Financial Incentives for Energy Efficiency
Some utilities are rushing to raise fixed charges. That would be bad for the economy and your utility bill
Slow growth in electricity demand (or, in some places, flat or declining sales) and growing numbers of customer photovoltaic systems are creating concern among utilities about their ability to adequately recover the costs associated with producing electricity. In response, there has been a disturbing trend around the country of utilities proposing to simply raise monthly “fixed charges,” or the charges we pay to the utility just for being a customer.
This summer was a scorcher. Heat waves repeatedly struck the Midwest and South, sparing only sections of the Northeast. All of California is still in a drought. Cities were especially hot due to their concentration of buildings and human activity, a phenomenon called the urban heat island effect. At times, it may have felt impossible to beat the heat.
At ACEEE we focus a lot on electricity, electric efficiency programs, and how energy efficiency is the least-cost electric resource. Well, it shouldn’t be a surprise, but there is a parallel and very similar success story for natural gas efficiency.
After a long warm-up, energy efficiency is taking its rightful place as a starting player in the clean energy game. This spring, we’ve seen both the public and the private sector put serious resources into helping build financing solutions to help efficiency reach the scale it needs.
State and local governments are laboratories for innovation in energy efficiency policies and programs. Policymakers, regulators, and citizens at all levels increasingly recognize that energy efficiency is crucially important to their economies and are increasingly taking action and seeking information on policies and programs in their communities. Today ACEEE is launching a new database tool that highlights the energy efficiency leadership—and opportunities for improvement—of state and local governments around the United States.
The moment we have been waiting for has arrived! The Warehouse for Energy Efficiency Loans (WHEEL), a financing platform that will open the market for energy efficiency investment to institutional investors, is open for business. WHEEL acts as a virtual financial warehouse for relatively small individual loans, holding them until there are enough loans to attract attention from large investment houses.
Recent months have seen some exciting developments in energy efficiency finance. Investment funds, capitalized at about $200 million, are set to break into the potentially extensive market for energy efficiency projects in the buildings sector.
Over the past several years, the energy efficiency community has worked hard to engage lenders in what is estimated to be a $279 billion market. At ACEEE’s annual Finance Forums, we have witnessed tremendous progress.
Over the past several years, financing for energy efficiency investments has been widely viewed as a promising solution to reducing upfront cost barriers to investment in energy efficiency. However, several markets, including multi-tenant commercial office and multi-family, remain stubbornly hard to reach.