Community Energy Financing
reductions, resource constraints, and other restrictions often make financing
energy efficiency projects a challenge for municipalities. The information below
outlines some financing approaches that your community might investigate.
The U.S. Department of Agriculture (USDA) has announced
that its Conservation Security Program (CSP) will start accepting sign-ups from
farmer and ranchers on March 28, 2004. Although the program is primarily meant
to support ongoing stewardship of private agricultural lands, this year's program
sign-up includes a renewable energy and energy efficiency component. Eligible
producers will receive compensation for conducting energy audits, for cutting
their energy use, for converting to renewable energy fuels (such as biodiesel
or ethanol), and for implementing renewable energy production, including methane
production as well as wind, solar, hydroelectric and geothermal energy.
approved a bill in September 2004 that will extend the wind
energy Production Tax Credit (PTC) through the end of next year. The PTC
was included in a major tax package that President Bush is expected to sign. The
PTC provides a tax credit of 1.5 cents per kilowatt-hour (in 1992 dollars, adjusted
for inflation) for power produced by wind turbines. According to the American
Wind Energy Association, the PTC extension will allow wind energy investments
of about $3 billion to move ahead over the next several years.
Industrial Competitiveness Through Energy, Environment, and Economics (NICE3)
A joint cost-sharing program of DOE and the U.S. Environmental Protection Agency
(EPA) that strives to improve industrial energy efficiency, reduce industry's
costs, and promote clean production. The NICE3 grants program funds up to 40 percent
of total project cost for up to three years in support of technology development
that can improve industrial cost competitiveness, prevent pollution, conserve
energy, and reduce industrial wastes. Since 1991, NICE3 has sponsored 58 projects,
totaling $17.9 million of DOE funding. For more information and the location of
the nearest NICE3 regional office, contact the Energy Efficiency and Renewable
Energy Clearinghouse toll-free at (800) DOE-EREC.
The USDA's High
Energy Cost Grant Program provides grants for improvement of energy generation,
transmission, and distribution facilities serving communities with extremely high
State energy offices can be a source
of funding for energy-efficiency projects. Available programs vary by state. The
National Association of State Energy Officials
(NASEO) offers a State
Energy Office Directory, which includes links to state energy office Web
Utility companies often offer rebates, low-interest loans, and
other incentives for energy-efficiency improvements. For more information, contact
your utility company.
The NEAAP Residential
Energy Efficiency Database is an resource feature designed to help residential
energy consumers save energy and money. Using the database, residential electric
and natural gas customers can find out what programs their utilities offer, such
as home energy audits, rebates for energy efficient appliances, and zero- or low-interest
loans to upgrade insulation or replace old heating and cooling equipment. The
extensive, regularly updated database lists residential energy efficiency programs
offered by public and private utilities, rural electric cooperatives, and state
agencies in all 50 states and the District of Columbia.
Energy States Alliance is a new non-profit organization established in
early 2004, comprised of 17 "clean energy" public funds from 12 states.
CESA expects the clean energy funds from the 12 statesCalifornia, Connecticut,
Illinois, Massachusetts, Minnesota, New Jersey, New York, Ohio, Oregon, Pennsylvania,
Rhode Island, and Wisconsinto total $3.5 billion over the next decade. CESA
will launch a number of joint initiatives to promote solar energy, wind power,
fuel cells, and other clean energy technologies, combining the power of many states
for more effective strategies while reducing the costs of individual state programs.
Connecticut Clean Energy Fund (CCEF) announced in October 2004 that it is offering
rebates on solar power systems
to cut in half the cost of installing them. CCEF has $1.8 million available for
solar power rebates, which can go as high as $25,000 per home.
2004, New Mexico passed House
Bill 251, which sets up a fund to invest in hydrogen and other cutting-edge
Public Service, the state's largest electric utility, offers financial
assistance, including incentives, for solar energy installations. APS doubled
its incentives for solar electric and solar water-heating systems, starting in
Also in Arizona, Tucson
Electric Power (TEP) has expanded its solar power incentives to provide
a subsidy of up to $3,000 per kilowatt of rated direct-current capacity for a
limited number of solar power systems, and $2,000 per kilowatt of rated alternating-current
capacity. According to TEP, solar power systems could also qualify for up to $1,000
in state tax credits. UniSource
Energy Services (UES), TEP's sister company, is offering the same incentives.
