Keeping It in the Community: Sustainable Funding for Local Energy Efficiency Initiatives

Research Report E124


Eric Mackres and Sara Hayes


Initial investments have already been made by thousands of local governments in energy efficiency projects, programs, policies, and expanding staff capacity, but most federal funds that have supported these efforts are expiring. Some communities have considered or adopted sustainable funding mechanisms for their energy efficiency investments. These efforts provide important examples for other communities hoping to sustain funding for their efficiency efforts. This report describes several of these local funding options and provides examples where each has been adopted. Options discussed include utility partnerships; licensing, service, or waste fees; energy or carbon taxes; systems benefit funds; bonds; and options to capture the value created by avoided energy costs to create self-sustaining funds through revolving loan funds or other mechanisms. Additional items discussed include leadership and management practices that have made the establishment and continuation of these funding mechanisms viable, such as champions, issue framing, dedicated staff, performance benchmarking, and measurement and verification.