U.S. Department of Energy Energy Efficiency and Renewable Energy

Clean Energy Lending from the Financial Institution Perspective

This section of the guide covers primary investors—the lenders—and the secondary market—the investors that might purchase loans from lenders.

  • Needs of Financial Institutions - The first part of the section presents a series of questions that financial institutions of all types will likely ask grantees about new clean energy lending products, a loan loss reserve fund, and other credit enhancements. Under each question is an explanation of why the answer is important to lenders. 

  • Needs of the Secondary Market Investor - The second part of the section presents the information required by investors in the secondary market and a brief discussion of several challenges facing clean energy lending programs.

Also see a sample residential program term sheetpdf. Grantees may wish to use this as a tool to guide them through the decision-making process as they prepare for meetings with financial institutions. 

Lending for energy efficiency and renewable energy projects is a new activity for many financial institutions. As a result, state and local governments with grant funding from the American Recovery and Reinvestment Act seeking to partner with such institutions will be in a stronger position if they understand the questions lenders are likely to ask them and why.

In this section, the term “financial institutions” includes not only the primary (or initial) lenders that provide loan capital to residential borrowers and hold on to the loans they make until maturity, but also investors (the secondary market) that purchase the loans from the initial lenders. 

You can download the guide’s entire chapter on Clean Energy Lending from the Financial Institution Perspectivepdf.