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

The SIR tells all stakeholders whether a project will be cash-flow positive. Under the C-PACE Act, there is no statutory requirement that the projects generate positive cash flow based on energy savings. While the statute does not require any demonstration of the savings-to-investment ratio, the C-PACE program strongly recommends projects have an SIR>1 because:

  • 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 energy assessment for the projects that show positive cash flow, and
  • In general, the higher the SIR, the greater the demonstrated environmental benefits, e.g., emissions reductions, of the project, which helps to support C-PACE goals.