The World's #1 Renewable Energy Network for News, Information, and Companies.

Commission Report Features Financing Recommendations to Double U.S. Energy Efficiency

The Alliance to Save Energy's Commission on National Energy Policy included financing as one of the central recommendations in its recent report, "Energy 2030: Doubling U.S. Energy Productivity by 2030." The commission consists of some of the key leaders in energy policy and business in the United States.

The commission’s plan would use financing programs and policies to unleash hundreds of billions of dollars of capital to support trillions of dollars of potential energy savings. 

According to the commission, energy savings performance contracts and utility energy service contracts, which focus on government-owned buildings, are the main energy efficiency financing methods which are active in the market. Although these models work well, their scope is not broad enough to have a broad nationwide impact on energy efficiency.   

To open the door to new energy efficiency financing opportunities, the commission recommends:

  • creating a secondary market for efficiency loans
  • setting up state and local programs to resell loans to investors in secondary markets
  • initiating on-bill repayment and on-bill financing programs
  • improving federal regulations to support financing efficiency through property taxes and trusts
  • attaching energy efficiency incentives to mortgages
  • setting up tax policies that encourage industrial investment in efficiency
  • increasing real estate buyers’ awareness through ratings and information
  • providing customers with their energy use data

Creating a Secondary Market

There is no robust secondary market for energy efficiency loans because there is no uniform system for evaluating these loans. In secondary markets, investors buy loans which have already been issued. If institutional investors could buy large quantities of energy efficiency loans, that would create a market for energy efficiency lending. 

To remove this barrier and allow investors access to the market, the commission recommends that consistent underwriting guidelines, contract language, and data requirements for energy efficiency investment be developed.

The report also recommends that state and local governments set up programs to resell groups of loans to investors in secondary markets. These programs would be similar to the new Warehouse for Energy Efficiency Loans (WHEEL) program.  

Revising Policies and Initiating Programs

New state and local programs could use on-bill repayment or property taxes to fund energy efficiency. On-bill repayment programs provide customers with the opportunity to pay for energy efficiency improvements over time through their utility bills. Third-party lenders pay for the upfront costs. On-bill financing programs are similar to on-bill repayment programs, but are financed by utility or ratepayer capital.

Revising federal regulations could make it easier for energy efficiency financing to develop. For example, real estate investment trusts are one potential vehicle for efficiency. 

Improving federal regulations related to residential property assessed clean energy (PACE) would remove the current roadblocks that obstruct these programs. Federal constraints do not exist for commercial PACE.

Federal regulations could also build energy efficiency incentives into mortgage programs. If mortgage programs included incentives for energy efficiency, that would steer the housing market toward more efficient choices. It would also encourage people to retrofit their homes before selling them. 

Changing federal tax policies could encourage industries to engage in capital investments which might also support energy efficiency. These policies could also target specific energy efficiency measures. 

Making Efficiency Information Visible

The commission recommends increasing awareness of energy efficiency on a national level. Making energy data transparent, available and easy to understand is one step toward improving public understanding of energy use. It is also important for financial markets, which need high-quality data on the actual energy savings associated with various types of energy efficiency projects.

Energy efficiency rating systems for buildings can give real estate buyers and sellers a visual incentive to pay attention to energy use. Manufacturers can also use ratings for appliances and other products. 

Allowing utility customers and third parties access to standardized energy data can empower customers to track their energy savings. For this approach to succeed, state regulators would need to set up rules to ensure customer privacy. 

This story was originally published by the Clean Energy Finance Center (CEFC). You can subscribe to future stories from the Clean Energy Finance Source by visiting the CEFC's news page.

Lead image: Recycle lightbulb via Shutterstock

RELATED ARTICLES

Electric Vehicle

Tesla E-motorcycles Complement SolarCity Microgrids

Mahesh Bhave, Contributor Batteries are the renewed focus of attention given the launch of Tesla’s PowerWall on April 30. What or where might the next major application be? Utility scale storage appears to be one. My thesis is that launching Tesla e...
Canadian Climate Goals

Canada Announces Weak Climate Target

Danielle Droitsch, NRDC Last week, Canada has announced its contribution to the global effort to reduce greenhouse gases by announcing its post-2020 target. The target announced today is off-track to the 80 percent cut by 2050 they committed to in...
Renewable Energy Stocks

What Drives Alternative Energy Stocks?

Harris Roen, The Roen Financial Report Alternative energy became a serious market player after the turn of the millennium. Since that time, solar, wind, smart grid and other alternative energy stocks have experienced both strong up and down trends. The forces at...
Microgrids

Coast to Coast and Across the Electric System, Microgrids Provide Benefits to All

Dick Munson, Environmental Defense Fund At the most obvious level, microgrids could disrupt today’s utilities and their regulated-monopoly business model, because they challenge the centralized paradigm. In a nutshell, microgrids are localized power grids that ha...
A former mechanical engineer with graduate training in journalism and environmental studies, Kat Friedrich is a self-employed writer focusing on energy, sustainability and technology. She is the editor of Yale University's Clean Energy Finance Forum.

CURRENT MAGAZINE ISSUE

Volume 18, Issue 3
1505REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

Doing Business in Brazil – in partnership with GWEC, the Global Win...

Brazil is one of the most promising markets for wind energy.  Ranke...

EU PVSEC 2015 (European PV Solar Energy Conference and Exhibition)

The EU PVSEC is the largest international Conference for Photovoltaic re...

Using Grid data analytics to protect revenue, reduce network losses...

COMPANY BLOGS

Can We Just Allow Florida To Be The Sunshine State?

We attended Solar Power Southeast, a regional solar show put on by&...

The Outlook for Midwest Solar

Our whirlwind solar conference tour continues! Yesterday we touched down...

Well, Hello There Southeast — We Are Excited To Be Here

We’ve traveled 651 miles into the heart of the Deep South to atten...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS