Bond Funding for Energy Projects is Repaid from Energy Savings
Driven to meet ambitious state energy savings targets set in 2007, Massachusetts planned a rapid pace of energy efficiency retrofit projects. However, in the wake of the 2008 national economic downturn, a steep decline in project financing from banks and energy service companies stranded a three-year pipeline of $237 million in projects. In 2010 Massachusetts responded by creating a financing model called the Clean Energy Investment Program (CEIP), using bond funding that is repaid from the energy savings generated by the projects. The bonds are obtained at the same time as general obligation bonds, however this low-cost financing does not impact the state’s debt limits.
In four years, CEIP has mobilized 28 projects for more than $136 million across 15 million square feet of state buildings. The state also has a pipeline of about $260 million for 74 ready-to-go energy efficiency projects. Massachusetts has maintained the top spot on the ACEEE State Energy Efficiency Scorecard for four years running and attributes its success in part to operationalizing its energy efficiency policies for state facilities via CEIP financing.
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