Harnessing the Market to
Create Energy Savings
An Energy Efficiency Financing Guide for State Policymakers
February 2015
BY GLEN ANDERSEN, JOCELYN DURKAY AND CASSARAH BROWN
Overview
Energy efficiency—due to its vital role in reducing energy
costs, increasing energy security and helping states meet
emissions targets—is becoming a central component in
many state energy planning efforts.
Despite a strong economic case, efficiency has not reached
its full potential, largely due to regulatory and market
factors. Additionally, energy efficiency customers are often
challenged to acquire the up-front capital investment
needed to install efficient technologies, particularly when
retrofitting existing buildings and industrial facilities.
1 | Harnessing the Market to Create Energy Savings
While many states use established financing products for
energy efficiency, more states are starting to explore how
innovative financing mechanisms and improved terms on
traditional financing products can overcome market barriers to energy efficiency.
This report outlines how a variety of state-initiated financing instruments can achieve broader energy efficiency
implementation. It illustrates state roles in energy efficiency
financing and details state legislative trends in this area.
© 2015 National Conference of State Legislatures
Overcoming Barriers to Efficiency
Energy efficiency offers a range of benefits to consumers
and states, including reduced energy bills, increased economic growth, decreased emissions and the avoided capital
costs of building new power plants.
Lower energy bills, in turn, decrease the risk of loan
defaults and improve property values, leading to stronger
performance for financial products that cover efficiency
improvements.1 Despite these benefits, lenders often lack
sufficient data on the value of offering low-cost, accessible
capital in the energy efficiency market. This, combined
with rising consumer interest in energy efficiency, has
created an increasing gap between
demand for energy efficiency retrofits and available financing. State
programs have proven to be very
useful in bridging this gap by seeking to address many of the consumer, regulatory and market barriers to
increased efficiency through innovative financing approaches.2,3
Financing removes the up-front cost
barrier for building owners by allowing them to repay energy efficiency
improvements with the energy
savings created by these projects—
typically in a time period of two
to 20 years. Many financing arrangements are tied to the
property itself so that payments are transferred to the new
owner in the event of a sale. Innovative new programs offer
more flexibility than conventional products as a way to
address split incentives—cases where rental property owner
do not benefit from improvements since the renter pays the
energy bills—by passing the costs of improvements to the
beneficiaries of lower energy bills, i.e. renters.
Coordinated state efforts have the potential to streamline
financing and project processes, energize private industry
and build energy efficiency expertise.4 State programs can
also consolidate energy savings data, quantifying the return
on investment for state evaluators and prospective customers. One key to an effective program is to ensure that customers are aware of the program and its benefits through
2 | Harnessing the Market to Create Energy Savings
education and outreach to address the lack of knowledge
about energy efficiency and financing opportunities.
Encouraging Energy Efficiency
Financing
Many states are adopting aggressive energy savings targets
or have established energy efficiency state standards.5 However, standards alone are not sufficient to drive the efficiency market and fail to address several barriers, including
small program budgets and high up-front investment costs
by customers. States can use financing tools to leverage
limited budgets and overcome cost barriers in order to
achieve energy savings goals.
States are exploring energy efficiency financing programs
since attractive energy efficiency project financing tools are
often not available without these state initiatives. While
lenders may understand that energy efficiency investments are frequently wise business decisions, they are often
unfamiliar with this type of financing and may not offer
products that are attractive to building owners and decision
makers in business and industry.
Many lenders are not taking the energy savings into account due to the lack of data or understanding of how
much energy savings they can rely on for particular
improvements. As a result, lenders may secure loans to borrower assets to mitigate their risk, but this may create unattractive terms for property owners and does not solve the
major problem faced by many who would like to perform
upgrades—lack of access to capital.
To expand efficiency project financing options and encourage lenders to participate in this market, state policymakers
have employed a number of approaches, such as acting
as a capital provider by providing revolving loan funds,
enabling the use of innovative financing tools to enable
property assessed efficiency financing and performance
contracting, and creating credit enhancement, such as loan
loss reserves. Loan loss reserves (LLRs), for example, can
leverage significant amounts of private capital to finance
energy efficiency despite limited budgets. Since state and
federal finances are limited, programs that create opportunities for third party financiers to invest in energy efficiency projects can be particularly useful.
© 2015 National Conference of State Legislatures
Non-State Actors and Energy Efficiency Financing
While states play a critical role in encouraging energy efficiency financing, many other actors, from commercial banks to local authorities, impact efficiency programs.
Banks and Credit Unions
Many states and local governments have partnered with banks and credit unions to provide the public and
private sector with energy efficiency improvement financing. Credit unions, community development institutions and banks can be
valuable partners depending on the program’s size and target markets. Credit unions have been great partners for residential efficiency programs since they offer very attractive terms and see these initiatives as serving their core missions.6 Credit unions also tend
to be more engaged than commercial banks in the home performance retrofit market and generally have higher energy loan approval
rates compared to commercial banks. The lack of available lenders has limited the success of some residential programs, however.7
Large commercial banks may be good partners for mature programs that need access to large pools of low-cost secondary market
capital.
Utilities
Utilities know the technical side of energy efficiency and can be important partners in program design and customer adoption.
Several states allow utilities to collect ratepayers’ fees, also known as system benefit funds that can be used to fund energy efficiency
projects, which could include financing efforts. Since they often have substantial ratepayer-funded efficiency budgets, utilities can
assist in direct provision of capital, on-bill financing and credit enhancement. Through on-bill financing, for example, utilities can
guarantee loan repayment by allowing consumers to repay a loan via surcharges on their monthly utility bills. While utilities can be
good partners in efficiency financing, they may be reluctant to engage in the lending business, which requires developing new accounting procedures and assuming a potential for added risk.
Local Governments
States are increasing the authorization for local governments to carry out energy financing programs with a variety of policies, including Property Assessed Clean Energy (PACE) financing, which allows municipalities to sell bonds in order to finance commercial and
residential efficiency efforts. Many local governments have created energy efficiency incentives or credits, and some provide significant funds for energy efficiency financing. New York City, for example, has received funding from nonprofits and foundations to
support energy efficiency financing in the city.8 Because of their smaller size, local governments are often well-suited to experiment
with nontraditional approaches and alternative funding models. Eugene, Ore. used an intra-governmental loan to invest in energy
efficiency upgrades for all municipal departments in the city. The city repaid the loan with energy savings within 10 years.9
The options explored below are examples of state programs
that were created to overcome barriers to energy efficiency
financing in a number of different ways. Some are targeted
towards larger commercial sector while others focus on
increasing access for residential financing.
Legislative Tools to Promote Energy
Efficiency Financing
state energy banks. Several of these financing options
require specific authorization or enabling legislation, and
some are targeted at either the commercial or residential
sector while others can work for both. Each financing strategy performs best in certain conditions and faces unique
challenges. No singular financing tool can drive the energy
efficiency market alone and states may harness the market
most successfully by using an all-of-the-above approach.
States have a multitude of energy efficiency financing tools
at their disposal, including bonds, loans, credit enhancements, energy savings performance contracting (ESPCs),
LLRs, on-bill financing or on-bill repayment, Property
Assessed Clean Energy (PACE) programs, mortgages and
Bonds
Local state and federal governments can leverage limited
funds to support energy efficiency through bond programs.
Bonds provide a stable investment that generates consistent
interest, which can be directed into energy efficiency grant
3 | Harnessing the Market to Create Energy Savings
© 2015 National Conference of State Legislatures
or loan programs. Bonds serve as a common tool for states
and can serve as a one-time or temporary funding source
for projects that are limited in size or scope. States can issue municipal bonds for a specific energy efficiency project,
a specific grant or loan program or a series of projects in
public buildings. For example, Kentucky Senate Bill 153
in 2014 established a bond program and customer education initiative for energy efficiency projects in small and
medium manufacturing facilities. Kentucky will reserve 10
percent of the state’s private activity bond cap for projects.
States and localities can issue bonds for on-bill financing or
repayment programs (described below) or Property Assessed Clean Energy financing programs (described below).
State, tribal and local governments have access to Qualified
Energy Conservation Bonds (QECBs) through the U.S.
Department of the Treasury. The
Treasury subsidizes the issuer’s borrowing costs to help fund new or
existing energy efficiency expenditures including public education
programs, projects to reduce energy consumption in public buildings or implementing community
energy efficiency programs.
