6 Ways to Finance Energy Efficiency Projects

Energy efficiency is a popular trend among organizations and individuals who want to contribute to environmentally friendly goals. Every day, more people are thinking about launching an energy efficiency project because they want to protect the environment and cut the costs of living.

But this can be a long and daunting process. Representatives of a company that recently conducted green upgrades, say that energy efficiency does not come for free, so you need to find a sustainable way to fund it.

You’ve probably heard of dozens of different options in this field, but we want to narrow down the choices and focus on the best financial arrangements. We will explain to you the concept of energy efficiency, its benefits, and six ways to finance your own project. Let’s take a look!

Energy Efficiency: Definition and Benefits

Energy efficiency means using less energy to provide the same level of energy. For instance, an insulated house is a good example of energy efficiency because it uses less energy to make the place warmer or colder.

A lot of modern appliances are designed to preserve energy, so now fridges spend almost 50% less energy than 20 years ago. Environment protection authors says this sort of progress has a number of practical benefits, including these:

Improve indoor comfort: It’s easier and cheaper to control the temperature and keep the air dry and warm.

Save money: Energy efficiency projects can save you a lot of money in the long run.

Live healthier: The new technology is not only keeping the air dry, but it is also making it healthier.

Reduce humidity: Now you can control humidity levels and reduce the risk of airborne diseases.

Increase property value: Energy efficient homes and buildings make the property easier to maintain, which increases the overall price of the object.

Reduce gas emission: This is your way to contribute to the higher goal by lowering the greenhouse gasses.

How to Fund Your Energy Efficiency Project

After everything we’ve said in the introductory part of this post, it is time to concentrate on practical ways to accumulate enough funds to launch an energy efficiency project. We selected the six best financial models here:

PACE Financing

Property Assessed Clean Energy (PACE) financing gives you the opportunity to acquire money through private lenders. The program is available in more than 20 states across America and it comes in two versions – residential and commercial. How does it work?

Jake Powel, a finance analyst explains it briefly: “Once you receive the funds to complete the project, PACE representatives make an assessment of the project value and you pay for it through the tax bill. The process takes a lot of administrative work, but it’s a small price to pay for project completion.”

On-Bill Financing

This program offers you loans from a utility that you eventually pay off through your regular energy bills. In this case, the utility becomes a lender who takes care of the project funding. Your job is to make energy efficiency upgrades and then pay a monthly fee until you’ve got everything covered. The program is available in nine states, but the procedure and administrative requirements are not the same everywhere.

Home Equity Line of Credit (HELOC)

Finance advisors define HELOC as a revolving account that you can use to finance energy efficiency projects. In this case, your property becomes collateral and you can quickly seal the deal with the lender. However, this way of funding your project is unique because you can actually use the funds for other purposes as well. This is why HELOC interest rates are mostly higher than fixed mortgages, but they can be subjects to tax deductions.

The Energy Efficiency and Conservation Loan Program

The US Department of Agriculture created The Energy Efficiency and Conservation Loan Program to support investments in commercial, industrial, and residential properties. The program targets users in rural areas, utilities in particular.

Namely, utilities can take financial loans and give it to third parties interested in investing in these rural territories. This type of money re-lending is based on the on-bill pay off method, while the number of energy efficiency applications is by no means limited.

Energy Efficient Mortgages

Just like the name suggests, Energy Efficiency Mortgages help users to conduct green projects by incorporating operational costs directly into the first mortgage. If you are interested in this type of funding, you need to obtain a Home Energy Rating System (HERS) report.

It’s a document that assesses energy improvements made on your building, including upgrades such as insulation, storm doors, solar systems, or dual-pane windows. Keep in mind, however, that the overall upgrade costs cannot be higher than 15% of the property value.

Renovation Loans

Renovation loans represent an all-around solution because you can use it for many different purposes, including energy efficiency upgrades. Using this tool, you also add costs to the first mortgage. According to business analysts renovation loans are suitable for home buyers of homeowners. The program allows you to spend money on various items, from green appliances and solar panels all the way to buying energy efficient doors and windows.

Conclusion

Energy efficiency is getting increasingly popular because people and businesses care about the environment and also want to reduce operational costs. In such circumstances, launching an energy efficiency project seems like a fairly reasonable solution.

But you might need financial support to kickstart your idea, which is why we showed you six ways to finance an energy efficiency project. Make sure to consider every option and make sure to leave a comment if you need additional explanations about this topic.

By Becky Holton, who is a journalist and a blogger at assignment masters. She is interested in education technologies and is always ready to support informative speaking. Follow her on Twitter.

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