Energy efficiency can provide important benefits for low- and moderate-income households such as lower utility bills and healthier, more comfortable homes, but the upfront costs of efficiency improvements are often a barrier. Extending financing to these households can help overcome this barrier but presents its own challenges, including the financial burden of monthly payments and the risk of incurring the repercussions of nonpayment. The deferred payment loan model can give low- and moderate-income households access to energy efficiency without the financial burden of monthly payments while mitigating the risk of nonpayment. From a program sponsor perspective, when grant funds are limited or unavailable, the model provides certain advantages of both grants and financing. Like a grant, target recipients have minimal risk, but like a loan, funds can serve multiple participants since the funding can be revolved. Organizations in several parts of the country have employed the model to provide safe, healthy homes by paying for home repair and home improvement. This case study provides a detailed overview of the deferred payment loan program for home improvements known as the Home Repair Program run by the Opportunity Council, a Community Action Agency (CAA) serving three counties in Washington State. This case study also considers two other CAA-administered deferred payment loan programs – one in Wisconsin and another in Michigan.

Nearly three-fourths of U.S. states have authorized local governments to use voluntary special assessments on commercial properties to finance energy improvements that boost economic development, create jobs, increase property values and advance energy goals. Commercial Property Assessed Clean Energy (C-PACE) financing allows building owners to repay the borrowed capital — from private or public sources — over time using their property as security. Berkeley Lab is supporting the Department of Energy’s Commercial PACE Working Group by developing a series of C-PACE issue briefs. The second brief in this series, Practices for Demonstrating Energy Savings from Commercial PACE Projects, looks at common practices for demonstrating energy savings to support state and local governments that sponsor C-PACE programs and want to track their energy impacts. This brief reviews: -The value proposition and trade-offs of conducting energy impact assessments for C-PACE programs; -Methods to quantify energy savings impacts from energy efficiency building improvements; and -Available resources and tools to support energy impact assessments. C-PACE programs may benefit from energy impact assessments for many reasons, including: -Validating the public benefits of the programs -Demonstrating that C-PACE can deliver participant benefits -Illustrating program impacts on public policy goals -Generating data to help improve program performance Many C-PACE programs are collecting data on project energy savings impacts, and these data can be leveraged to further support decision making and program implementation. Potential drawbacks to energy impact assessments may include added cost and burdens on property owners (e.g., the need to collect building energy consumption data). Where these burdens are considerable, they might slow program uptake. State and local governments can balance the benefits of energy impact assessments with the range of costs and accuracy inherent to available assessment methodologies. Additionally, depending on the policy context in the state or local government, a C-PACE program may be able to leverage existing efforts (e.g., building energy benchmarking programs) to reduce impact assessment costs, align with building owner practices and expectations, and efficiently assess program impact.

Greater use of Commercial Property Assessed Clean Energy (C-PACE) financing within communities where it is enabled will increase energy savings, drive economic development, and result in additional public benefits. Some states with active C-PACE programs have ramped up activity significantly while others have not achieved and sustained a high volume of transactions. This brief details C-PACE project origination trends, barriers, and market practices for state and local government C-PACE program sponsors looking to grow their C-PACE project pipeline. Based on the results of a questionnaire of C-PACE stakeholders, this brief provides new information on project origination trends and strategies for how state and local governments and third-party partners can increase the volume of projects leveraging C-PACE financing. The questionnaire results support the following observations about the C-PACE financing market: -Marketing and education: Program administrators and capital providers agree that direct outreach to property owners (e.g., one-on-one or in small groups) to explain the benefits of C-PACE financing is the most effective strategy to originate projects. -C-PACE capital providers: Specialty C-PACE capital providers—private lenders with deep knowledge of and a significant focus on C-PACE financing—are the primary source of capital for most C-PACE programs according to program administrator respondents. The share of capital provided by specialty C-PACE providers grew from 2019 to 2020. However, some C-PACE programs (two in this study) are structured so that they use exclusively public capital. -C-PACE project entry point into a program: Most program administrators report that over 75% of financing volume comes from projects with pre-selected capital providers,1 meaning that property owners have connected with capital providers before making contact with the C-PACE program. Transaction sizes for these projects grew from 2019 to 2020 (most are now over $1 million), helping to drive industry growth. -Smaller C-PACE projects: Small and medium projects often do not have a pre-selected capital provider and may need additional support from a program administrator to navigate the transaction process. This is significant given that some programs have goals to serve small- and medium-sized businesses.2 -Messaging to property owners: The features property owners find most attractive about C-PACE financing are the long repayment period and the fact that it does not require a personal guarantee. 1 In open C-PACE programs, multiple capital providers compete to fund C-PACE projects. Most program administrators in our questionnaire administer open programs; however, some administer closed programs and several administer both open and closed programs. It is unclear how to interpret the responses of program administrators who work entirely or in part in closed programs, where there is not a choice among capital providers. 2 For example, Minnesota, Michigan, and Colorado, which are profiled in Improving Access to C-PACE for Smaller Businesses (National Association of State Energy Officials, 2021).