Loans
Loans allow states to deploy capital
from grants, bonds or other funds
through a number of structures depending on a state’s goals
or resources. Secured loans—where a loan is supported by
collateral, such as a property—benefit large projects that
require low-interest rates or long payback periods. Energy
efficient mortgages (described below) and PACE loans are
both forms of secured loans. Unsecured loans benefit small
projects or projects with higher interest rates, as they are
only supported by a borrower’s creditworthiness. Leases
or lease-to-purchase agreements, where a borrower uses
but may not necessarily own equipment, are valuable for
commercial or industrial customers that may have debt
constraints. Government entities may have the ability to
aggregate leases through a master lease or pooled leasing in
order to negotiate lower interest rates, such as with Virginia’s Master Equipment Leasing Program for energy efficient
equipment at state agencies and institutions.
4 | Harnessing the Market to Create Energy Savings
Revolving loan funds, provide states and borrowers with a
self-sustaining finance model where loan repayments and
interest payments replenish the pool of available financing.
Several states used the seed capital provided through the
American Reinvestment and Recovery Act (ARRA) Energy
Efficiency and Conservation Block Grants for new or existing revolving loan funds.
For example, the Energize Delaware Home Energy Loan
Program provides qualifying Delaware homeowners with
low rate loans that can finance energy improvements. To
qualify for loans and available energy rebates, however, the
program requires homeowners to first have an energy audit
performed by a pre-approved contractor. Loan interest
rates are lowest, starting at 3.9 percent, for projects with
the largest expected energy savings and go up to 6.9 percent for smaller projects with less
projected energy savings. The loan
payback period is up to 10 years.10
Texas’ LoanSTAR Revolving Loan
Program was supplemented with
ARRA funds, after its 1989 establishment with petroleum violation escrow funds.11 The program
finances energy retrofits for state
buildings, as well as public schools,
hospital facilities, colleges and
universities.12 The base fund of the
program grows through interest payments, which are set
to recover the cost of administering the program.13 As of
January 2014, the program provided over 237 loans, totaling more than $395 million and has achieved an estimated
total energy savings of over $419 million. Because the
retrofits are for public facilities, the energy savings benefit
taxpayers by reducing building operating costs.
Credit Enhancements
States can also employ credit enhancement techniques—
such as loan loss reserve funds (LLRs), subordinated debt
and loan guarantees—to reduce lender risk, allowing
them to offer lower rates, longer terms and less restrictive
underwriting to borrowers. Loan loss reserves reduce lender
risk by providing first loss protection in the event of loan
defaults. A 5 percent LLR for example, allows a private
lender to recover up to five percent of its portfolio of loans
© 2015 National Conference of State Legislatures
from the LLR. A $20 million private capital fund, for
example, would need a $1 million public LLR to provide
5 percent coverage and leverage public dollars 20:1. By reducing lender risk, they incentivize lenders to participate in
programs and to offer better loan terms and conditions.14
State and local governments may provide loan guarantees
to cover defaults, or they may use designated funds to support loan loss reserves to reduce lender risk. In Washington
state, the Community Energy Challenge Loan Program
provides loan reserve resources, generally administered
by local governments, to provide 7.5 to 10 percent of the
loan amount to enhance borrower credit.15 As the value of
energy efficiency lending is demonstrated with robust performance data through time, states may be able to reduce
or eliminate the size of LLRs.
Energy Savings Performance Contracts
An Energy Savings Performance Contract (ESPC), also
known as a guaranteed energy savings contract, is a partnership between an energy savings company (ESCO) and a
government agency or entity to finance and implement energy efficiency improvements.16 ESCOs are businesses that
implement energy efficiency projects and have a contractual obligation to guarantee energy savings. Once possible
projects are identified—typically through an energy audit—they are often financed through tax exempt municipal
leases, revolving loan funds or bonds. The financing costs
of the energy efficiency improvements are repaid through
the monthly energy savings. If the project fails to create the
guaranteed energy savings, the ESCO pays the difference in
repayment costs. When savings exceed the guarantee, many
states allow public entities to retain the savings to help
incentivize energy efficiency improvements. Many states
provide contract support and information on approved
ESCOs to select from. States may also ensure that public
entities that pursue energy efficiency improvements do not
face funding reductions based on their energy savings.
Colorado initiated its ESPC program in 1988 with its
Commercial and Public Buildings Program in Performance
Contracting. The program is being used as an important
tool to cut the state’s energy use 20 percent by 2020.17 A
performance contracting professional from the Colorado
Energy Office works with clients from state or local government agencies and provides technical assistance. Once
5 | Harnessing the Market to Create Energy Savings
a contract is negotiated, the Energy Office supports the
improvements, as necessary, and provides annual reviews
of energy savings.18 As of June 2014, the program supported over 182 active or completed projects, leveraging
$447 in capital construction funds.19 By providing support
to public entities entering ESPCs, the Colorado Energy
Office has helped enhance the success of the program and
encouraged agencies to explore ESPCs as a way to create
energy savings.
