Pay for Energy Initiatives

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An important component of an energy strategy is finding a way to pay for key energy initiatives. Many state and local governments have found ways to use both innovative financing mechanisms as well as traditional finance tools to support their strategic energy goals. Some mechanisms include bonding tools, energy savings performance contracting (ESPC), property assessed clean energy (PACE), and on-bill financing.   

The resources available below aim to provide an overview of financing for state, local, and tribal governments who are designing and implementing energy financing programs to serve both public facilities via lead-by-example, as well as private buildings in the industrial, commercial, and residential markets. 

Target A Market

Financing tools are not one-size-fits-all—different financing mechanisms work better for different market segments, including public (state and local facilities), residential, commercial, industrial, and small business market segments. State, local, and K-12 energy efficiency financing initiatives will often fall into one of two broad categories:

Financing for Lead by Example in Public Facilities: State and local governments face unique challenges when funding energy upgrades on their own facilities. The financing mechanisms listed below provide an overview of the most common tools used by state and local governments to finance upgrades on their facilities. Popular lead-by-example financing mechanisms include: ESPC, bonding tools, revolving loan funds, and leasing arrangements.

Enabling Investment on Private Property: State and local governments may authorize, sponsor, fund, and/or implement energy efficiency financing programs designed to serve private property owners. The financing mechanisms listed below provide an overview of the most common tools to enable energy efficiency financing for residential, multi-family, commercial and industrial properties. Popular financing mechanisms for private property energy efficiency investment include: PACE, ESPC, leasing arrangements, on-bill finance and repayment.

Understand Financing Mechanisms

Energy efficiency and renewable energy projects can be paid with a variety of financing mechanisms, including:

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