Path to Self-Sustainability
This section addresses how to create self-sustaining clean energy finance programs by focusing on five strategies:
- Prove clean energy finance as a profitable line of business for financial institutions
- Review and reset leverage ratios for the first generation programs and establish metrics
- Arrange additional sources of loan loss reserve funds
- Build the secondary market for energy efficiency and renewable energy loan portfolios
- Link clean energy finance programs to other state government development, finance, and financial system support/reform initiatives.
Clean energy finance programs backed by funding from the American Recovery and Reinvestment Act of 2009 (ARRA) will support investments in clean energy projects and fill a financing gap in the market. These programs will create jobs, save energy, lower utility bills, improve energy security, and reduce greenhouse gas emissions. They have an important additional objective: to create finance models that are commercially sustainable and scalable and that will continue even after ARRA grant funds are spent.
Grantees have a limited amount of time to use their ARRA funds to support energy efficiency and renewable energy lending projects. Although the federal government may provide funds in the future, it is unlikely the amounts will be at the level of the current State Energy Program and Energy Efficiency and Conservation Block Grant Program ARRA grants. Therefore, it is important for all grantees and program partners to start thinking now about how to make their new financing programs sustainable for many years beyond the life of the original infusion of ARRA funds.
You can download the guide’s entire chapter on the Path to Self-Sustainability.