Commercial property-assessed clean energy (CPACE) is a financing structure … Contact online >>
Commercial property-assessed clean energy (CPACE) is a financing structure
However, the market is very large, in part because leases are commonly used to
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There are a variety of financing options and strategies that organizations can pursue to facilitate their renewable energy project''s deployment. It is necessary to understand and evaluate the different financing structures that are available to determine the most appropriate strategy.
Third-party financing is a well-established financing solution in the United States, having emerged in the solar industry as one of the most popular methods of solar financing. Third-party solar financing predominantly occurs in two forms: solar leases and power purchase agreements (PPAs). In the lease model, a customer signs a contract with an installer/developer and pays for the use of a solar system over a specified period of time, rather than paying for the power generated. In the PPA model, the solar energy system offsets the customer''s electric utility bill, and the developer sells the power generated to the customer at a fixed rate, typically lower than the local utility.
Below are resources to help you understand third-party ownership financing structures as a means to facilitate your solar project development.
A renewable energy certificate (REC) is a tradeable, market-based instrument that represents the legal property rights to the "renewable-ness"—or all non-power attributes—of renewable electricity generation. A REC can be sold separately from the actual electricity (kilowatt-hour, or kWh). The REC owner has exclusive rights to make claims about "using" or "being powered with" the renewable electricity associated with that REC. A REC is issued for every megawatt-hour (MWh) of electricity generated and delivered to the electric grid from a renewable energy resource.
If you own the RECs associated with your renewable energy project''s electricity output, you can sell these RECs to another party. In doing so, you forfeit the ability to make any claims about "using" renewable energy, but generate a new revenue stream. The revenue is a function of the system''s kWh output and the market price of RECs.
Organizations engaged in a PPA may choose to sell the RECs associated with the on-site solar PV system and in their place buy RECs sourced from other geographically eligible green power resources in order to make environmental claims. This process is referred to as REC arbitrage (pdf) and allows the site host to capture the financial benefits of solar RECs while also making environmental claims and meeting the Green Power Partnership''s requirements.
Below are resources to help you understand REC monetization strategies and how RECs may impact the financing and economics of your project development.
IEA (2021), Financing Clean Energy Transitions in Emerging and Developing Economies, IEA, Paris https://, Licence: CC BY 4.0
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Not sure where to start on energy efficiency or renewable energy financing? Use this page to explore financing options and see how they compare to each other. Anywhere in the page, click on a Financing Option Button to learn more about that option, including how to connect with providers who can finance your projects. For more information on how financing for energy projects is done within each sector, view the sector energy financing primers below.
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 providerswithin a few minutes.
Ready to take the next step? We recommend you start by briefly reviewingthe information below. You can click on any financing option button for a simplefact sheet about that option. After that, answer a few questionsthat 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 Alliesright 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.
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 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.
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.
There are more than 23 million market-rate and subsidized affordable multifamily housing units in the U.S. which collectively produce 107 million metric tons of greenhouse gas emissions annually. Financing decarbonization projects--electrification, energy efficiency, and renewable energy --in multifamily buildings can be challenging due to the sector''s diversity, complexity, and unique characteristics. However, there are a range of financing mechanisms and funding resources available to providers committed to decarbonization.
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.
About Renewable energy financing options
As the photovoltaic (PV) industry continues to evolve, advancements in Renewable energy financing options have become critical to optimizing the utilization of renewable energy sources. From innovative battery technologies to intelligent energy management systems, these solutions are transforming the way we store and distribute solar-generated electricity.
When you're looking for the latest and most efficient Renewable energy financing options for your PV project, our website offers a comprehensive selection of cutting-edge products designed to meet your specific requirements. Whether you're a renewable energy developer, utility company, or commercial enterprise looking to reduce your carbon footprint, we have the solutions to help you harness the full potential of solar energy.
By interacting with our online customer service, you'll gain a deep understanding of the various Renewable energy financing options featured in our extensive catalog, such as high-efficiency storage batteries and intelligent energy management systems, and how they work together to provide a stable and reliable power supply for your PV projects.
