Explore Financing Options
ENERGY EFFICIENCY AND RENEWABLE ENERGY FINANCE 101
Energy efficiency and renewable energy can reduce operating costs, cut greenhouse gas emissions, and improve the resiliency of buildings. However, upfront costs are a major barrier to getting these projects done. Many organizations don't have the capital available to pay for the equipment, installation, and servicing of energy efficiency and renewable energy upgrades out of pocket. Even those with plentiful cash may prefer to spend it on their core operations instead.
That's where financing comes in. In the broadest terms, "financing" simply means using someone else's capital to fund projects in your facilities and then paying it back over time. In practice, there are a variety of strategies and structures to accomplish this, each with their own pros, cons, and nuances. These are often called financing products, financing mechanisms, or, as we call them in the Navigator, financing options. They range from simple options like loans and leases, to more specialized options designed to overcome specific challenges, such as property assessed clean energy (PACE) or efficiency-as-a-service.
As demand for energy efficiency and renewable energy financing has grown, the diversity of financing options available in the marketplace—and the number of companies that provide them—has grown as well. This means that there is probably a financing option in the market that will fit your needs. But it also means that most building owners, executives, and other decision-makers don’t have time to understand and compare all of the available options.
That’s why we built the Navigator: to help you learn about the options, decide which might be a good fit, and begin connecting with financing providers within a few minutes.
Ready to take the next step? We recommend you start by briefly reviewing the information below. You can click on any financing option button for a simple fact sheet about that option. After that, answer a few questions that will help you find financing options and providers that are right for your organization. Or, if you want to skip ahead, you can begin connecting with Financial Allies right away.
The diagram below summarizes the energy efficiency and renewable energy financing options available in the market. “Traditional” options are commonly used to finance energy projects in addition to other types of goods and services, whereas “specialized” options are specifically designed for energy projects. Organizations can also fund projects internally without seeking third-party financing. For a more detailed typology of financing options, see LBNL's "Current Practices in Efficiency Financing" report.
- Energy Efficiency and
Renewable Energy Financing
- Traditional Financing
- Specialized Financing
- Property Assessed Clean Energy (PACE)
- Energy Services
- Traditional Financing
- Energy Efficiency (EE)
- Renewable Energy (RE)
- Both RE & EE
BROWSE FINANCING OPTIONS
Here you can sort the available financing options according to a variety of attributes such as balance sheet treatment, contract complexity, and typical close time. Simply select an attribute from the drop-down menu to sort accordingly.
Each building sector faces different challenges and opportunities regarding financing for energy efficiency and renewable energy projects. The sector-specific financing primers provide a summary of how energy financing is done within each sector.
The commercial sector is large, diverse, and represents substantial energy savings potential as commercial buildings represent just under one-fifth of U.S. energy consumption. Companies in the commercial sector range from large corporations with hundreds of properties across the country to small businesses with one or two properties. A range of financing solutions are available to companies of all sizes and structures that are looking to implement energy efficiency and renewable energy projects.
The healthcare sector accounts for over 4.1 billion square feet of floor space in the United States and spends over $5 billion annually on energy. Energy costs can consume 1-3 percent of a typical healthcare facility’s operating budget, which often represents an estimated 15% or more of profits. The sector has been a market leader in the adoption of innovative internal funding strategies for energy projects, and other common financing solutions for energy efficiency and renewable energy include leases, loans, and energy savings performance contracts (ESPCs).
The higher education sector accounts for over 5 billion square feet of floor space in the United States and spends an estimated $6 billion annually on energy costs. Higher education institutions play a unique role in their communities as labs for innovation and research, and many schools are using innovative financing strategies to implement energy efficiency and renewable energy. The sector has been a market leader in the adoption of energy savings performance contracting (ESPC) and, more recently, green revolving funds. Other common financing approaches include leases, loan and debt financing, and other forms of internal funding.
The industrial sector is a significant consumer of energy, accounting for nearly a third of energy consumption in the US. Industrial facilities are often energy intensive due to their size and the energy consumption of process and cross-cutting industrial technologies such as furnaces and compressed air systems. There are important opportunities to save energy by implementing best practices and energy saving technologies. Manufacturers are using a variety of financing strategies to fund energy efficiency, some of them quite innovative.
There are more than 18 million market-rate and affordable multifamily housing units in the U.S., and one in six American households resides in a multifamily building. Financing energy efficiency, renewable energy, and water conservation projects in multifamily buildings can be challenging as the sector’s diversity, complexity, and unique characteristics create barriers to implementation, but new financing mechanisms and other resources are creating opportunities for building owners.
Energy consumption in state and local government buildings totals 980 trillion Btus annually – more than half of the total energy use of all government-owned buildings in the United States. With a 20% improvement in energy performance, these buildings could save $6 billion annually in avoided energy costs. Energy efficiency in the public sector reduces operational costs, frees up much-needed funding for public priorities, and demonstrates good stewardship of taxpayer dollars.