UES has also started a voluntary program for customers to add $2 to their monthly
electric bill to support solar power projects in the UES service territory.
Pacific Gas & Electric Company (PG&E) reopened its popular program of
efficiency rebates in summer 2004. The utility has an additional $6.5
million in funds to keep the rebates flowing until the end of the year. PG&E
closed the program in early July for lack of funds, but recently earned approval
from the California Public Utilities Commission to redirect some unspent funds
toward the rebate program.
Energy Harvest grant program funds projects that promote and build markets
for advanced or renewable energy technologies. The second round of funding is
expected in July 2004.
The Hawaiian Electric Company (HECO) is involved
in a number of efforts to advance renewable energy, energy efficiency, and fuel
cells in Hawaii, including low-interest loans and rebates for solar hot water
systems in Honolulu and the opening of the Hawaii Fuel Cell Test Facility, also
in Honolulu. And in late May, HECO announced that its subsidiary, Renewable Hawaii,
Inc., is requesting proposals for renewable energy projects on the island of Oahu.
The company has approval to invest up to $10 million in grid-connected power projects
that draw on renewable energy. Read
the HECO press releases.
In Minnesota, the Renewable
Development Fund was created by legislation in May 1999. Xcel Energy is
currently required by legislation to put $16 million annually into the fund. Funding
for renewable energy projects will be available for various sized-projects in
two categories: Energy Production, and Research and Development. Read more about
The Pennsylvania Department of Environmental Protection
(DEP) announced in May 2003 a new $5-million initiative to fund renewable energy
projects throughout the state. A DOE grant helped kick off the new initiative,
Energy Harvest, which will provide funds for wind installations, small-scale
solar power systems, and biomass projects.
Energy Mitigation Program is an innovative program of the city of Aspen
and Pitkin County, Colorado, that taxes energy consumption. Launched in 2000,
the program requires homeowners who wish to exceed the city's strict energy "budget"
for new buildings either to install a renewable energy system or to pay a renewable
energy mitigation fee.The funds--more than $2 million--are used for for local
energy efficiency and renewable energy projects.
are encouraging the use of renewable energy through funding opportunities and
other incentives. For example, in July 2002, the California Power Authority launched
Leadership Solutions for Energy (PULSE) program, a low-interest loan fund
for California public agencies installing energy efficiency improvements or clean
on-site power generation.
Trust of Oregon strives to change how Oregonians produce and use energy
by investing in efficient technologies and renewable energy resources. The organization
also offers services and incentives to Oregon businesses and homeowners who invest
in energy-efficient equipment and materials.
Massachusetts established its
Energy Fund in January 2003 to provide equity capital, loans, and management
assistance to the state's renewable energy businesses.
The New Jersey Board
of Public Utilities launched the New
Jersey Clean Energy Program in early January 2003 by approving $2.7 million
to develop renewable energy markets, businesses, and technologies within the state.
The program will award the funds by a competitive solicitation.
also will soon have a $60 million package
of initiatives to encourage business owners to install renewable energy
equipment and make energy efficiency modifications. Some $45 million will be available
for long-term loans to encourage the development of large-scale renewable energy
production that will feed directly into the grid--$10 million for low-interest
loans for renewable energy and energy efficiency projects that will be below market
rate to encourage businesses to install renewable energy by providing the up front
capital costs, and $5 million for an innovations fund to enable renewable energy
companies to bring their products and technologies to market.
incentives are those for combined
heat and power (CHP) systems. The program offers qualifying customers,
contractors, and energy service companies incentives to purchase and install various
types of combined heat and power CHP units. Rebates of 30 to 40 percent may be
available, depending on a decision by the Board of Public Utilities.
qualify, the facility must be located in New Jersey, the customer must purchase
electricity from the utility grid, and the distributed generation unit capacity
must be 5 MW or less and must be an electric or gas customer served by an eligible
tariff. Proposals must be submitted by August 2, 2004.
