Supporting Investment in Building Modernization
Cliff Majersik, IMT, and Camille Kadoch, RAP
Homes in the United States come in all shapes, sizes and ages. The median age of U.S. homes is 39 years, which means that most homes are decades out of date on the most efficient and cost-saving housing technologies.1 Most buildings have older windows, lower levels of insulation and appliances of varying ages. Building upgrades are worthy investments that many people lack the cash to make without external financing assistance. Consequently, financing polices are important tools to spur the adoption of efficient building technologies and practices that are in the public interest.
Financing policies can take many forms, including rebates, loans and grants; direct installation of energy-saving and electrification measures; income tax credits and income tax deductions for individuals or businesses; and sales tax exemptions or reductions for eligible products. Financial incentives can lower the upfront cost and shorten the payback period of upgrades. Incentives can also raise consumer awareness of eligible products, encouraging manufacturers and retailers to market these products more actively to garner greater market adoption. As production and distribution scales up, prices of eligible products fall, allowing them to better compete within the market.2 Financing policies are a familiar tool and have helped stimulate purchases of energy-efficient products across the United States for decades.
Recent federal legislation, such as the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, will provide money to states for various programs, including revolving loan funds, individual rebates through state energy offices and generous tax credits. Many require states to take action by submitting plans, creating rebates or creating a state fund to direct these moneys to residents.3 While federal funding provides a starting point to support building modernization upgrades, other sources of funding are necessary to fill in critical gaps. The Inflation Reduction Act presents several examples:4
- High-Efficiency Electric Home Rebate Act (HEEHRA) rebates for low- and moderate-income (LMI) households are capped at different levels for different upgrades, with a maximum of $14,000 per home.
- The Home Energy Performance-Based, Whole-House Rebates program, known as HOMES, provides rebates of $4,000 to $8,000.
- Tax credits (for those with enough tax liability to use them) are capped at $2,000 per year.
While this funding is significant, many state residents will not be able to take advantage of it because health or safety issues associated with older and distressed housing stock must be repaired first to make them eligible, or because the costs of the upgrades are more than the incentives and the building owner lacks savings or access to credit to pay the difference. This funding gap will be an insurmountable barrier to most LMI households.5 State actions can help leverage federal support to the greatest benefit for residents.
Financing policy is a key element of building modernization policies. State experience indicates that providing funding and incentives for energy efficiency, renewable energy and building electrification can provide economic, energy, social and environmental benefits. Financing policy can:
- Reduce consumers’ total energy costs.
- Enhance occupant health and comfort.
- Address inequality when targeted to LMI customers.
- Establish the necessary technology or project development infrastructure to continue stimulating the market after the incentives are no longer in effect.
- Leverage federal incentives and stimulate private sector investment.
- Stimulate business and job growth in clean energy technologies within a state.
- Improve air quality, reduce water discharges, decrease water use and solid waste, and improve land resource use.
- Transform the market toward offering more energy efficiency, renewable energy and electrification options.6
State legislation is often necessary to implement financing policies. For instance, legislatures pass bond legislation and authorize appropriations for incentives. They also change tax laws and state accounting and procurement rules; such changes can enable clean energy funding programs. State legislatures or executive branches can authorize outsourcing or performance contracting in facilities under their authority. They can pass legislation to create an independent, quasi-governmental entity such as a market accelerator or green bankgreen bank A financial institution that can leverage public funding to attract private capital for clean energy projects (including energy efficiency, renewable energy and other distributed energy resources) and other “green” investments..7
Although many states have financing tools to advance energy efficiency, fewer have added electrification to the suite of financing policies available. Additionally, many states have some financing policies that do not benefit all segments of the population. For instance, many financing policies may not benefit overburdened communitiesoverburdened communities “Minority, low-income, tribal, or indigenous populations or geographic locations in the United States that potentially experience disproportionate environmental harms and risks. This disproportionality can be as a result of greater vulnerability to environmental hazards, lack of opportunity for public participation, or other factors” (U.S. Environmental Protection Agency). Largely synonymous terms include “marginalized,” “front-line,” “underserved” and “environmental justice” communities.; such policies can unjustly aggravate inequality. Some states seek to expand the application of programs beyond current segments. Others are evaluating how rebates and incentives are paid: Some are paid with state funds, others with ratepayer funds through utilities. All of these considerations indicate that state financing policies should be continuously and periodically reevaluated to advance building modernization policies. Best-practice steps for finance policy assessment include the following:
- Develop an inventory of current financing and incentive programs.
- Review the performance of existing programs and determine whether the programs are effective and adequately serve all population segments, including LMI or overburdened communities, individuals, and commercial, government and nonprofit entities. For instance, LMI households with less disposable income may lack the upfront capital to pay for such improvements. This can especially exacerbate financial inequities if households have to wait months to receive tax or other rebates.
- In many cases, LMI customers are prevented from taking advantage of energy programs like utility programs and the federally funded Weatherization Assistance Program (WAP) because health and safety problems with their homes make them ineligible for such programs. Often these problems aren’t found until a contractor is in the home to install weatherization measures and is forced to abandon the planned weatherization — a common situation known in the industry as a “rollback.” Because fixing health and safety problems typically saves no energy, WAP and utility funds typically cannot be used for the fixes under existing rules. To address this problem, legislatures can (1) change utility rules to enable and in some cases require utilities to address health and safety problems for LMI customers and/or (2) provide flexible funds that can be used to address health and safety and can be braided with energy funds. Legislation can direct such funds through utilities, community-based organizations, local governments or other program administrators. (See Weatherization in this toolkit.)
- Determine whether new technologies should be eligible for financing.
- Determine whether some technologies have reached market parity or saturation and incentives can be reduced.
- Determine whether technology-specific incentives, such as for solar photovoltaics, can be practically replaced with technology neutral incentives (any technology that reduces load or emissions according to a standard). The Inflation Reduction Act, for example, will provide investment tax credits that are emissions-based, technology-neutral credits available to any power generation that’s net zero.8
- Determine if adjustments are needed in the incentive structure to achieve desired results.
- Ensure existing incentives and programs provide enough long-term stability and predictability to provide market and consumer confidence.
- Assess market transformation opportunities — ways that policies might permanently change the economics and business practices such that market actors will continue to invest in efficiency and electrification even if programs and incentives sunset.
Table 1 provides an overview of current policies and their purpose and target audience.9
Table 1. Summary of finance policy landscape
Financing policy tools
Policy objective
Policy description
Target audience
Instant rebate or incentive upon sale
Decrease upfront cost
Financial incentive at the point of transaction to help overcome higher upfront costs
Upstream and midstream subsidies
Decrease upfront cost and enhance product availability
Payments to retailers, distributors, manufacturers, contractors or homebuilders to ensure efficient options are available and promoted by suppliers
State grants
Decrease cost and transform market
State grant programs cover a broad range of activities and may help fund system installation costs, research and development, business and infrastructure development, system demonstration and feasibility studies. Grants can be given alone or leveraged by requiring recipients to match the grant.
Mail-in rebates
Decrease cost
Financial incentive paid to consumer after documentation of purchase
Tax incentives
Decrease cost
Tax incentives can be used to reduce income, property or sales tax to make certain products and services more attractive. They can be directed to individuals or corporations and can be administered through sales, property, corporate and income taxes. Since smaller proportions of LMI households own property or earn enough to pay income taxes, they tend to benefit less from these incentives.
Revolving loan funds
Provide low-cost financing
Self-supporting programs that use the payments from earlier borrowers to provide loans for new borrowers
On-bill loans
Provide low-cost financing
Allow participants to pay back loans through their regular utility bills. Loans may require credit checks, making it difficult for many LMI households to qualify. More recently, inclusive utility investment has gained favor as a complement or alternative to traditional on-bill repayment.
Inclusive utility investment11
Provide upfront capital accessible regardless of credit scores
Utilities acquire capacity and other grid resources by investing in building improvements, some at little or no cost to the participant. Utilities recover their investment over time through fixed charges on the utility bills, which total less than the sum of estimated energy savings. Investments are tariffed like investment in a substation. They are not loans and require no credit checks.
Property assessed clean energy financing
Provide low-cost financing
Provides building owners upfront cash to make improvements. Payments are secured through a lien on the property, which can be paid off over several years and may be transferred to subsequent property owners.
Market accelerators and green banksgreen bank A financial institution that can leverage public funding to attract private capital for clean energy projects (including energy efficiency, renewable energy and other distributed energy resources) and other “green” investments.
Decrease cost and provide low-cost financing
Market accelerators and green banks are a coordinated umbrella framework offering many of the financial mechanisms in this table. Green banks rely on a mix of public and private capital. They are potentially eligible to apply to the U.S. Environmental Protection Agency for lending capital from a new $27 billion pool created by the IRA. 13
Community development financial institutions and credit unions
Decrease cost and provide low-cost financing
Community development financial institutions and credit unions are nonprofit lenders that often have deep ties to their local communities and are more flexible and holistic in underwriting loans, meaning they are more likely to greenlight loans to LMI customers and small businesses that serve them. These lenders can offer many of the financial mechanisms in this table and are potentially eligible to apply to the U.S. Environmental Protection Agency for lending capital from a new $27 billion pool created by the IRA. 13
Information sources: U.S. Environmental Protection Agency. (2015). Chapter 3. Funding and Financial Incentive Policies. EPA Energy and Environment Guide to Action; and McEwen, B., & Miller, J. (n.d.). Local Governments’ Role in Energy Project Financing: A Guide to Financing Tools for the Commercial Real Estate Sector
The following descriptions provide more information on the policies in Table 1 and considerations on the best application for the policies. States can employ some, many or all of these policies to provide the optimum support to beneficial building improvements. Careful analysis of population segments reached by the financial policies in place in a state will be critical. Some, such as direct financial incentives, inclusive utility investment, certain green banks and community development financial institutions, could provide needed financial support to LMI individuals, municipal governments and corporations. Making these types of policies available is critical, when more than half of U.S. households are either renters or not qualified for consumer credit criteria linked to loans, rendering them ineligible for many subsidized energy efficiency loan programs.14
Other policies, such as upstream and midstream subsidies, grants and revolving loan funds, are more appropriate for government and commercial applications. And yet others, such as loans, commercial property assessed clean energy (C-PACE) financing, tax incentives and mail-in rebates, may work for most individuals but not low-income populations. Like any policy, state financial policies should be frequently reviewed and optimized to maximize public benefit.
Policies Providing Point-of-Sale Direct Financial Assistance
Direct assistance refers to direct point-of-sale incentives15 to households to help decrease the typically higher upfront costs of energy-efficient and electrified end uses and renewable energy options. Federal WAP funding, the Low Income Home Energy Assistance Program and state policies to bolster these programs are also direct financial assistance and are covered in more detail in the Weatherization and Home Retrofit part of this toolkit.
Point-of-sale incentives can be structured to apply at the point of purchase to immediately decrease the cost. They are usually used to offset the initial purchase cost of a renewable energy system or energy efficiency or electrification technology. For example, several states have employed programs that offer incentives to help reduce the upfront costs of on-site solar photovoltaic systems.16 Incentives are frequently used to encourage the purchase of energy-efficient appliances and electrified end uses such as heat pumps or hot water heaters as well. Midstream and upstream incentives are cash incentives targeted to retailers, distributors, manufacturers, contractors or homebuilders to ensure efficient options are available and promoted by suppliers. Suppliers can use the incentive to offer a lower price to consumers.7
The structure of the incentive, to take effect at the point of purchase, has significant impact on consumer uptake. To be most effective, this assistance needs to be available to households at the point of transaction, meaning that it needs to result in immediate cost reductions from the retailer, distributor or contractor “off the top.” As Rewiring America and the Coalition for Clean Capital have noted, asking households — particularly LMI households — to pay out of pocket and take a leap of faith that they will get money back later on, such as through a mail-in rebate, is a surefire way to ensure there is little policy uptake and dampen participation in the program.17 Many others may likewise forgo the more efficient option based upon purchase price because they lack the needed cash, are unaware of the rebate or are unwilling to deal with the perceived hassle of getting the rebate.
State grant programs, which may also be structured as a point-of-sale incentive, cover a broad range of activities and may help fund system installation costs, research and development, business and infrastructure development, system demonstration and feasibility studies. Grants can be given alone or leveraged by requiring recipients to match the grant. Grants can also be bundled with other incentives, such as low-interest loans.7
Policies That Decrease Cost Over Time
Other policies provide a credit that takes effect later, such as through tax incentives or mail-in rebates. The purpose of these policies is still to decrease costs to make energy-efficient, electrified and renewable energy options more accessible to people, but the structure of the incentive will affect which sectors of the public are able to utilize and benefit from them.
