The SIR tells all stakeholders whether a project will be cash-flow-positive. It is calculated by dividing the projected energy cost savings over the finance term by the total installed cost of the project, including the cost of equipment, installation, and financing.
While the Colorado C-PACE Statute does not require any SIR criteria, the program strongly encourages projects with an SIR>1 for the following reasons:
- Mortgage holders will be more likely to provide consent for projects that show positive cash flow
- Capital providers will look favorably on projects that show positive cash flow
- In general, the higher the SIR, the greater the demonstrated environmental benefits of the project, helping to promote the goals for the Colorado C-PACE program set forth in the C-PACE Statute.