While all 50 states, the District of Columbia and Puerto
Rico have legislation that enables ESPCs, programs can
vary significantly in their degree of support for ESPCs.
States continue to expand and revise their programs. For
example, Colorado enacted legislation in 2014 permitting
small or rural communities to aggregate energy efficiency
projects to better attract ESCOs and financing.
On-Bill Financing and Repayment
On-bill financing allows property renters and owners,
in both the residential and business sectors, to engage in
energy efficiency improvements that are paid for over time
via charges on their utility bill. These programs overcome
the up-front cost barrier presented by many efficiency improvements, increasing access for middle and low-income
customers, renters, residents of multifamily properties and
small businesses. While energy efficiency financing may be
appealing for owners that occupy their properties, many
landlords lack incentives to pursue financing because they
do not pay utility bills. State action that allows rental property owners to participate in energy efficiency programs
can help expand the effectiveness of financing.
On-bill financing programs may require “bill-neutrality,”
meaning energy efficiency savings on monthly bills must
be greater or equal to a customer’s loan payments. This approach allows customers to upgrade efficiency at no added
cost, since they save more in energy costs than they pay for
the on-bill finance costs. For example, the South Carolina
“Help My House” Rural Energy Savings Program Pilot
led to a 34 percent reduction in energy use for residential program participants and resulted in average annual
savings of $288 per home—the total savings after loan
payments.20 Default rates have been found to be between
zero and 2 percent—lower than with other loans—making
them lower risk for lenders.21 On-bill financing programs
© 2015 National Conference of State Legislatures
can also be arranged to use utility bill repayment history
to underwrite upgrades, allowing customers with poorer
credit scores to access financing. Some programs have
increased their impact by bundling on-bill financing with
marketing, technical assistance, energy audits, rebates and
tax credits, use of prescreened contractors for services and
post-installation inspections for quality assurance.
On-bill financing programs use seed capital from revolving
loan funds, public benefits funds, utility shareholder funds,
grants or private investors. Programs then operate as either
loans or tariffs. On-bill tariffs keep the financial obligation with the property. If the property is sold or rented,
the tariff payments will simply transfer to the new owner
or renter. Because many states do not classify on-bill tariffs
as loans, these programs are subject to less complicated
laws and regulations. Connecticut’s Small Business Energy Advantage program is an on-bill loan program that is
co-administered by Connecticut Light and Power and the
United Illuminating Company, both Connecticut utilities. Financing is provided to small business and industrial
customers through the Connecticut Energy Efficiency
Fund, a public benefits fund. Financed energy improvements are paid through surcharges on business’ utility bills,
and the program provides loan loss reserves and permits
utility disconnection as a means of credit enhancement.
In 2011, the program’s default rate was less than 1 percent
of total loans.22 Most projects range in size from $8,000
to $12,000 and are financed over 24 to 36 months. The
program provides additional incentives, including access
to a zero percent interest rate for qualifying customers and
incentives to subsidize a portion of the energy efficiency
projects.23
Many states are also exploring on-bill repayment programs.
While on-bill financing refers to programs that utilize
ratepayer, utility shareholder or public funds, on-bill repayment programs leverage private, third-party capital for
financing.24 Banks, credit unions or financial institutions
provide the loan capital and repayments are displayed on
utility bills. This approach allows third-party institutions
to take care of administrative functions, while utilities only
need to process payments. On-bill repayment can also be
sole sourced or open sourced—programs in New York and
Oregon use a single source of capital while Hawaii is developing an open source model where banks and investors
compete for customers.
Twelve states have enacted legislation to authorize public
benefit funds for capital, to create pilot programs or to
require utilities to offer on-bill financing or on-bill repayment. Public benefit funds are funds created through
surcharges on utility bills for efficiency improvements.
Utilities in an additional 19 states administer on-bill
financing programs although there has been no legislative
action to create these programs. Figure 1 shows states that
have on-bill financing enabling legislation and utility-run
on-bill financing programs.
Figure 1. State Action for On-Bill Financing and Repayment
DC
Has legislation related to on-bill financing
Utilities have implemented or are developing
on-bill financing programs
Source: NCSL, February 2015.
