Energy finance program report released

A report by ACEEE indicates that there is a growing interest by the government and various financial institutions in investing in the energy finance sector.

August 22, 2011

A report by ACEEE revealed that energy finance programs have increased in terms of quantity and diversity in the last several years. There is also a growing interest from financial institutions in giving out money for local initiatives for these various projects.

Thanks to significant increases in funding for finance programs through the American Recovery and Reinvestment Act (ARRA), the Regional Greenhouse Gas Initiative program (RGGI; Northeast U.S.), there are a number of initiatives for residential and commercial buildings.

While cash flow from commercial banks has not increased—they prefer to work through contracts from large energy firms like Siemens and Honeywell—Credit Unions and Community Development Financial Insitutions (CDFIs) have shown an increased interest. Credit Unions don’t have the kind of collateral a bank does and CDFI loan funds tend to focus on one particular segment of the housing/building market, limiting their reach.

State governments, however, have been shown to be major supporters of the energy initiatives and have used the money from the federal government by using low-income housing projects as a way to build their energy efficiency projects. State housing agencies, as a result, are the largest source of capital for the energy finance programs because of where the money is being allocated. The trickle-down effect ends up reaching local towns and counties who are looking to use the money for low-income housing and other projects for their citizens. Other sources of income for energy finance programs come from philanthropists, institutional money managers, and private equity/venture capital. In the end, though, most of the money will be coming from the federal government.

The report concludes that there is plenty of money out there and plenty of people—an estimated 100 million—who could use the money to cut down on their utility bills with homes that are more energy efficient and environmentally friendly.