Tax incentives can be used to reduce income, property or sales tax burdens, thus reducing the ultimate effective cost of investments in energy efficiency, electrified end uses and renewable energy systems. The most common types of state tax incentives are credits on personal or corporate income tax and exemptions from sales tax, excise tax and property tax.7
The structure of tax incentives will limit applicability for some people. Unlike direct financial assistance (policies such as incentives, grants and direct installation), tax incentives require the purchaser to pay the entire cost up front, file their taxes and then wait to receive the incentive. Additionally, tax-exempt sectors (i.e., municipal, education and nonprofit) cannot benefit from these incentives because they pay no income or sales taxes. Some people, such as retirees, may not pay income tax and may not be able to benefit from income tax incentives. People with low and moderate incomes also may not benefit from a tax incentive, either because the payback takes too long to be feasible, they pay little or no income tax, or they do not file tax returns.18 Careful consideration should be given to ensuring that population segments that cannot benefit from a tax incentive have access to other financing mechanisms; the most equitable outcome will often be to rely exclusively on other financing mechanisms rather than utilizing tax incentives.
Rebates, commonly utilized as mail-in rebates, are another policy financing tool that reduces costs over a slightly shorter time frame than tax incentives but still longer than point-of-sale incentives. Federal legislation could provide a boost to rebate programs. For instance, the Inflation Reduction Act will provide $4.5 billion for the HOMES program, which is a rebate program that awards grants to state energy offices. Under the program, states must provide rebates to homeowners and aggregators for certain whole-house energy saving retrofits made for LMI households.13 Other federal funds may provide rebates to other programs.
Some states fund rebates themselves. In many states, ratepayers fund rebates and utilities administer them with oversight from public utility commissions. In some states, both a state agency or quasi-public agency and utilities administer incentive and rebate programs. In most cases, utility bill charges are collected as a line item that is separate from other utility charges. In a few states, utilities fund programs directly under commission directives.7
As with incentives, the timing of rebates may impact uptake among different population segments. Rebates that require proof of purchase, such as common mail-in rebates, generally provide quicker payback than tax incentives. However, the time lag is typically still too long for LMI participants to realistically utilize mail-in rebates. Often a rebate will take longer than a credit card billing cycle. Research indicates that many rebates require additional manual paperwork that leaves a customer waiting weeks or months for their check — often discouraging customers from making the energy-efficient purchase in the first place.19
Many Americans make bigger purchases on credit using a credit card. However, as of 2019, almost 30% of the population didn’t use or have access to a credit card. According to federal data, low-income, less-educated, Black, Hispanic, American Indian or Alaska Native households and working-age disabled households were less likely to use bank credit.20 This means that 30% of the population will likely not be able to afford more efficient and electrified appliances unless the cost is directly decreased at the point of sale.
Policies That Provide Low-Cost Financing
Other financing policies seek to provide low-cost financing to help people afford investments in energy efficiency, electrification and renewable energy systems. Loans and financing programs provide a source of funding for those upfront costs, usually at favorable interest rates or loan terms. Oftentimes, these loan programs will fund activities or programs that otherwise might not be eligible for loans from traditional sources.21 The following loans and financing programs are a few methods to address potential financing and cost barriers.
State Revolving Loan Funds
States or local governments can provide pools of capital from which loans can be made for electrification, clean energy and energy efficiency projects. These funds are “revolving” because, as loans are repaid, the capital is then reloaned for another project. Some states have used these funds to upgrade state buildings. Others give residents access to the loans as well. Government-sponsored funds typically offer lower interest rates or more flexible terms than are available in commercial capital markets. These programs often focus on financing the cost of efficiency upgrades, such as appliances, lighting, insulation, and heating and cooling systems. More than 30 states have established revolving loan funds for energy efficiency and renewable energy improvements.22 According to the Department of Energy, these established programs could be expanded to include electrification. Experience indicates that revolving loan funds are an effective tool for improvements in the $2,000 to $10,000 range that are too expensive for a cash or credit purchase but not large enough to justify a second mortgage or new home equity line.23
On-Bill Loans
On-bill loans provide a mechanism whereby a utility or third-party financier loans money to customers to invest in energy-saving improvements and equipment, and the loan is paid back on the customer’s utility bill. Table 2 describes the two main types of these loan programs: on-bill loans (utility financed) and on-bill repayment (third-party financed).24
Table 2. On-bill program types
| On-bill loans | • Collected through consumer bills as a loan: Investment is paid for in the form of a loan from the utility to the property owner. In this model, the utility is the capital provider and underwriter of the loan to the customer. • May have more flexibility than most loans: This model allows the utility more flexibility in determining the creditworthiness of the customer. Typically, the utility will base creditworthiness on bill payment history to the utility. This allows broader accessibility to capital to low- and moderate-income customers who have less access to credit through traditional lenders. • May be accessible to renters: Utilities have the discretion to expand customer eligibility to include renters and allow the debt to be transferred with the sale of the property. • Success depends on an engaged, proactive, motivated utility, which requires utilities to think beyond their traditional business model. Legislation and commission regulation can be structured to help motivate utilities. |
| On-bill repayment | • Collected through consumer bills as a traditional loan: Capital is provided by a third-party lender that provides underwriting services and qualifies the property owners based on traditional underwriting criteria. In this model, the utility serves primarily as a marketing and payment collection partner, marketing the loan to its customers and collecting the debt via its bill payment system and forwarding it to the bank. • Tied to owner: These are traditional loans, which tie the debt obligation to the property owner and are not transferable with the sale of the property. • Success depends on an engaged, proactive, motivated utility, which requires utilities to think beyond their traditional business model. Legislation and commission regulation can be structured to help motivate utilities. |
Information source: Southeast Energy Efficiency Alliance. (2022). On-Bill Finance
Depending on the type of program, on-bill loan programs may be beneficial for property owners and sometimes renters who can’t cover the one-time investment in energy efficiency, electrification or renewable energy upgrades or aren’t able to qualify for traditional financing.25 Important consumer safeguards such as disclosure, limits on shut-off authority, performance authority and coordination with existing assistance programs ensures on-bill loans provide the greatest benefit.26 No two on-bill programs are alike: They differ on components such as their underwriting criteria and whether they are loans versus tariffs, transferable, and on or off the balance sheet — all of which should be carefully considered.27
Despite enabling legislation, many utilities have not been interested in using their capital, are concerned about losses or are reluctant to enter what they see as the banking business. Consequently, even successful on-bill loan programs are reaching only 3% of customers.28 According to the American Council for an Energy-Efficient Economy, advancements such as new sources of capital that utilities can use, prepackaged programs that utilities can easily adopt, and the presence of organizations with consumer finance expertise with which utilities can partner are necessary prerequisites to wider adoption of on-bill loan programs.29
Inclusive Utility Investment
Recently, focus has shifted to center on inclusive utility investment, formerly known as on-bill tariffed investment. The original inclusive utility investment model was created by the Energy Efficiency Institute Inc. and trademarked Pay As You Save (PAYS) with the goal of providing a risk-free method for customers to receive and benefit from energy efficiency improvements.30 As of 2021, 20 U.S. utilities in 10 states provide real-world examples of inclusive utility investment programs with robust consumer protections, and those examples are all based on the PAYS system.31
Photo by AllGo on Unsplash
Inclusive utility investment is different from on-bill programs because the investments are not a consumer loan or lease. Further, the investments are inclusive because the utility is assessing the building’s energy savings potential, rather than the owner’s income, liquidity or creditworthiness, to make investment decisions.32 As such, traditional financial or housing tenure barriers to participation are avoided, making building efficiency upgrades that produce net savings accessible to customers without credit checks, upfront cost or debt obligation.32 An inclusive utility investment program has the following elements:
- Utilities make site-specific investments in building efficiency upgrades on the customer’s side of the meter with site-specific cost recovery.
- The program pays upfront costs for 100% of efficiency upgrades that are estimated to produce immediate net savings.
- Utility cost recovery is achieved through a tariffed charge on the utility bill tied to the location rather than an individual.
- The cost recovery charge is calculated based on an approved tariff that includes installation costs, administrative costs, estimated savings and cash flow for participating customers.
- Successor customers at an upgraded site are notified that the cost recovery charge applies automatically to the bill until the utility’s costs are recovered.30
Although the above elements are similar to on-bill loan programs or third-party financing, inclusive utility investment programs differ from loan programs in that they:
- Do not require consumer credit checks.
- Do not require upfront customer investment, which is optional.
- Tie cost recovery obligations to the utility meter rather than the customer, making the approach an appealing route for more customers including renters, low-income and other underserved customers.
- Are available to customers regardless of income, credit score or rental status.32
The PAYS form of inclusive utility investment is rapidly gaining traction. Between 2019 and 2021, regulators and legislators in Missouri, Georgia, Virginia and Illinois have either ordered or paved the way for utility PAYS programs, with Missouri becoming the first state where every investor-owned utility is making site-specific investment and cost recovery a core part of its essential services.32 Proponents of the PAYS inclusive utility investment programs argue that strong customer protections in the program contribute to its success. To be considered a program based on the Pay As You Save system, the program design must meet PAYS’ essential elements and minimum program requirements, a set of consumer protections and design parameters informed by decades of field testing.32
In addition, a PAYS program operator, EEtility, has developed best practices that complement the model and refine consumer protections. Recent inclusive utility investment programs have incorporated the following consumer protections:33
- Site-specific energy savings estimates to ensure modeled energy savings provide an accurate estimate on which to base the cost recovery charge.
- Positive cash flow to ensure that the cost recovery charge is lower than the estimated energy bill savings on an annual basis.
- Customer choice enabling participants to pay for upgrades in addition to what the estimated savings alone would support.
- Equipment warranties to help ensure that customers realize benefits from the improvements throughout the cost recovery period.
- Site-specific quality verification after installation.
- Monitoring of future energy usage to help ensure consumption is in line with expectations and to identify anomalies.
- Investigation of anomalies and provision of remedies at no cost to the participant.
- Termination of payments if an upgrade fails through no fault of the occupants and is not repaired.
- Avoidance of conflict of interest among trade allies, utility or program operators.
- Notification to subsequent owners and occupants.
Inclusive utility investment success depends on an engaged, proactive, motivated utility, which requires utilities to think beyond their traditional utility business model. Legislation and commission regulation can be structured to help motivate utilities.
Property Assessed Clean Energy Programs
States can authorize PACE programs, which permit property owners to take on a tax assessment for clean energy upgrades that they then pay back through a new line item on their property tax bills. Doing so ties responsibility for repayment of the PACE investment to the building title; it is senior to the mortgage and may not be accelerated. The obligation remains in place after a sale of the building, allowing for a longer payback period, which can encourage owners to greenlight improvements.34 PACE-enabling legislation is active in 37 states plus Washington, D.C., and PACE programs are now active (launched and operating) in 26 states plus Washington.35 The vast majority of PACE programs are C-PACE for commercial properties (23 states).
Residential PACE is currently offered only in California, Florida and Missouri.36 Reports of fraud and abuse by contractors who serve as financing agents with PACE programs and insufficient oversight have led California to enact safeguards to protect consumers against predatory lending,37 but the success of these measures is not yet known.38 In early 2020, the Federal Housing Finance Agency sought public input on potential changes to its policies for its regulated entities (i.e., Fannie Mae and Freddie Mac, as well as the Federal Home Loan Banks) based on safety and soundness concerns, but has not yet taken further action. Critics of residential PACE are calling for comprehensive state and federal regulation that would treat PACE as a mortgage product, in response to an advanced notice of proposed rule-making by the Consumer Financial Protection Bureau.38
Green Banks and Clean Energy Funds
Other policies seek to go beyond individual incentives, rebates, loans or financing options and instead combine many of these in an effort to transform the market for energy-efficient and electrified home technologies. Market transformation is the strategic process of intervening in a market to create lasting change in market behavior by removing identified barriers or exploiting opportunities to accelerate the adoption of specific technologies or behaviors as a matter of standard practice.39 Market transformation is realized by providing direct financial assistance and reducing costs up front and over time. Therefore, under certain circumstances, all policies discussed here may lead to market transformation. Careful policy design can greatly increase the likelihood that market transformation will result.
Energy efficiency is a market transformation success story that is not complete, yet its evolution reveals the meaningful impacts that market transformation strategies can provide to society. Energy Star LED lightbulbs, which can have a lifetime of 25 years, had a retail price of $50 when first introduced but now typically cost less than $5, with prices trending even lower.40 This massive price decrease is due to concerted market transformation efforts that include consumer education, technology advancements and focused attention on energy efficiency improvements.
Energy efficiency and electrified end uses greatly benefit society by reducing energy usage and emissions. But because these technologies face market barriers ranging from small to huge, they merit targeted policy mechanisms to make them easily accessible, understandable and affordable to consumers. Barriers include:41
- Difficulty obtaining funding for a new technology.
- Technology performance uncertainties and risks.
- Limited customer awareness of potential savings.
- Limited customer understanding of and comfort with the new technologies.
- Higher upfront costs and long payback periods.
- Split incentives (i.e., who pays is not always who gains).
