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Energy Efficiency Financing

Evaluating Profitable Energy Efficiency Projects

Energy efficiency projects reduce or eliminate energy expenses that have to be incurred in order for a business to survive and keep the lights on. As a result, investment in energy efficiency projects are a low-risk proposition because they are easier to finance than other relatively high-risk opportunities. Besides conventional funding available from financial institutions and capital markets in the form of loans, bonds and cash, many utilities, government agencies and non-profit entities also offer energy efficiency financing in the form of equipment purchasing and leasing, energy performance contracting, shared savings, paid-from savings, incentives, grants and rebates. Choosing among all the various financing options available is a task dependent upon factors like risk tolerance, debt capacity of the customer and in-house budget appropriation.


Energy Efficiency Financing Considerations

Commercial property owners can determine the appropriate financing mechanism for their energy efficient improvements by evaluating a number of factors:

  • What energy efficiency measures will be implemented and which ones qualify for financing?
  • How large is the financing gap between the financing required and the financing available for their energy efficient improvements (size of the available pool)?
  • Which financing programs are preferred by the property owners, managers and key tenants?
  • How are the financing incentives aligned between the owners and tenants? (For instance, some energy efficiency financing options may require the cost to be passed on to tenants and residents. Others like ‘On-Bill Financing’ keep the capital costs completely off the balance sheet by allowing the customer to pay back the entire cost of the retrofit through their monthly utility bills; the utility sponsors 100% of the upfront capital costs.)
  • What is the risk tolerance of the property owners and managers (how much can be assumed and how much should be transferred)?
  • What limitations exist under the specific programs for financing energy efficient improvements or for financing energy efficient construction in new buildings?
  • Does the facility qualify for an energy performance contract in which energy savings realized from the implemented energy efficient improvements are used to pay for the capital costs?
  • Is there a plan for monitoring and verification of energy savings determined in the energy efficiency financing program?
  • What are the State and Federal financing programs available for financing energy efficiency retrofits in commercial properties? (e.g. NYSERDA’s MPP, federal tax credits for energy efficient measures)
  • What are the private sources of energy efficiency financing available to commercial properties?


Multifamily Performance Program (NYSERDA)

Funds available through NYSERDA’s statewide program, Green Jobs-Green NY, have enabled the creation of low-interest energy efficiency financing, as well as incentives for multifamily properties through the Multifamily Performance Program (MPP).  The program provides per-unit incentives to multifamily dwellings that want to finance capital upgrades identified in their whole-building energy assessments. Qualifications for the program include properties:

  • Having 5 or more units
  • Having savings of at least 15% on annual energy bills
  • Customers of one of the following utilities: Con Edison NY, National Grid, NYSEG, Central Hudson Gas & Electric, Orange and Rockland Utilities, and Rochester Gas & Electric


Our Energy Efficiency Financing Options

Associated Renewable is a premier provider of energy efficiency and renewable energy financing to a wide spectrum of clients including commercial and industrial sectors, multifamily housing, municipalities, schools, hospitals and retail facilities. We offer a mix of debt and equity sources of capital to enable customers to choose from a variety of options to finance energy retrofits, energy efficient improvements, HVAC system upgrades or replacements, efficient lighting upgrades, building envelope and weatherization as well any other custom energy efficiency project.

Our Finance and Grants Services divisions work with clients who wish to identify, implement and finance energy efficiency measures after conducting energy audits and technical studies. Local Law 87 mandated energy audits can be financed through internal sources as well as third-party external sources and partner institutions.  If the AR Financing team assesses that your property qualifies for an energy performance contract, suitable terms and schedule of payment will be determined for approval.


Additional Resources:

The State Clean Energy Financing Guidebook by the National Governors Association (NGA) describes in detail various types of energy financing programs including:

·         Revolving loan funds;

·         Utility on-bill financing ;

·         Loan purchase agreements

·         Linked deposit programs;

·         Energy savings performance contracting (ESPC);

·         Pooled bond and pooled lease purchase financing; and

·         Property-assessed clean energy programs (PACE)


Energy Efficiency Finance 101: Understanding the Marketplace – An ACEEE whitepaper

Financing - ENERGY STAR Building Manual

Financial incentives for energy efficiency by State – American Council for an Energy-Efficient Economy (ACEEE)

Energy Efficiency in the States: 2013 Outlook – An ACEEE presentation

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Tuesday, February 14, 2017 - 13:01


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