What is the savings-to-investment ratio (SIR)?

The SIR tells all stakeholders whether a project will be cash-flow positive. C-PACE existing building projects are often designed such that the estimated energy cost savings, over the effective useful life of the qualified energy efficiency improvements and/or renewable energy improvements, exceeds the financing amount, i.e. the savings-to-investment ratio (SIR) is greater than one (SIR >1.0). There are significant benefits to this outcome:

  • Property owners and capital providers look favorably on projects that show positive cash flow over their lifetime
  • Mortgage holders are more likely to consent to the imposition of a voluntary benefit assessment for projects that show positive cash flow
  • In general, the higher the SIR, the greater the demonstrated environmental benefits, e.g., emissions reductions, of the project, which helps to support the goals of C-PACE.