Financing Strategies for Municipal Energy Efficiency

Abstract

Energy efficiency represents a significant opportunity to reduce energy use, save money and reduce environmental impacts. For municipalities that are facing increasingly tight budgets and have an aging building stock, efficiency represents an especially attractive opportunity. One of the key challenges, however, is how to consistently secure the initial capital necessary to make investments in projects that increase efficiency. Based on a partnership with the Clean Energy Coalition in administering a $4.4 million grant for Michigan‘s Cities of Promise, this report details how revolving energy funds can assist cities by offering a sustainable source of capital to invest in energy efficiency projects. In addition, this report discusses best practices and lessons learned in implementing the Cities of Promise project. Finally, this report evaluates two different fund structures: a fully grant-based fund, and an L3C-based fund that could combine grants with investor capital.