To achieve market transformation, policy mechanisms should be targeted to advance technologies and practices that provide greater public benefit but may not otherwise have a competitive advantage. LED and compact fluorescent lightbulbs provide the same service, but LEDs do so with much greater efficiency and longevity. Market transformation investments are necessary to accelerate technology development, bring it to market with sufficient availability, provide education to consumers about why they should choose LEDs over compact fluorescent bulbs, and provide cost parity between the two types. Similarly, the market can be slow to adopt superior practices that lower energy and sometimes labor and other costs. Delayed market acceptance can justify market transformation investments to accelerate adoption. An example of such a superior practice is advanced framing (using 2-by-6-inch studs 24 inches on center, allowing for bigger cavities for insulation).42
Green banks, also known in some states as clean energy accelerators or funds, provide clean energy projects with access to low-cost capital. By blending public, private and philanthropic capital, green banks or accelerators can have a broader reach than funds exclusively capitalized by state agencies. Green banks and clean energy funds can be run by governments or by independent entities in collaboration with governments.
State and local governments have established green banks under a variety of different structures, legislative directives and funding sources. The Connecticut Green Bank, one of the first examples of a green bank in the United States, is capitalized by a surcharge on household electricity rates of $0.001 per kWh, resulting in a cost of about $10 per year per household.43 The Montgomery County Green Bank in Maryland was capitalized by an approximately $14 million grant from the county as part of a local utility merger process. The state of Nevada enacted the Nevada Clean Energy Fund by legislation in 2017, enabling different funding sources for startup and capitalization of the fund, including federal, state and private grants and bonds, as well as foundational support and high-net-worth individuals.44
Community development financial institutions and credit unions are increasingly lending to individuals and businesses to finance investments in efficiency, electrification and renewables. For example, Inclusive Prosperity Capital,45 a not-for-profit investment fund, is scaling energy financing in underinvested neighborhoods and underserved markets. Similarly, The Community Preservation Corporation is on track to manage and finance electrification in 10,000 units of LMI housing in New York. The corporation has published excellent guidance to lenders on how to underwrite efficiency investments and work with borrowers to encourage and aid efficiency investments to the benefit of both the borrower and the lender.46
Combining programs and policies to maximize benefits
Experience shows that combining programs and policies yields the greatest benefits from both. Mandates requiring investment without corresponding financial support don’t achieve their goals; financial incentives not tied to policy mandates will not provide sufficient motivation to realize the full potential of modern, efficient buildings and won’t produce emissions reductions at the pace needed to achieve ambitious climate commitments. Working with multiple jurisdictions, experts and stakeholders, the Institute for Market Transformation has developed a concept that combines elements of on-bill repayment and performance contracting with building performance standards to achieve effective building retrofits at scale.47 The concept assumes that a building performance standard is in place that mandates minimum quantified levels of performance by a broad swath of existing public and private buildings with consequences for noncompliance. It can be applied to all large commercial and multifamily buildings or a prioritized subset such as affordable housing. It consists of the following components:
- A designated entity (a government agency, quasi-governmental agency or contractor) serves as a general contractor and program administrator in charge of providing building owners with everything needed to meet building performance standard The administrator takes on the risks associated with improvements, including the risk of noncompliance with the building performance standard. The entity provides the capital for projects and accepts longer-than-typical paybacks to encourage installation of major heating, ventilation, air conditioning and building envelope improvements and other measures to deliver deep savings.
- Most participants face no upfront costs.
- Energy savings pay for some or all of the program.
- Savings are based on on-site metering and measurement, not deemed or calculated. This ensures achievements are real and makes them a resource that can be sold to investors.
- There is a long-term jurisdictional commitment to address all included buildings over 15 years.
- Implementation occurs in phases (buildings prioritized to front-load maximum savings and cash flow) to maximize the impact of available capital.
Legislative Options
These legislative options provide examples of financial support that fall in the following categories:
- Policies providing point-of-sale direct financial assistance: incentives and grants.
- Policies that decrease cost over time: rebates and tax incentives.
- Policies that provide low-cost financing: revolving loan funds, on-bill loans, inclusive utility investment, C-PACE financing, green banks and clean energy funds.
A regular review of state financing policies can ensure that a state is supporting policies that align with its goals. Review questions could include the following:
- Are the financing policies accessible to all members of the public? Are there some members of the public who previously had difficulty accessing financing who now warrant disproportionate focus of new policies to overcome this gap?
- Do current financing policies support all technologies and practices necessary to advance state goals, including energy efficiency, weatherization, electrified end uses and renewable energy?
- Have some technologies reached parity such that financing policies can be decreased or focused on different segments of society?
- Which policies are working?
- Which policies are not producing desired results and need revision?
- Do financing policy application policies present a barrier to uptake? Can the policy application process be revised to encourage higher utilization?
The following legislative options provide examples of current directions in the types of financing policies discussed above. These examples are not meant to show the full variety of pricing policies available.
Policies Providing Point-of-Sale Direct Financial Assistance
Direct assistance refers to point-of-sale incentives to households to help decrease the typically higher upfront costs of energy-efficient and electrified end uses and renewable energy options. Direct financial incentives are not a new policy, but the options included here provide examples of new approaches states are taking to these incentives. Direct financial incentives are a powerful tool to reach low-income populations and members of overburdened communities. However, if the incentive is not structured or targeted correctly, it may not reach intended recipients. Options 1 and 2 provide examples of different approaches to ensure direct financial assistance incentives reach intended recipients.
The Maryland Climate Solutions Now Act of 202248 created a task force to assess and make recommendations to the governor and legislators on policies and incentives to reduce emissions from the buildings sector. The task force is to make recommendations for a variety of incentives including direct subsidy payments. Importantly, the act requires recommendations for “complementary programs, polices and incentives” to encourage a coordinated effort that can both rely on existing programs and incentives and incorporate new efforts. Additionally, the act requires the establishment of “holistic retrofit” targets for low-income households. Such a requirement can incorporate energy efficiency, weatherization, electrification and renewable energy, as well as any needed structural upgrades.
Option 1 Provision: Establish a Building Energy Transition Implementation Task Force
(a) There is created a building energy transition implementation task force.
(b) The task force shall:
(1) Study and make recommendations regarding the development of complementary programs, policies and incentives aimed at reducing greenhouse gas emissions from the building sector in accordance with this subtitle;
(2) Make recommendations on targeting incentives to electrification projects that would not otherwise result in strong returns on investment for building owners; and
(3) Develop a plan for funding the retrofit of covered buildings to comply with building emissions standards.
(c) The plan developed under this section may include recommendations related to:
(1) The creation of commercial tax credits or direct subsidy payments for building decarbonization projects;
(2) The creation of financial incentives through [state energy office or third-party administrator] and other state programs to support all aspects of the transition to electrified buildings;
(3) The establishment of low-income household holistic retrofit targets and heat pump sales targets; and
(4) The use of options such as on-bill, low-interest financing to spread out the upfront costs associated with electrification retrofit upgrades.
(d) On or before [date], the task force shall report its plan to [governor, relevant officials, legislature, etc.].
Senate Bill 2226 in Massachusetts, which was known as the Building Justice with Jobs Act,49 directs a state agency to create a program that provides housing emissions renovations, primarily focusing on environmental justice populations (front-line or overburdened communities). Although the bill did not pass, it provides guidance to states on targeted financial assistance for overburdened communities. A housing emissions renovation is defined as “improving heat insulation, electrifying the heating system, installing solar panels or other forms of distributed generation, and installing energy efficient appliances.”50 Assistance could also include removing or remediating a preexisting environmental hazard, such as asbestos, lead, vermiculite, animal feces or any other dangerous substances contained in the building, or actions necessary to improve the structural integrity of the building. The bill provides for financial support for these renovations that is graduated based upon whether the building is located within an identified environmental justice population and the median household income. Such direct financial assistance targeted to environmental justice communities and low-income communities prioritizes locations and individuals that need the greatest assistance.
Option 2 Provision: Prioritize Direct Financial Assistance for Overburdened Communities
(a) When providing a housing emissions renovation for a home located within [a front-line community], the [relevant state agency] shall finance the complete cost of:
(1) The housing emissions audit;
(2) [Projects to remediate one or more preexisting environmental hazards if such hazards are present]; and
(3) The housing emissions renovation.
(b) When providing a housing emissions renovation for a home that is not located within [a front-line community] but is located within a census tract with a median household income that is lower than the statewide median household income, the [relevant state agency] shall:
(1) Pay the entire cost of the housing emissions audit;
(2) Pay the entire cost of [projects to remediate one or more preexisting environmental hazards if such hazards are present]; and
(3) Offer a financial subsidy for half of the cost of the housing emissions renovation, and offer a 10-year, zero-interest loan sufficient to finance half of the cost of the housing emissions renovation.
(c) When providing a housing emissions renovation for a home that is owned or leased by a household with [exactly one member who has a cumulative gross adjusted household income that is below 40%][exactly two members who have a cumulative gross adjusted household income that is below 60%][three or more members who have a cumulative gross adjusted household income that is below 70%]51 of the statewide median household income, the [relevant state agency] shall finance the complete cost of:
(1) The housing emissions audit;
(2) All environmental hazard remediation projects if there are one or more preexisting environmental hazards; and
(3) The housing emissions renovation.
(d) The [relevant state agency] may offer additional financial incentives and subsidies for housing emissions audits, environmental hazard remediation projects and housing emissions renovations, when appropriate.
Policies That Decrease Cost Over Time
Policies that decrease cost over time include longer-term rebates and grants. Option 3 below provides an example of state grants. Examples of rebates are not included here, because all 50 states have an existing rebate program of some type.52 States may need to update existing rebate programs to implement the Inflation Reduction Act, which will grant nearly $9 billion to state energy offices to fund HOMES and HEEHRA rebate programs. HEEHRA rebates will be for high-efficiency electric home upgrades; HOMES rebates for low- and moderate-income homeowners and aggregators will be based on meeting whole-house energy savings benchmarks.13
Some states set up grant funding for building efficiency and electrification. Grants can decrease the cost of the improvement. They generally do not act as immediate direct financial assistance and generally are not targeted to individuals.
This option is based on Connecticut S.B. 356, which established an energy efficiency retrofit grant program for affordable housing units.53 The legislation directs usage of federal monies or other funds utilized by the state for energy efficiency upgrades specifically for affordable housing units. Additions to this option could allow for upgrades to other low-income housing and could also fund electrification upgrades.
Option 3 Provision: Funding for Weatherization and Electrification
(a) No later than [date], the [lead state agency] shall, using available federal or other funds, establish an energy efficiency and electrification retrofit grant program. The [state agency or department] may receive funds from the federal government, corporations, associations or individuals to fund the grant program.
(1) Such a program shall award grants to fund the installation of energy-efficient upgrades to:
(A) Affordable housing including, but not limited to, property of a housing authority; or
(B) Other dwelling units owned by a landlord at the discretion of the [agency or commissioner].
(2) Such upgrades shall include energy efficiency and weatherization measures and may include, but need not be limited to, the installation of rooftop solar photovoltaic panels, energy storage systems located on the customer’s premises, electric vehicle charging infrastructure, heat pumps and balanced ventilation, and the mitigation of health and safety hazards including, but not limited to, gas leaks, mold, vermiculite and asbestos, lead and radon, to the extent such hazards impede the installation of energy efficiency upgrades and weatherization measures.
(b) The [lead state agency] shall develop standards for the energy efficiency retrofit grant program. The [lead state agency] may consult with other state agencies, quasi-public agencies and housing authorities and shall consider [state energy performance standards or other standards] in establishing the standards for the grant program. The [lead state agency] may coordinate with other state agencies, quasi-public agencies and housing authorities to implement the grant program in conjunction with other existing state programs that have the purpose of installing or otherwise assisting state residents to obtain the upgrades set forth in subsection (a) of this section. The [lead state agency] may retain consultants with expertise in energy efficiency retrofit programs, home electrification programs, distributed energy programs or all of the above for assistance with its development or administration of the grant program.
(c) A grant applicant shall submit an application to the [lead state agency] on forms prescribed by the commissioner, which shall include, but not be limited to:
(1) Description of the proposed project;
(2) An explanation of the expected benefits of the project in relation to the purposes of this section;
(3) Information concerning the financial and technical capacity of the applicant to undertake the proposed project;
(4) A project budget; and
(5) Any other information deemed necessary by the commissioner.
(d) The commissioner shall prioritize grants to applicants who:
(1) Use the services of local contractors who pay the prevailing wage and who make good faith efforts to hire, or cause to be hired, available and qualified minority business enterprises; and
(2) Upgrade affordable housing or dwelling units for households that include an individual who qualifies for utility financial hardship programs or who receives means-tested assistance administered by the state or federal government.
(e) Not later than [date], and annually thereafter, the commissioner of [lead state agency] shall submit a report to the [governor or relevant legislative agency having cognizance of matters relating to energy and technology and housing]. Such report shall include the standards developed pursuant to subsection (b) of this section, an analysis of the scope of residences able to be served by the grant program and proposed goals for the annual percentage of affordable housing units that can be served by the program.
