To encourage homeowners and businesses to make significant retrofits and energy efficiency improvements, efficiency policies and programs can help minimize upfront project costs through strategies such as on-bill financing, Property Assessed Clean Energy (PACE) financing, energy service agreements, and energy efficiency mortgages.
The success and prevalence of financing programs have fluctuated over the past few decades. Today, utilities, as well as federal, state, and local governments, sometimes offer these financing strategies for energy efficiency upgrades. Green Banks, Community Development Financial Institutions, and private entities have also become increasingly interested in providing capital to finance packages of clean energy projects.
Successes include the following:
- Multifamily buildings have taken advantage of preferred-lending programs for efficient properties, and the number of properties taking advantage of those lending options has grown rapidly.
- The private-sector Energy Service Company (ESCO) market for energy efficiency services in commercial buildings and institutions has grown significantly over the past several years.
- Commercial PACE financing has experienced a period of massive growth over the past decade. As more programs emerge around the country, and as market awareness increases, this growth is expected to continue.
But a major challenge remains: Financing programs for homeowners have typically drawn low participation rates and primarily attracted the homeowners least in need of financing opportunities. Financing for those most in need—people with low or fixed incomes and poor credit—has had little success.
Our annual Energy Efficiency Finance Forum, designed for investors, financiers, utilities, and policymakers, surveys the energy efficiency financial landscape and explores the latest innovations in financial structures and models.
ACEEE has also released a series of reports on energy efficiency finance, beginning with Energy Efficiency Finance 101: Understanding the Marketplace, which gives an overview of current financing options and investment partners. Energy Efficiency Program Financing: Size of the Markets examines and estimates the volume of energy efficiency financing from five major programmatic sources. Leading by Example: How Multifamily Real Estate Companies Approach Energy Management and Savings details how a growing number of private multifamily real estate companies are integrating energy efficiency into their planning and operations. Finally, What Have We Learned from Energy Efficiency Financing Programs? offers a review of 24 energy efficiency loan programs and explores the potential of these low-risk investments.