Financing and Funding Energy Efficiency Initiatives www.efc.unc.edu
Paying for Energy Programs Two main program elements Finance program design Sources of capital Programs around the state and country mix and match designs and sources of capital
My household has (mark all) 1. Received rebate for energy efficiency appliance 29% 32% 2. Received rebate for energy upgrade 19% 19% 3. Has taken out loan to do energy improvement 4. Has spent more than $3,000 of savings on an energy improvement Received rebat... Received rebat... Has taken out... Has spent more...
Comfort Level With Finance 1. MBA/CPA/Expert 2. Novice I ve heard of bonds 47% 32% 3. At least I balance my checkbook 15% 4. Running Scared 6% MBA/CPA/Expert Novice I ve he... At least I bal... Running Scared
Common Barriers to Program Implementation Limited financial resources Resistance to change Scarce human or time resources Misunderstood or unfocused definition of sustainability Difficulty gathering data or establishing measurements Organizational structure Source: Ashley, Jackie. From Commitment to Action: Success Stories from Local Government Sustainability Initiatives. 2008 UNC MPA Capstone Paper.
How To Pay For Programs
This is NOT the Answer
Government Funding Sources and Revenues Sources of Funds Appropriated funds Unrestricted fund balance Capital reserve fund Grants Public and Private Fees ESCO financing Loans/Bond proceeds Installment purchase G.O. Special (Qualified Energy Conservation Bonds) Revenues Increased appropriated funds Savings linked to project Revenue linked to project Energy sales Green tags/recs Assessments Fees for service
Creative Finance Program Designs and Options
Innovative Options for Internal Government Programs
Guaranteed Energy Savings Contracts Contract for the evaluation, recommendation, or implementation of energy conservation measures Payments made over time Energy savings guaranteed to exceed costs G.S. 143-64.17(3)
Using Third Party Ownership to Capture Tax Credits Governments not eligible for tax credits Third party installs and owns energy improvement, then transfers to government after tax credit period over for market value
Internal Revolving Energy Funds Capitalized as a bank from which departments and divisions can borrow to fund energy efficiency, renewable energy or energy conservation projects Energy cost savings are used to replenish the bank, and then more loans are made
Innovative Options for Community Programs
Revolving Loan Funds Government loans out its own money to residents and businesses Example: Carrboro Commercial Energy Efficiency Revolving Loan Fund
Loan Loss Reserve Pools/Capital Access Program Credit enhancement to support private lending Examples: Rural Center CAP, Greensboro LLR, Michigan Saves, Keystone Help (Pennsylvania)
PACE Property owners assessed for cost of energy improvement through their property tax bills Residential programs on hold Example: Florida Statewide Agency, Commercial program in Boulder County, CO funded by QECBs
Interest Rate Buy-Down Cash paid to lenders to lower the interest rate that borrowers pay Example: Connecticut program to buy down interest rate of Fannie Mae energy loan program, UVA Community Credit Union
Rebates Program covers some or all of the cost of a specific energy improvement or suite of improvements Wide range, from small appliance rebates under $100 to whole house retrofit rebates for thousands of dollars Very common with utilities
Sustainable Energy Business Improvement District Authority for this would come from G.S. 160A-536, which allows for a city council to create a special district for downtown revitalization projects Services such as installation of solar panels, upgrades to water heaters or a.c. units, or other green services such as a green street lighting program or extensive recycling services
Innovative Options Summary Internal Government Guaranteed Energy Savings Contracts Third Party Ownership QECBs Internal Revolving Energy Funds Community Revolving Loan Funds Loan Loss Reserves PACE Interest Rate Buy-Down Rebates Sustainable Energy Business Improvement Districts
Key Resource: DSIRE Database http://www.dsireusa.org/
Questions? www.efc.unc.edu