Policies That Provide Low-Cost Financing
Policies that provide low-cost financing help people afford investments in energy efficiency, electrification and renewable energy systems. These policies include tariffed options that do not require credit checks and that apply to the property, not the person. They also include special loans and financing programs that provide a source of funding for upfront costs, usually at favorable interest rates or loan terms. Oftentimes, these loan programs will fund activities or programs that otherwise might not be eligible for loans from traditional sources.54 Green banks and clean energy funds, sometimes referred to as market transformation policies,” provide a variety of these low-cost financing options as well.
State Revolving Loan Funds
States can provide pools of capital from which loans can be made for electrification, clean energy and energy efficiency projects. These funds are “revolving” because as loans are repaid, the capital is then reloaned for another project.
This option is based on California A.B. 78, which was adopted in 2020 to create the California Climate Catalyst Revolving Loan Fund.55 This act creates a bank to provide capital to deploy technologies, innovations and infrastructure that addresses critical climate goals yet faces demonstrated financing gaps. Inventors of new technologies can face difficulty getting financing for projects because there is often lack of familiarity due to limited data, a misperception of the risk of these projects and an unwillingness to fund projects in underserved areas of the state. The newly created bank is charged to pursue capitalization from governmental entities other than the state and from private sources. The act also stipulates that the bank may work in concert with other elements of California’s climate programs by providing low-interest financing for a portfolio of projects across California’s climate agenda and by focusing on areas not well served by grant, bond or other loan programs. Eligible Climate Catalyst Revolving Loan Fund Program participants include governmental, private and tribal entities. Optional additions to this type of legislation could focus on specific technologies (electrification, renewables, energy efficiency, storage) on specific areas in the state (overburdened communities) or providing grants to specific entities (local or tribal governments).
Option 4 Provision: Statewide Revolving Loan Fund to Public and Businesses
(a) This chapter shall be known, and may be cited, as the [name] Revolving Loan Fund Program.
(1) The bank established under this chapter shall administer the [name] Revolving Loan Fund Program to provide financial assistance for [energy efficiency, renewable energy, clean energy and electrification] projects, as defined herein.
(2) Financial assistance for [list] projects through the [name] Revolving Loan Fund Program shall be provided at low-interest rates and at low cost as determined by the bank to support the projects directly and to attract additional third-party capital.
(b) “Climate catalyst projects” means any building, structure, equipment, infrastructure or other improvement within [state], or financing the general needs of any sponsor or participating party for operations or activities within [state] that are consistent with and intended to further [state’s] climate goals, [including electrification, weatherization and energy efficiency], [activities that improve quality of buildings and health of building occupants in low-income and highly impacted communities], activities that reduce risks associated with climate change, and the implementation of low-carbon technology and infrastructure.
(c) Authorization
(1) The bank is hereby authorized and empowered to provide financial assistance under the [name] Revolving Loan Fund Program to any eligible sponsor or participating party either directly or to a lending or financial institution, in connection with the financing or refinancing of an [energy efficiency, renewable energy, clean energy, electrification, health and safety] project, in accordance with an agreement or agreements between the bank and the sponsor or participating party, including, but not limited to, tribes, either as a sole lender or in participation or syndication with other lenders.
(2) Repayments of financing made under the [name] Revolving Loan Fund Program shall be deposited in the appropriate account created within the [name] Revolving Loan Fund Program.
(3) The [relevant state council or agency], in consultation with the [labor and workforce development agency] and [public utility commission] and [state energy office or energy agency or both], shall advise the legislature prior to the end of each calendar year, commencing with [year], of potential categories of [energy efficiency, renewable energy, clean energy and electrification] projects that would focus on the state’s key [climate mitigation][clean energy][cost-effective energy][leader in clean energy][health and safety] and [resilience] priorities. The [relevant state agency or council] recommendations may include indicative percentages of investment allocations across identified priority sectors. [Percentages of investment of all project categories shall be no less than [x%] for low-income and underserved communities.] The [relevant state agency or council] shall inform the bank of the advice provided to the legislature.
(d) Annual report
(1) Annually, commencing [date], and no later than [month/day] of each year, the bank shall prepare and submit to the [relevant state agency or council], the governor, the [speaker of the state house of representatives or assembly][president of the state Senate] a report containing [name] Revolving Loan Fund Program activity for the preceding fiscal year ending [month/day] and including all of the following:
(A) Information on individual [name] Revolving Loan Fund Program financing, specifically all of the following:
(i) Project categories;
(ii) Project descriptions;
(iii) Financial assistance amounts;
(iv) Outstanding financial assistance amount due;
(v) County and city of the funded projects;
(vi) A description of the expected contribution of the project to the state’s [climate][energy] policy objectives, including [greenhouse gas reduction][customer savings] and [climate resilience][economic] benefits;
(vii) Type and quality of any jobs created as a result of the financial assistance; [including:]
(I) [Number of minority workers employed as a result of the financial assistance;]
(II) [A description of the methods to overcome barriers to hiring, such as educational attainment; criminal records; disabilities; wealth inequalities; and age, racial and gender biases among employers];
(viii) Total number and type of financial assistance issued to small businesses, including woman-owned, minority-owned and disabled-veteran-owned businesses, which shall comprise [x%] of total assistance awarded; and
(ix) Total number and types of applications received.
(B) Recommendations on needed [name] Revolving Loan Fund Program changes or improvements to meet the objectives of this article. The bank shall meet and confer with the [relevant state agency or council] prior to the annual submission of the report required herein in an effort to develop those recommendations.
(2) The report shall be posted on the bank’s internet website.
(3) The report shall be presented to the [relevant state agency or council] at its final public meeting of the calendar year in which the report was prepared. If the [relevant state agency or council] holds no public meetings following the submission of the report, the report shall be presented to the [relevant state agency or council] at its next available public meeting.
(e) Creation of fund
(1) There is hereby created in the state treasury the [name] Revolving Loan Fund for the purpose of implementing the objectives and provisions of this article. Moneys deposited into the fund shall be limited only to receipt of funds from private entities and governmental entities other than the state. The [name] Revolving Loan Fund shall be separate from any other fund or account created under this division.
(2) Obligations of the bank incurred in connection with the activities authorized under this article shall be payable solely from moneys within the [name] Revolving Loan Fund. No other fund or account of the bank shall be available or shall be used for the payment of obligations incurred in connection with this article.
(3) Within the [name] Revolving Loan Fund there shall also be established a revolving loan account, a guarantee and credit enhancement account, a securities acquisition account and additional accounts and subaccounts that the bank may establish.
(4) All moneys in the [name] Revolving Loan Fund are available for expenditure, including for the bank’s general administration of the activities authorized by this article, upon appropriation by the legislature.
(5) This subdivision shall not limit the authority of the bank to expend funds directly related to the servicing of approved debt, payments on credit enhancements or guarantees, acquisition of securities of any sponsor or participating party in connection with a project, or any other purpose in connection with providing financial assistance to a sponsor or participating party in connection with a project as set forth in this article.
(6) Not more than [5%][x%] of any bond proceeds administered by the bank in connection with the activities of the bank authorized under this article may be expended to cover the costs of issuance, as that terminology is defined under Section 147(g) of the Internal Revenue Code (26 U.S.C. Sec. 147(g)).
(f) Approved bank actions
(1) The bank may pledge any or all of the moneys in the [name] Revolving Loan Fund as security for payment of the principal of, and interest on, any particular issuance of bonds issued for the purposes of this article. The bank may use any or all of the money in the [name] Revolving Loan Fund to retain, or purchase for retention or sale, subordinated bonds issued by the bank, by a special purpose trust or by a sponsor, all in connection with the purposes of this article. For these purposes, the bank may divide the fund into separate accounts or may divide the accounts created under this article into separate subaccounts.
(2) All money accrued from the [name] Revolving Loan Fund and its accounts and subaccounts, the proceeds of financial assistance provided to a sponsor or participating party, the investment of any moneys within the [name] Revolving Loan Fund, or any other moneys generated in connection with the activities authorized under this article shall be deposited in the fund.
(3) Subject to liens, covenants against encumbrances, negative covenants, priorities and other exclusions or reservations that may be created by the pledge of particular moneys in the [name] Revolving Loan Fund to secure any issuance of revenue bonds of the bank, a special purpose trust, or a sponsor, in each instance in connection with the purposes of this article, and subject further to reasonable costs that may be incurred by the bank in administering the [name] Revolving Loan Fund Program, all moneys in the [name] Revolving Loan Fund derived from any source, shall be held in trust for the security and payment of revenue bonds of the bank, a special purpose trust or a sponsor, in each instance in connection with the purposes of this article, and shall not be used or pledged for any other purpose so long as the revenue bonds are outstanding and unpaid.
(4) Pursuant to any agreements with the holders of revenue bonds issued for the purposes of this article pledging any particular assets, revenues or moneys of the [name] Revolving Loan Fund, the bank may create separate accounts or subaccounts in the [name] Revolving Loan Fund to manage these assets, revenues or moneys in the manner set forth in the agreements.
(5) Investment and interest
(A) The bank may direct the treasurer to invest moneys in the [name] Revolving Loan Fund that are not required for its current needs, including proceeds from the sale of any bonds, in any eligible securities as the bank shall designate.
(B) The bank may direct the treasurer to deposit moneys in interest-bearing accounts in any bank in this state or in any savings and loan association in this state.
(C) Notwithstanding any other directions herein, all interest or other increment resulting from the investment or deposit of moneys from the [name] Revolving Loan Fund shall be deposited in the [name] Revolving Loan Fund. Moneys in the [name] Revolving Loan Fund shall not be subject to transfer to any other funds.
(D) Notwithstanding any contrary provision in this article, moneys in the [name] Revolving Loan Fund may be deposited in accounts held by a trustee bank or other financial institution in connection with the issuance of any revenue bonds for the purposes of this article.
(6) Subject to any agreement with holders of particular bonds, and to the extent permitted by law, the bank may also invest moneys of the [name] Revolving Loan Fund, including, but not limited to, proceeds of any of its bonds or refunding bonds, in obligations of financial institutions as are permitted by board resolution.
(7) Subject to any agreement with the holders of particular bonds, all interest or other increment resulting from the investment or deposit shall be deposited in the [name] Revolving Loan Fund.
(8) The [name] Revolving Loan Fund shall be organized as a public enterprise fund.
(9) The bank shall cause all moneys in the [name] Revolving Loan Fund that are in excess of current requirements to be invested and reinvested, from time to time.
(g) Administration
(1) The bank may administer and distribute among the accounts and subaccounts created under this article, at its discretion, the proceeds from any general obligation bonds issued in accordance with [state law on bonds].
(2) The assets of the [name] Revolving Loan Fund shall be available for the payment of the salaries and other expenses incurred by the bank in connection with the administration of this article, all in accordance with this article.
(h) Miscellaneous
(1) All costs, liabilities, obligations and expenses incurred in carrying out the purposes of this article shall be payable solely from funds provided for the purposes of this article, and no liability, cost, expense or obligation shall be imposed upon the state or the bank beyond the extent to which money shall have been provided solely for the purposes of the bank’s activities authorized under this article.
(2) Moneys in the [name] Revolving Loan Fund received from the proceeds of bonds issued pursuant to this division may not be transferred to any other fund except as necessary to pay the expenses of operating the [name] Revolving Loan Fund Program.
(3) The bank, for deposit in the [name] Revolving Loan Fund for use as set forth in this article, may borrow or receive moneys from other funds within the bank, as permitted by this division, or from any federal, state or local agency, or any private entity, for the purposes of this article and as authorized by resolution of the board.
(4) Expenditures of the [name] Revolving Loan Fund shall not be subject to the supervision or approval of any other officer or division of state government, with the exception of the legislature. However, the bank’s budget for the activities authorized in this article shall be prepared and reviewed not later than [month/day] of each year.
(5) The bank’s budget regarding the [name] Revolving Loan Fund shall include the amount of credit and liabilities of the fund, based on an audit of the fund at the close of the prior fiscal year. The bank’s operating budget in connection with the activities authorized under this article shall be subject to review and appropriation in the annual [state budget].