6 | Harnessing the Market to Create Energy Savings
© 2015 National Conference of State Legislatures
Property Assessed Clean Energy Programs
Property Assessed Clean Energy (PACE) programs allow governments—usually cities and municipalities—to
provide financing for energy efficiency improvements that
building owners pay back through property tax assessments. Assessments typically last from five to 20 years and
are often financed through public municipal bonds or
private lenders, frequently secured with a senior lien on the
property, giving PACE assessments priority above other
liens.25 As a result, they are very secure for the investor.
Many states allow the lien to be transferred to a new owner
when the property is sold. One of the benefits of the PACE
model is that it is built from a municipal financing model
that has long been used for spaces that serve the public
good, such as street paving, parks, water and sewer systems,
or municipal street lighting.
Establishing a PACE program typically requires the state
legislature’s authorization, except in local control or “home
rule” states. Legislation comprises a number of elements including: stating a program’s purpose, authorizing bonding
authority to local governments, prescribing eligible projects
or sectors, establishing minimum and maximum thresholds
for borrowing and determining loan-to-value ratios. Established at municipal, multi-county or state levels, programs
can vary greatly in their financing structure and program
procedures.26
As a result, the Federal Housing Finance Agency (FHFA)
issued a statement in July 2010 advising the federal government’s mortgage financiers, Fannie Mae and Freddie Mac,
which hold or issue more than half the nation’s mortgages,
from purchasing property on which PACE financing has
placed a first lien.27
While some states have worked to establish a second lien
status for residential PACE assessments, many state statutes
explicitly require senior lien loan status for PACE financing, stalling many residential PACE programs. Although
programs that place a lien that is subordinate to the home
mortgage are permitted under the FHFA rule, this makes
the programs more complicated to implement and greatly
decreases the security of the assessment. Currently, residential PACE programs are implemented in four states: California, Florida, Missouri and New York. Oklahoma and
Vermont have passed legislation to downgrade PACE from
senior lien to junior lien. Maine offers residential programs
without holding a lien against properties. Commercial
PACE programs are unaffected by the FHFA rule, as the
borrower is typically required to receive the initial lender’s
consent before taking on additional liability through PACE
financing.28
PACE loan amounts are typically based on the tax capacity
of the property rather than the traditional approach of a
property owner’s credit. PACE financing is an alternative to
a traditional loan, and the timing of payments are aligned
with timing of benefits. Since programs typically require
that projects be cost-effective, energy savings equal the
amount of the loan payments or exceed it. Many programs
require that building owners be current in property taxes
and have no delinquencies for at least the past three years,
not be in bankruptcy and have a mortgage in good standing.
In 2010, Maine enacted legislation authorizing local
governments to establish PACE programs. Municipalities can opt to have Efficiency Maine, which received $30
million from the Department of Energy’s Better Buildings
Neighborhood Program, to initialize the program or to
administer their PACE programs. Efficiency Maine has
established a $20.4 million revolving fund for residential
PACE. Because the program provides residential loans with
a lien junior to a home mortgage, it has been able to operate within the FHFA ruling. Homeowners repay the PACE
loans through separate billing statements at fixed loan rates
of 4.99 percent. In the program’s first 18 months, the program had administered 273 residential loans, totaling more
than $3.4 million.29
Residential and commercial PACE assessments operate differently. For example, many residential PACE assessments
take priority over secured loans, such as mortgages, with senior lien status. Controversy has emerged due to concerns
that the PACE assessment subordinates the residential
mortgage lender’s security interest in the financed property.
PACE legislation has been enacted in 31 states and the
District of Columbia, and 12 states and the District of
Columbia have active programs. Figure 2 illustrates state
activity. Legislation has focused on authorizing local governments and municipalities to administer PACE programs
and on expanding PACE assessment eligibility.
7 | Harnessing the Market to Create Energy Savings
© 2015 National Conference of State Legislatures
Figure 2. State Action for PACE Financing
DC
Has PACE authorization
Has authorization and active programs
No action
Source: NCSL, February 2015.
Energy Efficient Mortgages
Energy efficient mortgages (EEM) account for a home’s
energy efficiency directly into the mortgage terms, allowing the borrower to qualify for a larger secured loan to help
finance energy saving measures in a better, more energy
efficient home. While EEMs are traditionally used to purchase a home that is already energy efficient, Energy Improvement Mortgages (EIMs)—mortgages for homes that
will have future efficiency improvements made—are often
included as a subset of EEMs. Benchmarking has helped
develop reliable standards for these mortgage programs.