This issue brief is for local governments that are well-positioned to participate in a commercial property assessed clean energy (C-PACE) program but are looking to inform a decision about whether to join or create a program. This resource addresses two specific barriers these local governments may face regarding C-PACE programs: (1) uncertainty about the likelihood of tax foreclosure on properties in default of C-PACE payments and the risks local governments bear, and (2) uncertainty about the staff labor commitment associated with administering the program, including the execution of the special tax assessment process.

The Inflation Reduction Act has created substantial new programs that support adoption of solar power by low-income households, including the $7 billion Solar For All program and the Low-Income Communities Bonus Credit Program, which increases the investment tax credit for certain types of deployment. In addition, a growing number of states are using solar programs to reduce energy burdens and create energy justice opportunities for low-income households and disadvantaged communities. Verifying the income of participating customers is an important component of these programs. Program managers are seeking strategies to verify a large number of subscribing customers in an accurate, timely, and cost-efficient manner. To help inform program managers, Berkeley Lab investigated how a number of energy and non-energy programs manage income verification. The most common approach is to require proof through tax documents, pay stubs, or other formal income documentation, which can pose an impediment to enrolling eligible customers and create a paperwork burden for administrators. In order to reduce the burden for both the applicant and the program manager, some programs use alternative methods. We identify three common alternative verification methods: -Categorical eligibility: Customers enrolled in other, similar income-verified assistance programs are automatically eligible for enrollment in other income-qualified programs. -Geographic eligibility: Eligibility is based on the customer’s location within a specified area, typically a low-income or disadvantaged community or census tract, and; -“Self-attestation”: The participant claims eligibility with or without further documentation. We describe these options, their pros and cons, give examples of how they are used, and explore how some low-income programs address administrative issues, audits, or other quality control measures. Finally, we explore the risk of mistaken verifications (finding a participant eligible when they are not) in the different strategies. While this memo was initiated by a request relating to income-based community solar programs, the methods are applicable to any program with income eligibility requirements in the energy or non-energy sector. Funding was provided for this research by the Solar Energy Technologies Office of the US Department of Energy, through the National Community Solar Partnership.

To meet clean energy goals, states will need significant capital. Federal funding from the Inflation Reduction Act and the Infrastructure Investment and Jobs Act will help, including by capitalizing clean energy state revolving loan funds (RLFs). States can leverage state clean water revolving funds to finance even more clean energy improvements. New York and Pennsylvania have used this innovative mechanism to extend the impact of their clean energy loan programs. For states looking to extend the reach of their clean energy financing programs, the brief: -Explains how each state leveraged their state revolving funds, -Identifies critical success factors for doing so, and -Offers key elements for replicating this model In New York, New York State Energy Research and Development Authority structured a sale of bonds secured by the repayments from a portfolio of residential energy efficiency loans from its Green Jobs – Green New York Program, with the additional support of a guarantee from the state’s clean water revolving fund. The Pennsylvania Treasury Department received a direct investment of funds from Pennsylvania’s clean water revolving fund to support the relaunch of the Keystone Home Energy Loan Program (HELP), which had previously been shuttered due to lack of support funding. From our review of these two case studies, when facilitating state clean water revolving fund transactions to support clean energy lending, the following critical success factors emerged: -Reference to preventing atmospheric deposition resulting from the combustion of fossil fuels in the state’s Clean Water Act Section 319 Nonpoint Source Pollution Management Plan, which sets out that state’s strategy for reducing pollution into state waterways. -Strong relationships and trust between the clean water revolving fund administrator and the state agency administering the clean energy loan program. -Limited funding exposure for the clean water revolving funds—which are generally large and well capitalized—to ensure that any losses experienced by clean water revolving funds would have a negligible impact on the fund’s ability to support core water and wastewater projects. -Willingness, on the part of the clean water revolving fund administrator, to innovate and engage in careful analysis to support transaction structuring, and support from state energy partner organizations. The brief provides case studies of these states’ experiences, critical success factors, and key elements for replicating the model.

This report identifies and analyzes alternative models for developing community solar projects in states lacking enabling policies, what we call “opportunity states.” Background: -Traditional community solar models rely on third-party ownership and subscription-based benefits delivered through virtual net metering (VNEM). -Opportunity states often lack the regulatory framework to support these models, hindering community solar development. Key Findings: -This report explores three alternative models for opportunity states: --Community Benefit Funds: Solar energy is converted to cash and distributed to beneficiaries (e.g., low-income energy assistance programs). --Cooperative Ownership Model: A member-owned cooperative develops and owns the solar project, with members receiving benefits through dividends. --Project Configuration & Technology: Projects are reconfigured or utilize new technologies to deliver benefits within existing net metering rules (e.g., solutions for multifamily buildings).