Leveraging revolving loan funds within C-PACE
Many of the financing options presented in this part of the toolkit can and have been combined to provide innovative solutions. Commercial PACE provides financing for clean energy projects, but investors and administrators are usually drawn to bigger projects because they provide greater returns and lower transaction costs. This can prove a barrier for smaller businesses interested in smaller retrofit projects. But innovative approaches using revolving loan funds can help. In Minnesota, the C-PACE administrator utilizes a dedicated tranche of funding through its revolving loan fund to lend to smaller businesses interested in leveraging C-PACE financing for retrofits.56 Utilizing this separate funding stream from the revolving loan fund ensures there is capital available for smaller projects at reasonable rates while allowing the private sector to purchase the loans and associated revenue streams on the secondary market.57 This in turn frees up capital for additional lending. The effect is to allow small businesses to acquire capital quickly and at lower rates, making C-PACE a more attractive financing option for those businesses. Consequently, over the past 10 years, MinnPACE has funded close to 350 projects, of which approximately 250 were smaller projects under $250,000 and one-third were organizations led by women or minorities.58
This example from Minnesota state statute59 utilizes a revolving loan fund to focus on energy conservation for state agency buildings. It is a much narrower focus than which utilizes funds more generally within the state for public or private interests. This option may be a good first step for states wanting to become familiar with the mechanics of a revolving loan fund prior to expanding access to other public and private entities. It may also help the state to prioritize upgrades among state buildings.60 The LoanSTAR Revolving Loan Fund in Texas takes this focus on public buildings a step further by providing financing for energy-related retrofits on facilities supported by the state, including public school districts, public colleges and universities, as well as units of local government such as counties, cities, towns and public hospitals.61
Option 5 Provision: Revolving Loan Fund for State Agencies
(a) Account established. The state building energy conservation improvement revolving loan account is established as a separate account in the state treasury. The commissioner shall manage the account and shall credit to the account investment income, repayments of principal and interest, and any other earnings arising from assets of the account. Money in the account is appropriated to the commissioner of administration to make loans to state agencies to implement energy conservation and energy efficiency improvements in state buildings.
(b) Committee. The State Building Energy Conservation Improvement Loan Committee consists of the commissioners of [relevant state agencies, including administration, management and budget and commerce]. The [lead of relevant state agency] serves as chair of the committee. The members serve without compensation or reimbursement for expenses.
(c) Award and terms of loans
(1) An agency shall apply for a loan on a form developed by the [relevant state agency] that requires an applicant to submit the following information:
(A) A description of the proposed project, including existing equipment, structural elements, operating characteristics and other conditions affecting energy use that the energy conservation improvements financed by the loan modify or replace;
(B) The total estimated project cost and the loan amount sought;
(C) A detailed project budget;
(D) Projections of the proposed project’s expected energy and monetary savings;
(E) Information demonstrating the agency’s ability to repay the loan;
(F) A description of the energy conservation programs offered by the utility providing service to the state building from which the applicant seeks additional funding for the project; and
(G) Any additional information requested by the commissioner.
(2) The committee shall review applications for loans and shall award a loan based upon criteria adopted by the committee. A loan made under this section must:
(A) Be at or below the market rate of interest, including a zero-interest loan; and
(B) Have a term no longer than seven years.
(3) In making awards, the committee shall give preference to:
(A) Applicants that have sought funding for the project through energy conservation projects offered by the utility serving the state building that is the subject of the application; and
(B) To the extent feasible, applications for state buildings located within the electric retail service area of the utility.
(4) Repayment. An agency receiving a loan under this section shall repay the loan according to the terms of the loan agreement. The principal and interest must be paid to the [relevant state agency], who shall deposit it in the state building energy conservation improvement revolving loan account. Payments of loan principal and interest must begin no later than one year after the project is completed.
Inclusive Utility Investment
Inclusive utility investments are investments in energy efficiency and electrification upgrades at a customer premises that are recovered through monthly tariffed charges on the customers’ bill. This investment is not a consumer loan or lease, which makes this policy available to the U.S. households that are either renters or that do not qualify for consumer credit criteria linked to loans, rendering them ineligible for subsidized energy efficiency loan programs.32 These investments are inclusive because the utility assesses the energy savings potential of the building, rather than the owner’s income, liquidity or creditworthiness, to make investment decisions. Traditional financial barriers to participation are avoided, making building efficiency upgrades that produce net savings accessible to all customers without credit checks, upfront cost or debt obligation.
This option is based on Section 16-111.10 of the Climate and Equitable Jobs Act in Illinois62 and is known as the Equitable Energy Upgrade Program. Bracketed additions to the language indicate key improvements and upgrades that the workshop process to implement the legislation identified, or alternative legislative language that states may consider.63 It is included here because the legislation specifies that the program be modeled on and consistent with the PAYS essential elements and minimum program requirements, which provide a set of robust consumer protections. It also includes some additional provisions that are unique, such as requiring that upgrades provide significant immediate net savings.
Option 6 Provision: Equitable Energy Upgrade Program
(a) The general assembly finds and declares that [state] homes and businesses can contribute to the creation of a clean energy economy, conservation of natural resources and reliability of the electricity grid through the installation of cost-effective renewable energy generation, energy efficiency and demand response equipment and energy storage systems. Further, a large portion of [state] residents and businesses that would benefit from the installation of energy efficiency, [electrification], storage and renewable energy generation systems are unable to purchase systems due to capital or credit barriers. This state should pursue options to enable many more [state] residents to access the health, environmental and financial benefits of new clean energy technology.
(b) As used in this section:
(1) “Commission” means the [state commerce commission].
(2) “Energy project” means renewable energy generation systems, including solar projects, energy efficiency upgrades, decarbonization measures, energy storage systems, demand response equipment or any combination thereof.
(3) “Fund” means the [state clean energy jobs and justice fund] established in the [relevant state statute].
(4) “Program” means the Equitable Energy Upgrade Program established under subsection (c).
(5) “Program operator” means a third-party organization retained by the utility to oversee operation and implementation of the program.
(6) “Utility” means electric public utilities providing services to [500,000][number] or more customers under this act.
(7) “Other regulated utilities” means entities regulated by the commission including gas and water utilities.
(c) The commission shall open an investigation into and direct all electric public utilities in this state to adopt an Equitable Energy Upgrade Program that permits customers to finance the construction of energy projects through an optional tariff payable directly through their utility bill, [modeled after the Pay As You Save essential elements and minimum program requirements and consistent with the essential consumer protections listed on the U.S. Environmental Protection Agency’s inclusive utility investment website at the time of program design].64 The program model shall enable utilities to offer to make investments in energy projects to customer properties with low-cost capital and use an opt-in tariff to recover the costs. The program shall be designed to provide customers with annual financial savings if they choose to participate. The program shall allow residential electric utility customers that own the property, or renters that have permission of the property owner, for which they subscribe to a utility service to agree to the installation of an energy project. The program shall ensure:
(1) Eligible projects do not require upfront payments; however, customers may pay down the costs for projects with a payment to the installing contractor in order to qualify projects that would otherwise require upfront payments;
(2) Eligible projects have sufficient estimated energy savings and estimated life span that produce annual net energy cost savings;
(3) Participants shall agree the utility can recover its costs for the projects at their location by paying for the project through an optional tariff directly through the participants’ electricity bill, allowing participants to benefit from installation of energy projects without traditional loans;
(4) [A program participant’s first-year tariff charges cannot exceed 90% of the participant’s estimated first-year cost savings under utility rates in place at the time of installation. The term of cost recovery shall be no more than 90% of the estimated life span of the installed upgrade. The commission may set the percentages for tariff charges and term at a lower number if the commission determines that percentage is more beneficial for [state] residents. The commission may set different percentages for different types of energy upgrade technologies;]
(5) The program is accessible to lower-income residents and environmental justice community residents; and
(6) The utility ensures that customers who are interested in participating are notified that if they are income qualified, they may also be eligible for the percentage of income payment plan program and free energy improvements through other programs and provide contact information.
(d) The commission shall establish program guidelines with the anticipated schedule of program availability as follows:65
(1) Year 1: Beginning in the first year of operation, each utility with greater than 100,000 retail customers is required to obtain low-cost capital of at least $20 million annually for investments in energy projects.
(2) Year 2: Beginning in the second year of operation, each utility with greater than 100,000 retail customers is required to obtain low-cost capital for investments in energy projects of at least $40 million annually.
(3) Year 3: Beginning in the third year of operation, each utility with greater than 100,000 retail customers is required to obtain low-cost capital for investments in as many systems as customers demand, subject to available capital provided by the utility, state or other lenders.
(e) In the design of the program, the commission shall:
(1) Within 270 days after the effective date of [act] convene a workshop during which interested participants may discuss issues and submit comments related to the program.
(2) Establish program guidelines for implementation of the program in accordance with the Pay As You Save essential elements and minimum program requirements that electric utilities must abide by when implementing the program. Program guidelines established by the commission shall include the following elements:
(A) The commission shall establish conditions under which utilities secure capital to fund the energy projects. The commission may allow utilities to raise capital independently, work with third-party lenders to secure the capital for participants or a combination thereof. Any process the commission approves must use a market mechanism to identify the least costly sources of capital funds so as to pass on maximum savings to participants. The state or the [relevant state funds] may also provide capital for the program.
(B) The commission shall establish conditions for customer protection guidelines modeled on Pay As You Save essential elements and minimum program requirements.
(C) [The commission shall require the utilities to retain a third-party program operator with expertise in implementing whole home energy upgrade programs. The commission shall establish conditions by which the utilities’ program operator may connect program participants to energy project vendors. In setting conditions for connection, the commission may prioritize vendors that have a history of good relations with the state, including vendors that have hired participants from state-created job training programs.]
(D) The commission shall establish conditions specifying the use of conservative estimates of energy savings with corresponding financial savings that exceed annual program costs for program participants.
(E) The commission shall establish conditions such that notwithstanding the method used to estimate site-specific energy savings or measure direct energy savings for program participants, the utility will report aggregate savings to the commission for regulatory filings in the same manner as other energy efficiency and/or clean energy programs.
(f) Within 120 days after the commission releases the program conditions established under this section, each utility subject to the requirements of this section shall submit an informational filing to the commission that describes its plan for implementing the provisions of this section. If the commission finds that the submission does not properly comply with the statutory or regulatory requirements of the program, the commission may require that the utility make modifications to its filing.
(g) An independent process evaluation shall be conducted after one year of the program’s operation. An independent impact evaluation shall be conducted after three years of operation, excluding one-time startup costs and results from the first 12 months of the program. The commission shall convene an advisory council of stakeholders, including representation of low-income and environmental justice community members, to make recommendations in response to the findings of the independent evaluation. [The commission shall issue recommendations from the advisory council of stakeholders, and utilities shall implement necessary program changes consistent with the recommendations within [one year] of receipt. If the utility is unable to implement the recommendations, the utility shall provide an explanation for why they are not possible to implement. The commission and utility shall determinate alternate compliance options that address stakeholder recommendations.]
(h) The program shall be designed using the Pay As You Save system guidelines to be cost-effective for customers. Only projects that are deemed to be cost-effective and can be reasonably expected to ensure customer savings are eligible for funding through the program, unless, as specified in paragraph (1) of subsection (c), customers able to make upfront copayments to installers buy down the cost of projects so it can be deemed cost-effective.
(i) Eligible customers must be:
(1) Property renters with permission of the property owner; or
(2) Property owners.
(j) The calculation of project cost-effectiveness shall be based upon the Pay As You Save system requirements.
(1) The calculation of cost-effectiveness must be conducted by an objective process approved by the commission and based on rates in effect at the time of installation.
(2) A project shall be considered cost-effective only if it is estimated to produce annual net energy cost savings, not counting copayments voluntarily made by customers. The commission may establish guidelines by which these required savings are estimated.
(k) The program should be modeled after the Pay As You Save system, by which program participants finance energy projects using the savings that the energy project creates with a tariffed on-bill program. Eligible projects shall not create personal debt for the customer, result in a lien in the event of nonpayment, or require customers to pay monthly charges for any upgrade that fails and is not repaired within 21 days. The utility may restart charges once the upgrade is repaired and functioning and extend the term of payments to recover its costs for missed payments and deferred cost recovery, providing the upgrade continues to function.
(l) Any energy project that is defective or damaged due to no fault of the participant must be either replaced or repaired with parts that meet industry standards at the cost of the utility or vendor, as specified by the commission, and charges shall be suspended until repairs or replacement is completed. The commission may establish, increase or replace the requirements imposed in this subsection. The commission may determine that this responsibility is best handled by participating project vendors in the form of insurance, contractual guarantees or other mechanisms and issue rules detailing this requirement. Customers shall not be charged monthly payments for upgrades that are no longer functioning.
(m) In the event of nonpayment, the remaining balance due to pay off the system shall remain with the utility meter at an upgraded location. The commission shall establish conditions subject to this constraint in the event of nonpayment that are in accordance with the Pay As You Save system.
(n) If the demand by utility customers exceeds the program capital supply in a given year, utilities shall ensure that 50% of participants are:
(1) Customers in neighborhoods where a majority of households make 150% or less of area median income; or
(2) Residents of environmental justice communities.
(o) Utilities shall endeavor to inform customers about the availability of the program, their potential eligibility for participation in the program, and whether they are likely to save money on the basis of an estimate conducted using variables consistent with the program that the utility has at its disposal. The commission may establish guidelines by which utilities must abide by this directive and alternatives if the commission deems utilities’ efforts are inadequate.
