California Institute for Energy and Environment (CIEE)

Based on program analysis, literature review, expert interviews, and an October 2022 expert roundtable, this report identifies a set of conclusions and recommendations for California policymakers. We offer recommendations in distinct but overlapping areas:

• Expanding consumer energy financing programs

• Addressing the needs of lower- and moderate-income residents

• Accelerating building decarbonization toward California’s 2045 goal

• Ensuring equity in program revenue sources

• Improving program design through learning

These recommendations all reflect a core insight developed from the research and outreach process: that the enormous size of California’s building decarbonization need calls for significant infusions of private capital, and financing programs can be a mechanism to attract some of this capital. However, consumer energy finance programs are not yet operating on a scale that matches the challenge. Even at their most robust and effective these programs will likely only fund a portion of the needed retrofits and are not always appropriate for lowerincome residents, who will require access to alternative measures involving minimal or zero repayment obligations. And effectively taking advantage of newly available federal Inflation Reduction incentives will rely on state programs that facilitate layering of funds from an array of sources.

A central recommendation across this report’s sections is that state legislators and financing program administrators consider alternatives to utility ratepayer funds as the core revenue source for credit enhancement. Shifting from ratepayer funds to alternative sources including taxpayer funds, federal funds, and philanthropic sources could potentially help scale up the GoGreen Financing programs’ reach and flexibility across utility service territories, fuel sources, and eligible measures; facilitate more seamless integration with other state programs; reduce procedural barriers to rapid adaptation to market and technology developments; and advance equity by relying on a more progressive revenue source