Owners, investors, and occupants will naturally think of retrofit financing differently, depending on their unique circumstances. Below we list several retrofit financing mechanisms, both time-tested and emerging. The issues with energy efficiency financing are highly dynamic, with new policy and innovative business models constantly emerging. Check back on this page frequently or follow us on twitter as we will be making updates to stay on top of the most recent options and programs.
Financing Mechanism
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Description
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Next Step
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Purchasing
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Loans |
Allows for flexible spending, yet building owner's debt capacity is reduced; significant down payment is required
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Contact a lender, or seek out low-interest loans from your state, municipality, and utility at DSIRE |
| Bonds |
Generally a public-sector organization issues a bond; approval time can be quite long but interest rate is low
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Contact a lender, or seek out bond programs at DSIRE |
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Lease
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Operating Lease |
Building owner rents equipment; at end of lease the owner can renew/renogiate the lease, or purchase or return the equipment
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Talk to an experienced financial professional |
| Capital Lease |
Building owner rents equipment and ownership is almost always transferred at the end of the lease term; down payment (which can be zero) is always much less than a loan
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Talk to an experienced financial professional |
| Performance Contracting |
Financing arranged
by an
ESCO
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Very little hassle for building owner since financing is fully managed and implemented by the ESCO
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See the BOMA and Clinton Climate Initiative toolkit |
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Emerging Mechanisms
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PACE |
Local government issues bond to pay for efficiency project; bond is repaid by building owner via property tax; more information
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Go to DSIRE to find PACE programs in your region |
| On-bill Financing |
Utility, state or 3rd party funds efficiency project and collects repayment via utility bill; repayment can be fixed to the property in the event of ownership transfer; more information
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Go to DSIRE to find on-bill financing programs in your region |
| Energy Services Agreement |
Similar to a power purchase agreement, except for energy efficiency and not
renewable energy; no upfront cost; see Metrus Energy for example
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Contact the product provider |