(p) Subject to commission specifications under subsection (c), each utility shall work with certified project vendors selected using a request for proposals process to establish the terms and processes under which a utility can install eligible renewable energy generation, [energy efficiency, electrification] and energy storage systems using the capital to fit the equitable energy upgrade model. The certified project vendor shall explain and offer the approved upgrades to customers and shall assist customers in applying for financing through the program. As part of the process, vendors shall also provide participants with information about any other relevant incentives that may be available. [The utility and certified project vendor will use customer energy consumption data and may use other relevant data to identify households with the largest energy saving potential for priority action.]
(q) An electric utility shall recover all of the prudently incurred costs of offering a program approved by the commission under this section [so long as the utility meets commission-determined thresholds for the number of customers served and the amount of its investments in those customers’ locations]. [A utility may recover the commission’s approved cost of capital from its customers; however, participants may only be charged 3% interest on the cost of their energy projects.] For investor-owned utilities, shareholder incentives will be proportional to meeting commission-approved thresholds for the number of customers served and the amount of its investments in those locations.
(r) The commission shall also direct all other regulated utilities to provide customer data to the program that is necessary to evaluate the energy and demand saving and energy services revenue opportunities of all customers. The commission may allow these utilities to recover the costs associated with data provision from all customers.
(s) [The commission may create specific rates and incentives to promote additional or more comprehensive energy projects or refunds to all customers by requiring utilities to allocate a percentage of the funds that they realize from increased sales resulting from electrification of gas-fired heating appliances.]
(t) The commission shall adopt all rules necessary for the administration of this section. [In promulgating rules for the utility programs, the commission shall:
(1) Determine how to best include access to the program for utility customers who need emergency upgrades; emergency upgrades are needed when a customer has one or more existing major appliances fail that need to be quickly replaced.
(2) Determine how to best serve residents of disproportionately impacted communities.
(A) The commission may consider:
(i) Targeted marketing efforts;
(ii) Engagement and communication with groups and programs that serve disproportionately impacted communities; and
(iii) A requirement that each utility ensure that a minimum percentage of its customers who participate in the utility’s program are members of a disproportionately impacted community.
(B) Should the commission require the features described in this subsection, it shall direct the utilities to create a fund or to identify and use other sources of funding to pay66 for repair or remediation of structural or health and safety deficiencies that prevent implementation of energy upgrades to buildings that house or serve disproportionately impacted communities.
(C) The commission may allow the utility to recover from customers the cost of funding the repairs and remediations described in this subsection.]
Property Assessed Clean Energy Programs
States can authorize property assessed clean energy programs, which permit property owners to take on a tax assessment for clean energy upgrades that they pay back through a new line item on their property tax bill. The financing for investment in the structure is tied to the structure, rather than the owner or occupant. Successful residential PACE programs use a public-private partnership model where local governments opt in to offer PACE and collect and disburse payments, while the private sector finances and administers the program.67 PACE-enabling legislation is active in 37 states plus Washington, D.C., and PACE programs are now active (launched and operating) in 26 states plus Washington.36 Most PACE programs are commercial. Residential PACE is currently offered only in California, Florida and Missouri.36 Residential PACE programs require consumer safeguards to protect against predatory lenders.68 PACENation has developed guidance on legislative clauses that provide the amount of clarity needed for commercial and residential PACE laws.69
States with existing PACE legislation may want to ensure definitions of eligible projects include electrification options. Data from the NC Clean Energy Technology Center indicate that of the states that have enabled PACE financing, so far 12 states have enabled PACE for heat pumps. The example below from Illinois H.B. 350170 clarifies that an energy efficiency improvement may either “decrease energy consumption or enable a more efficient use of electricity.” This means that beneficial electrificationbeneficial electrification Electrification that saves customers money, enables better grid management and reduces negative environmental impacts. products that more efficiently use electricity are included in the definition. Additions in brackets below more explicitly include electrified end uses as eligible for PACE financing.
Option 7 Provision: Adding Electrification to Property Assessed Clean Energy
(a) The PACE Act is amended by changing sections [x] as follows:
(b) “Alternative energy improvement” means any fixture, product, system, equipment, device, material or interacting group thereof intended to charge a motor vehicle that is fully or partially powered by electricity, including, but not limited to, electrical wiring, outlets or charging stations.
(c) “Energy efficiency improvement” means any fixture, product, system, equipment, device, material or interacting group thereof intended to decrease energy consumption or enable a more efficient use of electricity, natural gas, propane or other forms of energy on property, including, but not limited to, all of the following:
(1) Insulation in walls, roofs, floors, foundations or heating and cooling distribution systems;
(2) Energy-efficient windows and doors, multiglazed windows and doors, heat-absorbing or heat-reflective glazed and coated window and door systems, and additional glazing, reductions in glass area and other window and door systems that reduce energy consumption;
(3) Automated energy or water control systems;
(4) High-efficiency heating, ventilating or air conditioning and distribution systems;
(5) Caulking, weather stripping and air sealing;
(6) [Electrified heating, cooling or water-heating systems];
(7) Lighting fixtures;
(8) Energy controls or recovery systems;
(9) Day lighting systems;
(10) Any energy efficiency project, as defined in [relevant statute]; and
(11) Any other fixture, product, system, equipment, device or material intended as a utility or other cost-savings measure as approved by the governmental unit.
(d) “Energy project” means the acquisition, construction, installation or modification of an alternative energy improvement, energy efficiency improvement, [beneficial electrification improvement], renewable energy improvement, resiliency improvement or water use improvement affixed to real property (including new construction).
Green Banks or Clean Energy Funds
Policies that provide direct support, decrease costs and provide low-cost financing for building modernization upgrades all lead to market transformation. The examples below create green banks, clean energy funds or clean energy accelerators to provide many of the policies discussed above in a single, aggregated fashion.
This example is inspired by Nevada S.B. 407 of 2017,71 which in turn draws heavily on the Connecticut Green Bank legislation in S.B. 1243, enacted in 2011.72 The Nevada green bank is the first in the United States sponsored by a Republican governor.73 The Nevada Clean Energy Fund represents a shift in green bank evolution, and the legislation highlights important shifts that make the fund more flexible than earlier green bank enabling legislation.74
- Rather than focusing on public capital, the Nevada legislation is structured to accept capital from public, private and foundation sources. This “shifts the focus away from competing for limited local public and nonprofit capital and focuses the organization on being able to perform its primary role of connecting projects in Nevada with capital from anywhere in the country (or world).”74
- The Nevada Clean Energy Fund also serves as a point of connection, by bridging projects with the appropriate sources of debt capital.
- It is also able to aggregate flexible sources of capital and investing resources to develop Nevada projects to the point where they can be financed on their own.
Option 8 Provision: State Green Banks or Clean Energy Funds
(a) Findings. The legislature hereby finds and declares that it is in the interest of this state to establish and support in this state an independent corporation for public benefit, the [name] fund, for the purposes of:
(1) Promoting investments in qualified clean energy projects;
(2) Increasing significantly the pace and amount of investments in qualified clean energy projects at the state and local levels;
(3) Improving the standard of living of the residents of this state by promoting the more efficient and lower cost development of qualified clean energy projects and providing financing for qualified clean energy projects that will create high-paying, long-term jobs;
(4) Fostering the development and consistent application of transparent underwriting standards, standard contractual terms, and measurement and verification protocols for qualified clean energy projects;
(5) Promoting the creation of performance data that enables effective underwriting, risk management and pro forma modeling of financial performance of qualified clean energy projects to support primary financing markets and to stimulate the development of secondary investment markets for qualified clean energy projects; and
(6) Achieving a level of financing support for qualified clean energy projects necessary to help abate climate change by increasing zero- or low-carbon electricity generation and transportation capabilities, realize energy efficiency potential in existing infrastructure, ease the economic effects of transitioning from a carbon-based economy to a clean-energy economy, achieve job creation through the construction and operation of qualified clean energy projects, and complement and supplement other clean energy and energy efficiency programs and initiatives in this state.
(b) Definitions
(1) “Alternative fuel vehicle project” means any project, technology, product, service, function or measure, or an aggregation thereof, that supports the development and deployment of alternative fuels used for vehicles, alternative fuel vehicles and related infrastructure, including, without limitation, infrastructure for electric vehicle charging stations. The term does not include any technology that involves the combustion of fossil fuels, including, without limitation, petroleum and petroleum products.
(2) “Demand response project” means any project, technology, product, service, function or measure, or an aggregation thereof, that changes the usage of electricity by retail customers in this state from the normal consumption patterns in response to:
(A) Changes in the price of electricity over time; or
(B) Incentive payments designed to induce lower electricity use at times of high market prices or when system reliability is jeopardized.
(3) “Energy efficiency project” means any project, technology, product, service, function or measure, or an aggregation thereof, that:
(A) Results in the reduction of primary energy (Btu) use required to achieve the same level of service or output obtained before the application of such project, technology, product, service, function or measure, or aggregation thereof; or
(B) Substantially reduces greenhouse gas emissions relative to emissions that would have been produced before the application of such project, technology, product, service, function or measure, or aggregation thereof.
(4) “Qualified clean energy project” means any alternative fuel vehicle project, demand response project, energy efficiency project, renewable energy project or system efficiency project.
(5) “Renewable energy” means energy produced by: solar, wind and geothermal resources; nonhazardous, organic biomass; anaerobic digestion of organic waste streams; small-scale, advanced hydropower; tidal currents; fuel cells using renewable resources; and any other source that naturally replenishes over a human, rather than geological, time frame.
(6) “Renewable energy project” means the development, construction, deployment, alteration or repair of any project, technology, product, service, function or measure, or an aggregation thereof, that generates electric power from renewable energy.
(7) “System efficiency project” means the development, construction, deployment, alteration or repair of any distributed generation system, energy storage system, smart grid technology, advanced battery system, microgrid system, fuel cell system or combined heat and power systems.
(c) The director of the office of energy shall cause to be formed in this state an independent, nonprofit corporation recognized as exempt from federal income taxation for the public benefit the [state] Clean Energy Fund, the general purpose of which is to carry out the provisions of this chapter.
(d) Governance
(1) There is hereby created a board of directors of the [state] Clean Energy Fund, consisting of the following members:
(A) The director of the office of energy;
(B) [Number] persons with expertise regarding clean energy resources;
(C) [Number] persons representing a state or regional organization primarily concerned with environmental protection;
(D) [Number] persons with experience in business or commercial investments;
(E) [[Number] persons representing environmental justice and underserved communities within the state];
(F) A representative of a statewide business association, manufacturing association or chamber of commerce;
(G) A representative of [relevant state agencies including energy office, energy, commerce, environment, others];
(H) The chair of the [state public utility commission];
(I) The consumer counsel;
(J) A representative of organized labor; and
(K) A representative of residential customers or low-income customers.
(2) The members appointed to the board should have expertise in matters relating to clean energy, clean energy development, banking, law, finance or other matters relevant to the work of the board. When appointing a member to the board, consideration must be given to whether the members appointed to the board reflect the ethnic and geographic diversity of the state.
(3) Members shall be appointed by [the governor, legislature, relevant agency or mix of all of these]. The term of each member of the board is three years. A member may be reappointed for additional terms of three years in the same manner as the original appointment. A vacancy occurring in the membership of the board must be filled in the same manner as the original appointment.
(4) The board shall annually elect a chair from among its members.
(5) The board shall meet regularly at least semiannually and may meet at other times upon the call of the chair. Any [five] members of the committee constitute a quorum for the purpose of voting. A majority vote of the quorum is required to take action with respect to any matter.
(6) The board shall adopt rules for its own management and government.
(7) While engaged in the business of the board, each member of the board is entitled to receive the per diem allowance and travel expenses provided for state officers and employees generally.
(e) To carry out the provisions of this chapter, the board shall:
(1) Annually develop and adopt a work program to serve and support the deployment of qualified clean energy projects in this state, including, without limitation, projects benefiting single-family and multifamily residential property, commercial, industrial, educational and governmental property, hospitals and nonprofit property and any other projects that advance the purposes of this chapter;
(2) Develop rules, policies and procedures that specify the eligibility of borrowers and any other terms or conditions of the financial support to be provided by the [state] Clean Energy Fund before financing support is provided for any qualified clean energy project;
(3) Develop and offer a range of financing structures, forms and techniques for qualified clean energy projects, including, without limitation, loans, credit enhancements, guarantees, warehousing, securitizationsecuritization A refinancing mechanism involving the issuance of bonds to raise funds to refinance the remaining undepreciated value of existing utility assets, which could include power plants. The bonds are paid back through a surcharge on customer bills. Therefore, the utility can generally refinance the outstanding undepreciated value with 100% securitization financing instead of using its standard combination of debt and equity financing. (2020 North Carolina Energy Regulatory Process) and other financial products and structures;
(4) Leverage private investment in qualified clean energy projects through financing mechanisms that support, enhance and complement private investment;
(5) Develop consumer protection standards to be enforced on all investments to ensure the [state] Clean Energy Fund and its partners are lending in a responsible and transparent manner that is in the financial interests of the borrowers;
(6) Assess reasonable fees for the financing support and risk management activities provided by the [state] Clean Energy Fund in amounts sufficient to cover the reasonable costs of the fund;
(7) Collect and make available to the public in a centralized database on an internet website maintained by the [state] Clean Energy Fund information regarding rates, terms and conditions of all financing support transactions, unless the disclosure of such information includes a trade secret, confidential commercial information or confidential financial information;
(8) Work with market and program participants to provide information regarding best practices for overseeing qualified clean energy projects and information regarding other appropriate consumer protections;
(9) Prepare an annual report for the public on the financing activities of the [state] Clean Energy Fund; and
(10) Undertake such other activities as are necessary to carry out the provisions of this chapter.