Congressional legislation established an EEM pilot program in 1992 in five states: Alaska, Arkansas, California,
Vermont and Virginia. This evolved into a national pilot
in 1995 and the program remains active through Federal
Housing Agency administration. While energy efficient
mortgages are predominantly administered at the federal
level, several states have taken initiative to encourage EEMs
through legislation or regulations. California enacted
Assembly Bill 984 in 2013, which authorizes grants for
homebuyers utilizing the federal EEM program. Colorado
enacted House Bill 1105 in 2013, requiring the state’s Energy Office to fund energy savings mortgages that finance
newly built energy efficient homes and improvements to
existing residences.
State Energy Banks
State energy banks are public-private partnerships that
8 | Harnessing the Market to Create Energy Savings
combine public funding with private capital and expertise
to promote energy-efficient technology and lower the cost
of investments. Energy banks—also known as green or resilience banks—are public or quasi-public institutions that
provide an array of financing tools, including bonds, loans,
on-bill financing or on-bill repayment, PACE financing, credit enhancements and co-investing.
State energy banks can serve to consolidate and coordinate
existing energy efficiency programs that may be housed
across various departments, programs or authorities,
allowing a state to deploy a cohesive financing strategy.
States have the authority to determine eligible projects and
sectors,the financing tools available, project guidelines,
sources of initial capital and the goals of the bank. Energy
banks can be tailored to meet states’ specific energy or
environmental goals. Energy banks require initial public
funds, such as state funds, federal grants, system benefits
charges, foundation grants, private investments or bonds.
Banks typically use a lending model—as opposed to a
grant model—to establish revolving capital that can lead to
financial sustainability. The statewide scale of investments
make technology more competitive, drives down projects
costs and helps overcome market barriers.
Connecticut, New Jersey and New York have established
energy banks. Maryland enacted study legislation for a
state energy bank in 2014. Connecticut established the
nation’s first energy bank in 2011 when the legislature con-
© 2015 National Conference of State Legislatures
solidated the Connecticut Clean Energy Fund and other
state programs to establish the quasi-public Connecticut
Energy Finance and Investment Authority (CEFIA). CEFIA is funded with both private and public capital, including proceeds from the Regional Greenhouse Gas Initiative
(RGGI), commercial electric bills, federal funds and grants,
and private capital. The bank coordinates state energy
finance programs and has a mandate to enable efficiency
improvements in at least 15 percent of single-family homes
by 2020. CEFIA’s 2013 annual report states the authority
has invested more than $220 million, creating 1,200 jobs
and avoiding 250,000 tons of greenhouse gas emissions.
The bank has a leverage ratio of 10:1, where every public
dollar invested corresponds to $10 of private investments.
In May 2014, the bank achieved a new level of financial
sustainability through securitization of a bundled portion
of its commercial Property Assessed Clean Energy (PACE)
loans to a finance company.
Conclusion
NCSL Resources
Additional Resources
•
Energy and Environment Legislation Tracking
Database (select “financing energy efficiency and
renewable energy”): http://www.ncsl.org/default.
aspx?tabid=13011
•
American Council for an Energy-Efficient Economy:
http://www.aceee.org/
•
•
Database of State Incentives for Renewables and Efficiency: http://www.dsireusa.org/
Energy Efficiency 2014 Legislative Update: http://
www.ncsl.org/default.aspx?tabid=28967
•
•
State and Local Energy Efficiency Action Network:
http://www.seeaction.energy.gov
Finding Financing Solutions with State Energy Banks:
http://www.ncsl.org/default.aspx?tabid=28825
•
•
On-Bill Financing: Cost-Free Energy Efficiency
Improvements: http://www.ncsl.org/default.
aspx?tabid=28179
U.S. Department of Energy Guide to PACE: http://
energy.gov/eere/slsc/property-assessed-clean-energyprograms
•
PACE Financing: http://www.ncsl.org/default.
aspx?tabid=28614
•
State Energy Savings Performance Contracting: http://
www.ncsl.org/default.aspx?tabid=27464
9 | Harnessing the Market to Create Energy Savings
Energy efficiency is playing a larger role in reducing energy
consumption, energizing the economy, meeting environmental goals and enhancing energy security and resiliency.