The Florida Department
of Community Affairs/Florida Energy Office (DCA/FEO) is currently offering $600,000
in hardware funds toward the installation of photovoltaic (PV) solar systems on
Florida schools. Rebates are expected to be in the range of $20,000 per installation
or $5 per watt based on system nameplate rating. An additional rebate of $1 per
watt is available for systems that include a battery back up component and can
be used to provide electricity to a school disaster relief shelter. Learn
The California Energy Commission's
Solar Schools Program encourages the installation of solar photovoltaic
(PV) systems at California public schools by offering a rebate of up to 90 percent
of the purchase and installation cost. School districts may also arrange for a
loan from the California Energy Commission's Energy
Efficiency Financing (Bright Schools) Program to cover the remaining 10
percent of project cost.
The Massachusetts Technology Collaborative
(MTC), which manages the state's $150-million Renewable Energy Trust, announced
the launch of thetrust's new $10-million Solar-to-Market
Initiative. As a first step, the initiative is awarding $2.6 million in
grants to six organizations that will install roughly 250 solar power systems
on homes, businesses, farms, institutions, and local government buildings throughout
the state. The new initiative also includes a $5.3 million loan fund to support
solar photovoltaic (PV) businesses in the state. In addition, MTC intends to award
$600,000 to support public education programs; training programs for solar installers,
inspectors, and utility representatives; and metering and evaluation programs
to document solar power system performance.
As well, MTC announced in September
2003 a $4
million initiative to help cities and towns throughout the state tap into
wind power. MTC is holding a series of meetings across the state to gauge interest
and to determine what resources are needed for developing successful local wind
The Connecticut Clean Energy Fund (CCEF) launched its Solar
PV Program with $1 million in funds. The program aims to install photovoltaic
systems on commercial, industrial, and institutional buildings in the state.
In California, San Diego's
Self-Generation Incentive Program provides cash incentives for residential
and business customers to produce their own energy through "self-generation"
of electricity. "Self-generation" refers to clean distributed generation
technologies installed on the customer's side of the utility meter to provide
electricity for a part or all of customer's electric load. The California Public
Utilities Commission approved program funding of $15.5 million annually for the
San Diego Region through December 31, 2004.
Office for Resource Efficiency (CORE) promotes renewable energy and energy
efficiency in western Colorado, primarily within the Roaring Fork Valley. CORE
offers several financial
incentives, including Solar Power Incentives, Climate Change Mini Grant
Program, Energy-Efficient Clothes Washer Rebate Program, and Energy-Efficient
Michigan announced in 2002 its new Next
Energy Initiative, which includes a number of components aimed at making
the state a leader in the renewable energy arena. One component is the NextEnergy
Tax Incentives, which allow "exemptions from the SBT and personal property
tax for companies, or activities within companies, whose primary focus is alternative
energy research, development or manufacturing."
Homes in southeastern
Pennsylvania may feature a growing number of solar electric installations through
an incentive program launched in June 2002 by the Energy Cooperative. The Philadelphia-based
company is offering to pay consumers 20 cents per kilowatt-hour for power produced
by solar electric systems installed on their homes. The Cooperative's goal is
to purchase 100,000 kilowatt-hours of solar power by the end of this year. To
take advantage of the program, customers must be members of the Energy Cooperative
and must purchase the Co-op's "EcoChoice 100" brand of 100 percent renewable
energy. The system must meet specific criteria and must include a separate meter
to measure its output. Read
Minnesota's State Energy Office is offering a rebate program
that pays up to 25 percent of installation costs for a photovoltaic system. The
program provides a rebate of $2,000 per kilowatt for 1 to 4 kilowatts of grid-connected
solar-electric installations. During the four-year program, approximately $1 million
will be spent to install 400 kilowatts of grid-connected solar-electric systems.
Additionally, solar panels purchased before August 1, 2005, are exempt from state
sales tax. Learn
The Long Island Power Authority's (LIPA) Solar Pioneer
Program is, in its second phase, offering a higher rebate for solar power systems
installed on homes and businesses. For systems installed and operating by July
31, 2002, the rebate is $6 per watt up to a maximum of 10 kilowatts, which wouldearn
the maximum rebate of $60,000. After July 31st, the rebate drops to $4 per watt.