(f) In addition to any money available through gifts, grants, donations or legislative appropriation to carry out the purposes of this chapter, the board shall identify any other sources of money which may, in the opinion of the board, be used to provide money for the fund.
(g) The fund may:
(1) Sue and be sued;
(2) Have a seal;
(3) Acquire real or personal property or any interest therein, by gift, purchase, foreclosure, deed in lieu of foreclosure, lease, option or otherwise;
(4) Prepare and enter into agreements with the federal government for the acceptance of grants of money for the purposes of this chapter;
(5) Enter into agreements or cooperate with third parties to provide for enhanced leveraging of money of the fund, additional financing mechanisms or any other program or combination of programs for the purpose of expanding the scope of financial assistance available from the fund;
(6) Bind the fund and the board to terms of any agreements entered into pursuant to this chapter; and
(7) Apply for and accept gifts, grants and donations from any source for the purpose of carrying out the provisions of this chapter.
This option is inspired by Maine’s Clean Energy and Sustainability Accelerator, which was created in 2021.75 Maine has an efficiency trust, an independent third-party administrator for efficiency programs, and this bill added administration of the accelerator to the purview of the efficiency trust. States that do not have an existing fund may establish a fund and oversight board as in Minnesota bill H.F. (House File) 6 requests proposals from nonprofit organizations “with extensive experience implementing energy efficiency programs” to administer an accelerator.
The bill provides that the accelerator may be funded by government, public, private or charitable contributions. In particular, the legislation states that it may be “capitalized with federal funds available from a national clean energy and sustainability accelerator and may accept other federal funds as available.” During 2021, the Build Back Better federal bill included a federal clean energy and sustainability accelerator, or green bank, which would provide funding to state accelerators or green banks. Recognizing this, Maine took bipartisan action to establish the accelerator, so that if federal funds became available, Maine could take immediate action.76 The Inflation Reduction Act provides $27 billion for the U.S. Environmental Protection Agency to establish a greenhouse gas reduction fund, which is a clean energy deployment bank.77 The fund is also able to rely on many other sources of funding, which follows emerging green bank best practices.44
Other states have funded accelerators with a surcharge on electricity. The Connecticut Green Bank was partly funded with a surcharge of $0.001 per kWh. Minnesota’s H.F. 6 requires utilities to contribute a percentage of sales to the accelerator, which are recoverable from a state fund. States will need to assess funding options from multiple sources and evaluate the impact on ratepayers.
The Maine legislation required 40% of accelerator activities to serve vulnerable communities. States may consider holistically how best to reach overburdened communities and low-income residents across all state programs, including financial incentives, weatherization programs and any utility programs focused on low-income residents.
Option 9 Provision: Clean Energy Accelerator/Green Bank Using Federal Funds
(a) As used in this section, unless the context otherwise indicates, the following terms have the following meanings.
(1) “Accelerator” means the [state] Clean Energy and Sustainability Accelerator, a dedicated, specialized finance entity under the trust that:
(A) Is designed to drive private capital into market gaps for goods and services producing low or zero greenhouse gas emissions;
(B) Uses finance tools to mitigate climate change;
(C) Does not take deposits;
(D) Is funded by government, public, private or charitable contributions; and
(E) Invests in or finances projects:
(i) Alone; or
(ii) In conjunction with other investors.
(2) “Alternative fuel vehicle project” means any project, technology, product, service, function or measure that supports the development or deployment of alternative fuels used for electricity generation, alternative fuel vehicles and related infrastructure, including infrastructure for electric vehicle charging stations, and that does not include the combustion of fossil fuels.
(3) “Climate resilient infrastructure project” means any project that builds or enhances infrastructure so that such infrastructure:
(A) Is planned, designed and operated in a way that anticipates, prepares for and adapts to changing climate conditions; and
(B) Can withstand, respond to and recover rapidly from disruptions caused by these climate conditions.
(4) “Demand response project” means any project, technology, product, service, function or measure that changes the usage of electricity by retail customers from normal consumption patterns in response to:
(A) Changes in the price of electricity over time; or
(B) Incentive payments designed to induce lower electricity use at times of [high market prices][peak demand] or when system reliability is jeopardized.
(5) “Electrification” means the installation, construction or use of end-use electric technology that replaces existing technology based on fossil fuel consumption.
(6) “Energy efficiency project” means any project, technology, product, service, function or measure that results in the reduction of energy use required to achieve the same level of service or output obtained before the application of the project, technology, product, service, function or measure.
(7) “Fuel switching” means any project that replaces a heating system or industrial process using fossil fuels with a system or process that uses a different fuel and achieves lower net greenhouse gas emissions.
(8) “Microgrid” means a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity in a larger electrical grid and that can connect to and disconnect from the larger grid to operate in either grid-connected or isolation mode.
(9) “Qualified projects” means the following kinds of technologies and activities that are eligible for financing and investment from the accelerator:
(A) Renewable energy generation, including:
(i) Solar, wind and geothermal projects;
(ii) Projects using small-scale hydropower that produce 30 megawatts or less of electricity;
(iii) Projects using ocean and hydrokinetic power generation;
(iv) Projects using fuel cells to store energy; and
(v) Projects powered by nonhazardous organic biomass and anaerobic digestion of organic waste;
(B) Building energy efficiency, fuel switching and electrification;
(C) Industrial decarbonization;
(D) Grid technology such as storage to support clean energy distribution, including microgrids and smart grid applications;
(E) Agriculture projects that reduce net greenhouse gas emissions, including reforestation, afforestation, forestry management and regenerative agriculture;
(F) Clean transportation, including battery electric vehicles, plug-in hybrid electric vehicles, hydrogen vehicles, other zero-emissions fueled vehicles, related vehicle charging and fueling infrastructure, and low-emissions mass public transit;
(G) Climate resilient infrastructure projects; and
(H) Any other key areas identified by [the board][relevant state agencies].
(b) Establishment. The [state] Clean Energy and Sustainability Accelerator is established under the [[state] Efficiency Trust and is administered by the trust][relevant state agency and state statute][cross-reference section of bill, if establishing a trust].
(c) Mandate. The accelerator shall help this state [combat the causes and effects of climate change][become a clean energy leader] through the rapid deployment of mature technologies and the commercialization and scaling of new technologies [by maximizing the reduction of greenhouse gas emissions in this state] for every dollar deployed by the accelerator, including by:
(1) Providing financing support for investments in [low-emissions and zero-emissions technologies][energy-efficient, electrified and renewable technologies] and processes in order to rapidly accelerate market penetration;
(2) Catalyzing and mobilizing private capital through public investment and supporting a more robust marketplace for clean technologies, while minimizing competition with private investment;
(3) Enabling highly impacted communities [affected by climate change] to benefit from and afford projects and investments that [reduce greenhouse gas emissions][improve affordability, building efficiency, comfort and public health];
(4) Providing support for workers and communities affected by the [energy] transition [to a low-carbon economy]; and
(5) Causing the rapid transition to a clean energy economy without raising energy costs to end users and seeking to lower costs when possible.
(d) Finance and investment. The following provisions govern the finance and investment activities of the accelerator.
(1) The accelerator may provide finance and investment services, including but not limited to:
(A) Originating, evaluating, underwriting and closing financing and investment transactions in qualified projects;
(B) Partnering with private capital providers and capital markets to attract coinvestment from private banks, community development financial institutions, investors and others in order to drive new investment into underpenetrated markets, to increase the efficiency of private capital markets with respect to investing in greenhouse gas reduction projects and to increase total investment caused by the accelerator;
(C) Managing the accelerator’s portfolio of assets to ensure performance and monitor risk;
(D) Ensuring appropriate debt and risk mitigation products are offered; and
(E) Overseeing prudent, noncontrolling equity investments.
(2) The accelerator may provide capital to qualified projects in the form of:
(A) Debt financing;
(B) Credit enhancements, including loan loss reserves and loan guarantees;
(C) Aggregation and warehousing;
(D) Equity capital; and
(E) Any other financial product approved by the board.
(3) [Zero-emissions fleet and related infrastructure financing program. The accelerator shall explore the establishment of a program to provide low-interest and zero-interest loans, up to 30 years in length, to any school, municipal planning organization or nonprofit organization seeking financing for the acquisition of zero greenhouse gas emissions vehicle fleets or associated infrastructure to support zero greenhouse gas emissions vehicle fleets.]
(e) Project prioritization and requirements. The following provisions govern project prioritization and requirements.
(1) While investing in projects that mitigate greenhouse gas emissions, the accelerator shall maximize the reduction of greenhouse gas emissions in this state for every dollar deployed by the accelerator.
(2) The accelerator shall ensure that [40%][x%] of its investment activity is directed to serve vulnerable communities.
(3) The accelerator shall ensure that workers employed by contractors and subcontractors in construction work on projects over $100,000 in total cost, financed all or in part by the accelerator, are paid wages not less than those prevailing on similar construction in the locality.
(f) Administration. The following provisions govern administration.
(1) The accelerator may be capitalized with federal funds available from a national clean energy and sustainability accelerator and may accept other federal funds as available.
(2) To sustain operations, the accelerator shall manage revenue from financing fees, interest, repaid loans and other types of funding.
(3) The accelerator shall create a publicly available annual report that describes the financial activities, greenhouse gas emissions reductions and private capital mobilization metrics of the accelerator for the previous year.
(4) The accelerator may not accept deposits.
(5) The accelerator may accept and use philanthropic funds.
Additional Resources
Coalition for Green Capital. (2022). What Is a Green Bank? Resource Library. https://coalitionforgreencapital.com/what-is-a-green-bank/resource-library/
Institute for Market Transformation. (2018). On-Bill Financing (OBF) and On-Bill Repayment (OBR). Retail Industry Leaders Association. https://www.imt.org/wp-content/uploads/2018/02/OBF_Primer.pdf
National Association of State Energy Officials. (2018). Residential Property Assessed Clean Energy (R-PACE): Key Considerations for State Energy Officials. https://www.naseo.org/data/sites/1/documents/publications/NASEO%20R-PACE%20Issue%20Brief.pdf
U.S. Department of Energy. (n.d.). Clean Energy for Low Income Communities — Completed. Better Buildings. https://betterbuildingssolutioncenter.energy.gov/accelerators/clean-energy-low-income-communities
U.S. Environmental Protection Agency. (2019). Clean Energy Finance: On-Bill Programs. https://www.epa.gov/sites/default/files/2019-09/documents/usepa_on-billprograms_final_0.pdf
Endnotes
- Zhao, N. (2021, June 3). The aging housing stock. National Association of Home Builders. https://eyeonhousing.org/2021/06/the-aging-housing-stock-4/
- American Council for an Energy-Efficient Economy. (n.d.). Financial incentives. https://database.aceee.org/state/financial-incentives
- Inflation Reduction Act of 2022, Pub. L. No. 117-169, 136 Stat. 1818 (2022). https://www.congress.gov/bill/117th-congress/house-bill/5376. See also National Association of State Energy Officials. (2023). Infrastructure Act resource hub. https://www.naseo.org/issues/infrastructure-act
- Houck, D. L. (2022, November 15). Building distributional equity into California’s rollout of Inflation Reduction Act rebates and tax credits for home decarbonization. Slide 3. https://pubs.naruc.org/pub/1620C742-1866-DAAC-99FB-F9C57BE494C0?_gl=1*1083n66*_ga*NzE3ODQ3NTU3LjE2NzE0NjI1Njc.*_ga_QLH1N3Q1NF*MTY3Mjc2Nzk5MC4yLjEuMTY3Mjc2ODMzNS4wLjAuMA
- Houck, 2022.
- U.S. Environmental Protection Agency. (2015). Chapter 3. Funding and financial incentive policies. EPA energy and environment guide to action. https://www.epa.gov/sites/default/files/2017-06/documents/guide_action_chapter3.pdf
- U.S. Environmental Protection Agency, 2015.