As a result, energy efficiency financing is becoming increasingly important, as are efforts to extend available capital,
expand the scale of current programs and increase publicprivate collaboration. As policymakers continue to innovate with new financing programs and as programs become
more established and familiar to the banking industry,
energy efficiency financing could play an increasingly critical role in meeting growing energy demand.
© 2015 National Conference of State Legislatures
Notes
1. Nikhil Kaza, Roberto Quercia, and Chao Yue Tian, Home
Energy Efficiency and Mortgage Risks (Chapel Hill, N.C.: University of North Carolina, 2014), http://www.huduser.org/portal/
periodicals/cityscpe/vol16num1/ch16.pdf; U.S. Environmental
Protection Agency, Summary of the Financial Benefits of Energy
Star Labeled Office Buildings (Washington, D.C.: EPA, 2006),
http://www.energystar.gov/ia/partners/publications/pubdocs/
Summary_of_the_Financial_Benefits_23June06_FINAL.pdf.
2. State and Local Energy Efficiency Action Network, Using
Financing to Scale Up Energy Efficiency: Work Plan Recommendations for the SEE Action Financing Solutions Working Group
(Washington. D.C.: SEE Action, 2013), prepared by Mark
Zimring, Matthew Brown, and Dave Carey, http://emp.lbl.gov/
sites/all/files/financing-workplan-recommendations.pdf.
3. Sara Hayes, Steven Nadel, Chris Granda, and Kathryn
Hottel, What Have We Learned From Energy Efficiency Financing
Programs? (Washington, DC: American Council for an EnergyEfficient Economy, 2011).
4. U.S. Department of Energy, Guide to Federal Financing
for Energy Efficiency and Clean Energy Deployment (Washington,
D.C.: U.S. Department of Energy, 2014), http://energy.gov/
downloads/federal-finance-facilities-available-energy-efficiencyupgrades-and-clean-energy.
5. Galen Barbose, Charles Goldman, and Jeff Shlegal, The
Shifting Landscape of Ratepayer Funded Energy Efficiency in the US
(Berkeley, Calif.: Lawrence Berkeley National Laboratory, 2009),
http://eetd.lbl.gov/ea/ems/reports/lbnl-2258e.pdf.
6. Mark Zimring, Austin’s Home Performance with Energy
Star Program: Making a Compelling Offer to a Financial Institution Partner (Berkeley, Calif.: Lawrence Berkeley National
Laboratory, 2011) eetd.lbl.gov/publications/austin-s-home-performance-with-energy.
7. John Freehling, Efficiency Finance 101: Understanding
the Market Place (Washington, D.C.: American Council for an
Energy-Efficient Economy, 2011).
8. Rodney Sobin and Nicole Steele, New York City: EnergyEfficient Building Policy (Washington, D.C.: Alliance to Save
Energy, 2011), http://www.ase.org/resources/new-york-cityenergy-efficient-building-policy.
9. Sara Hayes et al., What Have We Learned From Energy
Efficiency Financing Programs?
10. Energize Delaware, Home Energy Loans (Dover, Del.:
Energize Delaware, n.d.), http://www.energizedelaware.org/
Home-Energy-Loans/.
11. Database of State Incentives for Renewables and Efficiency, Texas: LoanSTAR Revolving Loan Program (Raleigh, N.C.:
Database of State Incentives for Renewables and Efficiency, June
10, 2013), http://programs.dsireusa.org/system/program/detail/1134.
12. State Energy Conservation Office, LoanSTAR Revolving
Loan Program (Austin, Texas: State Energy Conservation Office,
n.d.), http://www.seco.cpa.state.tx.us/ls/.
10 | Harnessing the Market to Create Energy Savings
13.Texas Administrative Code Title 34, Part 1, Chapter 19
Rule §19.45, http://texreg.sos.state.tx.us/public/readtac$ext.
TacPage?sl=R&app=9&p_dir=&p_rloc=&p_tloc=&p_
ploc=&pg=1&p_tac=&ti=34&pt=1&ch=19&rl=45.
14. Merrian Borgeson, Mark Zimring, and Charles Goldman, The Limits of Financing for Energy Efficiency,
(Berkeley, Calif.: Lawrence Berkeley National Laboratory,
DATE??), http://emp.lbl.gov/sites/all/files/LBNL_Limits_of_Financing_ACEEE-SS2012_FINAL2.pdf.
15. U.S. Department of Energy, Sample Lending Program
in Washington State (Washington. D.C.: U.S. Department
of Energy, January 17, 2012), http://energy.gov/sites/prod/
files/2014/05/f15/loan_loss_reserves_lessons_from_the_field_
presentation.pdf.
16. Federal Energy Management Program, Energy Savings
Performance Contracts (Washington, D.C.: U.S. Department of
Energy, November 6, 2012), http://www1.eere.energy.gov/femp/
financing/espcs.html.
17, Energy Services Coalition, A Colorado Success Story—A
Performance Contracting Program (Denver, Colo.: Energy Services
Coalition, n.d.), http://www1.eere.energy.gov/wip/solutioncenter/pdfs/colorado_case_study.pdf.
18 Colorado Energy Office, Standards for Success for
Energy Performance Contracting CEO’s Services to Ensure Success
(Denver, Colo.: Colorado Energy Office, n.d.), http://www.
colorado.gov/cs/Satellite?blobcol=urldata&blobheadername1
=Content-Disposition&blobheadername2=Content-Type&b
lobheadervalue1=inline%3B+filename%3D%22Standards+f
or+Success+%28EMAP%29.pdf%22&blobheadervalue2=applic
ation%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere
=1251851823501&ssbinary=true.
19. Colorado Energy Office, Public Energy Performance
Contracting (Denver, Colo.: Colorado Energy Office, n.d.),
http://www.colorado.gov/cs/Satellite/GovEnergyOffice/
CBON/1251599983018.
20. Environmental and Energy Study Institute, Help My
House Loan Pilot Program: Program Design and Results (Washington, D.C.: EESI, 2013), http://www.eesi.org/files/072413_
Help_My_House_Brochure.pdf.
21. Catherine Bell, Sara Hayes, and Steven Nadel, On-Bill
Financing for Energy Efficiency Improvements: A Review of Current
Program Challenges, Opportunities and Best Practices (Washington, D.C.: American Council for an Energy-Efficient Economy,
2012), 21.
22. Catherine Bell, Sara Hayes, and Steven Nadel, On-Bill
Financing for Energy Efficiency Improvements: A Review of Current
Program Challenges, Opportunities and Best Practices.
23. American Council for an Energy-Efficient Economy,
On-Bill Financing for Energy Improvements (Washington, D.C.:
ACEEE, 2012), http://aceee.org/files/pdf/toolkit/OBF_toolkit.
pdf.
24. State and Local Energy Efficiency Action Network,
Energy Efficiency Financing Program Implementation Primer
(Berkeley, Calif.: Lawrence Berkeley National Laboratory, 2014),
prepared by Mark Zimring, https://www4.eere.energy.gov/seeaction/system/files/documents/financing_primer_0.pdf.
© 2015 National Conference of State Legislatures
25. Daniel Byrd and Richard Cohen, A Roadmap to Energy
Efficiency Loan Financing (New York, N.Y.: Progressive Energy
Group LLC, 2011), http://www.cleanenergyfinancecenter.
org/wp-content/uploads/DOE-Energy-Efficiency-Reportrev-8-29-11.pdf.
26. U.S. Department of Energy, Clean Energy Finance
Guide: Chapter 12 Commercial Property Assessed Clean Energy
(PACE) (Washington, D.C.: Department of Energy, 2013),
http://www.energy.gov/sites/prod/files/2014/05/f15/ch12_commercial_pace_all.pdf.
27. State Court of Appeals for the Ninth Circuit, No. 1216986 (San Francisco, Calif.: United States Courts for the Ninth
Circuit, 2013), http://cdn.ca9.uscourts.gov/datastore/opinions/2013/03/19/12-16986%20web_revised.pdf.
28. Daniel Byrd and Richard Cohen, A Roadmap to Energy
Efficiency Loan Financing.
29. U.S. Department of Energy, Efficiency Maine Offers Sustainable Upgrades for the Future (Washington, D.C.: U.S. Department of Energy, May 13, 2013), http://www1.eere.energy.gov/
buildings/betterbuildings/neighborhoods/maine_profile.html.
NCSL Contact
Jocelyn Durkay
Policy Specialist
303-856-1494
[email protected]
William T. Pound, Executive Director
7700 East First Place, Denver, Colorado 80230, 303-364-7700 | 444 North Capitol Street, N.W., Suite 515, Washington, D.C. 20001, 202-624-5400
www.ncsl.org
©2015 by the National Conference of State Legislatures. All rights reserved.
11 | Harnessing the Market to Create Energy Savings
ISBN 978-1-58024-772-6
© 2015 National Conference of State Legislatures