LIPA is also giving away 30 solar electric systems, each with a capacity of 500
to 600 watts. Learn
Congress approved in March 2002 the Job Creation and Worker
Assistance Act -- commonly known as the economic stimulus bill -- and in the process
provided a two-year extension of the production tax credit (PTC). The PTC provides
renewable power producers with a tax break of 1.5 cents per kilowatt-hour (in
1992 dollars, adjusted for inflation) and applies to electricity produced from
wind power, poultry waste, and biomass power produced from dedicated energy crops.
The credit now applies retroactively to installations placed in service since
the beginning of this year, and extends through the end of 2003. The PTC is crucial
for wind energy development in the United States, and its extension was hailed
by the American Wind Energy Association (AWEA). Read
Financing Solution Center
Provides useful links to energy efficiency
and renewable energy financing resources for homeowners, small business, industry,
utilities, state and local programs, federal building, and international projects.
Database of State Incentives for
Renewable Energy (DSIRE)
This searchable online database catalogs
state, utility, and local incentives, including tax incentives, grants, loans,
rebates and industrial recruitment, and provides an overview of the renewable
energy activities of 45 communities in 22 states.
Toolbook for Financing Energy Efficiency and Pollution Prevention Technologies
Helps manufacturers work through key issues and alternatives relating to financing
manufacturing modernization. Includes the following sections: 1) Financing options,
techniques, and strategies; 2) Case studies; 3) Federal programs; and 4) State
National Association of
Energy Service Companies
Promotes the delivery by ESCOs of comprehensive
energy services to maximize customer benefits and environmental sustainability.
The site provides an excellent definition of Energy Service Companies and their
role in financing energy efficiency. Also provides a list of accredited member
Energy Management Program (FEMP)
FEMP's Financing Team provides policy
guidance and technical and contracting assistance related to private-sector funding
for Federal energy efficiency, renewable energy, and water-conservation projects.
FEMP also offers an Alternative Financing Action Kit, which describes financing
tools available to Federal agencies, states, energy service companies, utilities,
industry, manufacturers, and others interested in implementing ESPC projects.
The kit can be ordered
Energy Commission's Energy Efficiency Financing Program
loans to schools, hospitals, and local governments for feasibility studies and
the installation of energy-efficiency measures.
to Save Energy -- Resources for Energy Efficiency Financing
a number of avenues for financing energy efficiency improvements in the United
States and globally.
The Center for Energy and Environment has developed
the One-Stop Efficiency
Shop, a full-service lighting rebate program designed to save energy in
the small business sector, working with Xcel Energy. The One-Stop program offers
qualified business owners a free audit, lighting rebates, and below-market-rate
financing that is paid on the owner's utility bill, with loan payments structured
to match the owner's monthly savings so that a neutral cash flow is maintained.
The program captured 2,418 kW in energy savings in 2002.
on Energy Services Companies (ESCOs)
Describes briefly the concept
and practices of energy services companies, performance contracting, and third-party
Retrofits: History and Future of ESCOs in the Age of Deregulation
Explains how the Building Energy Measurement and Verification Protocol (formerly
the North American Energy Measurement and Verification Protocol) will increase
the reliability and quality of estimated efficiency savings and improve realized
Borrower's Guide to Financing Solar Energy Systems: A Federal Overview
Provides information that can assist both lenders and consumers in financing
solar energy systems, which include both solar electric (photovoltaic) and solar
thermal systems. The guide also includes information about other ways to make
solar energy systems more affordable, as well as descriptions of special mortgage
programs for energy-efficient homes. To order, contact: Patrina Eiffert, Ph.D.,
National Renewable Energy Laboratory, 1617 Cole Boulevard, Golden, CO 80401-3393;
will we get the money to finance energy efficiency?
on getting city and county energy efficiency projects financed.
Business Side of Urban CO2 Reduction: Money for Energy Efficiency
Answers questions that municipal finance departments might have about financing
city energy efficiency projects. Covers municipal source revenues, direct borrowing,
and alternative financing. Discusse performance contracts, using energy savings
to pay for energy efficiency retrofits, and lease purchase agreements.
Investing in Energy
Efficiency: Financing Strategies for Municipalities
main approaches to financing energy efficiency for municipalities.
updated: March 25, 2005
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