- Dajani, M. (2022, August 9). Diving into the Inflation Reduction Act’s tax credits and the ambitious plan to reshape the US energy sector. Utility Dive. https://www.utilitydive.com/news/diving-into-the-inflation-reduction-acts-tax-credits-and-the-ambitious-pla/629075/
- Information in the table is from U.S. Environmental Protection Agency, 2015, and McEwen, B., & Miller, J. (n.d.). Local governments’ role in energy project financing: A guide to financing tools for the commercial real estate sector. Institute for Market Transformation and Community Innovators Lab. https://www.imt.org/wp-content/uploads/2018/10/Local-Governments-Role-in-Energy-Project-Financing.pdf. The latter provides a more detailed comparison of the attributes, strengths and weaknesses of financing options.
- Experience indicates that successful low-income policies and programs are tailored to low-income consumers; are cost-effective and financially sustainable; have measurable results; and are flexible enough to adapt to changing conditions and learning. See Paulos, B. (2017, May). Bringing the benefits of solar energy to low-income consumers: A guide for states & municipalities. Clean Energy States Alliance. https://www.cesa.org/wp-content/uploads/Bringing-the-Benefits-of-Solar-to-Low-Income-Consumers.pdf
- U.S. Environmental Protection Agency & U.S. Department of Energy. (n.d.). Inclusive utility investment. Energy Star. https://www.energystar.gov/products/inclusive_utility_investment
- Residential financing of this type is available in only three states.
- Inflation Reduction Act of 2022.
- Bickel, S., Ferguson, J., Goldman, E., & Shaban, H. (2022). Utility value of a Pay As You Save inclusive utility investment program for whole home energy efficiency and electrification upgrades. European Council for an Energy Efficient Economy proceedings. https://www.eceee.org/library/conference_proceedings/eceee_Summer_Studies/2022/3-policy-finance-and-governance/utility-value-of-a-pay-as-you-save-inclusive-utility-investment-program-for-whole-home-energy-efficiency-and-electrification-upgrades/
- Point-of-sale incentives are referred to as point-of-sale rebates in some jurisdictions. To avoid confusion with longer-term mail-in rebates discussed in the next section, we are omitting discussion of point-of-sale rebates here.
- American Council for an Energy-Efficient Economy, n.d.
- Zurofsky, A., Schub, J., Rhodes, J., Curnes, T., & Calisch, S. (2021). Rewiring communities: A plan to accelerate climate action and environmental justice by investing in household electrification at the local level. Rewiring America and Coalition for Clean Capital. https://www.ourenergypolicy.org/resources/rewiring-communities-a-plan-to-accelerate-climate-action-and-environmental-justice-by-investing-in-household-electrification-at-the-local-level/
- Many individuals have taxes deducted by their employers and qualify for refunds but do not file tax returns or collect those refunds. See: Gleckman, H. (2019, August 6). Remember the 47 percent who pay no income taxes? They are not who you think. Forbes. https://www.forbes.com/sites/howardgleckman/2019/08/06/remember-the-47-percent-who-pay-no-income-taxes-they-are-not-who-you-think/?sh=7a25767347d7
- Uplight. (2021). Engaging low-income customers in the 21st century. https://uplight.com/resources/engaging-low-income-customers-in-the-21st-century/complete/
- Federal Deposit Insurance Corp. (2021, December 17). 2021 FDIC national survey of unbanked and underbanked households. https://www.fdic.gov/analysis/household-survey/index.html
- U.S. Environmental Protection Agency. (2023, February 27). Clean energy financing toolkit for decisionmakers. https://www.epa.gov/statelocalenergy/clean-energy-financing-toolkit-decisionmakers
- U.S. Department of Energy. (n.d.). Revolving loan funds. https://www.energy.gov/eere/slsc/revolving-loan-funds
- U.S. Department of Energy, n.d.
- Southeast Energy Efficiency Alliance. (2022). On-bill finance. https://www.seealliance.org/initiatives/low-income-financing/
- Fredette, J. (2015, December 16). Consumer considerations for on-bill finance programs. Environmental Finance Center, UNC School of Government. https://efc.web.unc.edu/2015/12/16/consumer-considerations-for-on-bill-finance-programs/
- Fredette, 2015.
- American Council for an Energy-Efficient Economy. (2017, February 16). On-bill energy efficiency. https://www.aceee.org/toolkit/2017/02/bill-energy-efficiency
- Gilleo, A. (2019, April 18). On-bill financing gains ground but faces barriers to wider adoption. American Council for an Energy-Efficient Economy. https://www.aceee.org/blog/2019/04/bill-financing-gains-ground-faces; and Trabish, H. (2019, February 12). Winning in a more distributed energy world: 3 steps to utility success. Utility Dive. https://www.utilitydive.com/news/winning-in-a-more-distributed-energy-world-3-steps-to-utility-success/548088/
- Gilleo, 2019.
- U.S. Environmental Protection Agency & U.S. Department of Energy, n.d.
- Clean Energy Works. (2022, January 1). Introduction to inclusive utility investments. https://www.cleanenergyworks.org/2022/01/01/introduction-to-inclusive-utility-investments/
- Bickel et al., 2022.
- For more detail on this list, see U.S. Environmental Protection Agency & U.S. Department of Energy, n.d.
- The buyer of the building and the buyer’s mortgage lender must consent to the lien remaining in place or require that the seller pay off the lien prior to sale.
- PACENation. (2019). PACE programs. https://www.pacenation.org/pace-programs/
- PACENation, 2019.
- Rao, J., & Cohen, A. (2020, March 16). Group comments in response to a request for input for property assessed clean energy (PACE) loans. National Consumer Law Center. https://www.nclc.org/resources/group-comments-in-response-to-a-request-for-input-for-property-assessed-clean-energy-pace-loans/
- Rao & Cohen, 2020.
- Allan, A. (2017, October 23). Transforming markets. Northwest Energy Efficiency Alliance. https://www.energystar.gov/sites/default/files/asset/document/4.%20Alexis%20Allan_%20NEEA%20-%20Plenary.pdf
- Gamble, D. (2015, November 2). LEDs are lighting the way — and dropping in price. Builder. https://www.builderonline.com/products/green-products/leds-are-lighting-the-way-and-dropping-in-price_o
- York, D., Bastian, H., Relf, G., & Amann, J. (2017, December). Transforming energy efficiency markets: Lessons learned and next steps. American Council for an Energy-Efficient Economy. https://www.aceee.org/sites/default/files/publications/researchreports/u1715.pdf
- U.S. Department of Energy. (n.d.). Advanced house framing. Energy Saver. https://www.energy.gov/energysaver/advanced-house-framing
- National Renewable Energy Laboratory. (n.d.). Green banks. https://www.nrel.gov/state-local-tribal/basics-green-banks.html
- National Renewable Energy Laboratory, n.d.
- Inclusive Prosperity Capital. (n.d.). About us. https://www.inclusiveprosperitycapital.org/about-us/
- The Community Preservation Corporation. (n.d.). Underwriting efficiency handbook. https://communityp.com/thought-leadership/tool/underwriting-efficiency-handbook/
- Institute for Market Transformation. (2021). Model ordinance for a building performance standard. Section 8. Technical and financial assistance to building owners. https://www.imt.org/resources/model-ordinance-for-building-performance-standards/
- Climate Solutions Now Act, ch. 38, S.B. 528 (Md. 2022) (enacted). https://mgaleg.maryland.gov/2022RS/Chapters_noln/CH_38_sb0528e.pdf
- An Act Providing for Building Justice with Jobs, S.B. 2226/H.B. 3365, 192nd Cong. (2021-2022) (Mass. 2022). https://malegislature.gov/Bills/192/SD2102
- An Act Providing for Building Justice with Jobs.
- The original legislation contained all the options in brackets. States could include all these simultaneously. They are presented here collectively.
- NC Clean Energy Technology Center. (n.d.). Summary maps. (Program type: Rebate program.) https://programs.dsireusa.org/system/program/maps
- An Act Establishing an Energy Efficiency Retrofit Grant Program for Affordable Housing, Pub. Act No. 21–48, (Conn. 2021) (enacted). https://www.cga.ct.gov/2021/act/Pa/pdf/2021PA-00048-R00SB-00356-PA.PDF
- U.S. Environmental Protection Agency, 2023.
- Infrastructure and Economic Development Bank Act, ch. 10, A.B. 78 (Calif. 2020) (enacted). https://lpdd.org/wp-content/uploads/2020/07/20190AB78_95.pdf
- National Association of State Energy Officials. (2021, July 26). Improving access to C-PACE for smaller businesses: Case studies from three states. https://www.naseo.org/data/sites/1/documents/publications/FINAL_CPACE_smallbiz_brief%207%206%2021.pdf
- National Association of State Energy Officials, 2021.
- Saint Paul Port Authority. (2021, June 23). MinnPACE and SPIRE receive national recognition as energy finance leaders [Press release]. https://www.sppa.com/minnpace-and-spire-receive-national-recognition-as-energy-finance-leaders
- Award and Repayment of State Building Energy Improvement Conservation Loans, ch. 16B, section 16B.87, H.F. 6 (Minn. 2021) (enacted). https://www.revisor.mn.gov/statutes/cite/16B.87
- A challenge can undermine the effectiveness of revolving loan programs and other initiatives to save energy in government buildings: Agency heads often feel little urgency to cut their energy costs in part because those costs are not paid out of their budget. To address this, states can take a variety of steps, including some combination of the following: (1) rank agencies by how much energy they save as a percentage of baseline; (2) add energy savings to the evaluation criteria of agency heads and other key personnel; and (3) add a portion of each agency’s energy savings to its future budgets.
- Texas Comptroller. (n.d.). LoanSTAR Revolving Loan Program. State Energy Conservation Office. https://comptroller.texas.gov/programs/seco/funding/loanstar/
- Energy Transition Act, Pub. Act 102-0662, 2021 Ill. Laws. https://www.ilga.gov/legislation/publicacts/102/PDF/102-0662.pdf
- Clean Energy Works. (forthcoming). Inclusive utility investment model legislation
- The original Illinois legislation required that the program be modeled after the Pay As You Save system developed by the Energy Efficiency Institute. The language here would explicitly require consumer protections listed on the U.S. Environmental Protection Agency website be included in any program created.
- An alternative provision could base program spending amounts on a percentage of the utility’s total residential meters, multiplied by a dollar amount. For example, “each utility shall invest capital in an amount equal to 1% of the number of the utility’s total residential meters multiplied by $10,000.” This percentage could increase gradually at certain dates, until the utility has invested enough capital for the utility to implement all energy projects requested by any customer of the utility.
- Legislative text could cross-reference a state or utility program that augments federal WAP programs to pay for WAP-deferred upgrades.
- Durkay, J. (2017, September). Financing clean energy projects through property assessments. National Conference of State Legislatures. https://www.ncsl.org/energy/financing-clean-energy-projects-through-property-assessments
- As with all policies, it is important to properly implement safeguards to avoid unintended consequences. Safeguards are necessary with residential PACE to protect consumers against predatory lending. See PACENation. (2021, October 21). Residential property assessed clean energy (R-PACE) state and local consumer protection policy principles. https://www.pacenation.org/wp-content/uploads/2021/11/PACENation-R-PACE-Consumer-Protection-Policy-Principles-ADOPTED-October-21.2021.pdf
- PACENation. (2018). Model clauses. https://perma.cc/5HZX-LBFB
- Property Assessed Clean Energy Act, Pub. Act No. 101-0169, H.B. 3501, 101st Gen. Assemb. (2019-2021) (Ill. 2019) (enacted). https://www.ilga.gov/legislation/publicacts/101/101-0169.htm
- An Act Relating to Energy, S.B. 407, 79th Sess. (Nev. 2017) (enacted). https://www.leg.state.nv.us/App/NELIS/REL/79th2017/Bill/5472/Text#
- An Act Concerning the Establishment of the Department of Energy and Environmental Protection and Planning for Connecticut’s Energy Future, Pub. Act No. 11-80, S.B. 1243 (Conn. 2011) (enacted). https://www.cga.ct.gov/2011/act/pa/2011PA-00080-R00SB-01243-PA.htm
- American Green Bank Consortium. (2019). Green banks in the United States: 2018 annual industry report. Coalition for Green Capital. https://greenbanknetwork.org/portfolio/agbc-annual-report-2018-2/
- American Green Bank Consortium, 2019.
- An Act to Create the Maine Clean Energy and Sustainability Accelerator, H.P. 1230/L.D. 1659, 130th Legislature, 2021 First Special Sess. 2021 (Me. 2021) (enacted). http://www.mainelegislature.org/legis/bills/getPDF.asp?paper=HP1230&item=1&snum=130
- Gibson, D. (2021, June 16). Maine passes LD1659: An act to create the Maine Clean Energy and Sustainability Accelerator [Press release]. Sierra Club Maine Chapter. https://www.sierraclub.org/maine/blog/2021/06/maine-passes-ld-1659-act-create-maine-clean-energy-and-sustainability-accelerator
- Craddock, E. (2022, October 26). EPA moves ahead on green bank: Opportunity to weigh in is now. Holland & Knight. https://www.hklaw.com/en/insights/publications/2022/10/epa-moves-ahead-on-green-bank-opportunity-to-weigh-in-is-now