P16-Funding

Funding mechanisms for energy efficiency, conservation and renewable energy improvements vary widely,and creative new funding opportunities are continually being developed.

Funding opportunities run the gamut from government grants and loan guarantees to property-assessed financing and power purchase agreements. Given the wide range of funding options, choosing the best funding mechanism for a given project is important.

Performance Contracting Program
Performance contracting provides a mechanism for making energy conscious upgrades to buildings with no initial cost to the owner. Improvements are financed and then paid for with the resulting energy savings. Businesses that develop, install, and arrange financing for these types of projects are known as energy service companies. Energy service companies act as project developers for a wide range of tasks and assume the risks associated with the project. Their services fees are bundled into the project cost and are repaid through the savings generated by the project.

Power Purchase Agreements
A power purchase agreement is a contract between an electricity generator and a power purchaser. The power purchaser agrees to pay a set rate for electricity for the life of the contract, which then enables the power generator to secure financing for construction of power generating capacity.

Through power purchase agreements, businesses, schools and governments can finance non-utility-owned electricity generating facilities that tap renewable resources and reduce greenhouse gas emissions.

Grants

Colorado Governor’s Energy Office
The Colorado Governor’s Energy Office, using American Reinvestment and Recovery Act monies, is providing grant funding for energy efficiency, energy conservation and renewable energy projects. The list of available grants changes monthly.

U.S. Department of Agriculture
The U.S. Department of Agriculture is providing grant funding to agricultural producers and small rural business owners interested in improving their energy efficiency or investing in renewable resource technology. Part of the Farm Security and Rural Investment Act of 2002, the grants are available to businesses in population centers of 50,000 or less and to farmers and ranchers.

The department’s Renewable Energy for America Program provides loan guarantees and grants for renewable energy systems, energy efficiency improvements, feasibility studies and energy audits. The program is available to agricultural producers and rural small businesses.

Property-assessed Clean Energy Financing
Legislation passed in 2008 (HB 1350) permits local governments to issue bonds to create a fund for loans to finance private renewable energy systems and energy efficiency installations. The bill also authorizes creation of special improvement districts for the purpose of investing in renewable energy resources.

Additional Funding-related Legislation
See appendix.