Is California Breaking the Dam that Restricts Energy Efficiency Financing?
The main reason many energy efficiency upgrades don’t happen is, in a word: money. And in order to free up more financing, it’s going to require scale, according to the Guardian.
A recent survey of 476 energy managers conducted by Noesis Energy found the primary reason why energy-efficiency projects are not getting approved is the inability to get funding.
And although huge investment houses such as Deutsche Bank and Goldman Sachs have billions they’re looking to invest, they aren’t interested in smaller projects, even “small” multimillion-dollar projects. Because each deal requires bankers’ time, the big investors want bundled projects, says the Guardian.
The magazine says Deutsche Bank and the Rockefeller Foundation estimate the US market for energy-efficiency retrofits to be $279 billion. But how to open the dam that prevents the flow of financing?
In California, the legislature is scheduled to consider a bill that would allow a warehouse line of credit to make energy efficiency loans in packages, effectively making a group of loans similar enough that they could be aggregated, says the Guardian. Loans for energy efficiency could become a class of asset.
California is also on track to launch an on-bill-repayment program. On-bill repayment offers an opportunity for building owners to finance energy efficiency upgrades or renewable electricity generation projects through loans from third-party investors. The investors work with the customer’s utility to include the loan payments on the customer’s utility bill.
Another scheme that’s gaining traction is property assessed clean energy (PACE) financing. Sacramento’s Metro Center Corporate Park will take advantage of $3.16 million in PACE financing to make energy efficiency upgrades. Ygrene Energy Fund will pay for the upgrades, then, Metro Center’s owner will repay the costs on its property tax bill.
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