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Financing Navigator Resources

Want to read more? This page provides a collection of resources including sector energy financing primers, financing option fact sheets, high-level market overviews and guides, and information on financing policies and programs in your area, all in one place.


Sector Energy Financing Primers

Looking up at sky scrapers from ground level

The commercial sector is large, diverse, and represents substantial energy savings potential as commercial buildings represent just under one-fifth of U.S. energy consumption. Companies in the commercial sector range from large corporations with hundreds of properties across the country to small businesses with one or two properties. A range of financing solutions are available to companies of all sizes and structures that are looking to implement energy efficiency and renewable energy projects.

Industrial complex

The industrial sector is a significant consumer of energy, accounting for nearly a third of energy consumption in the US. Industrial facilities are often energy intensive due to their size and the energy consumption of process and cross-cutting industrial technologies such as furnaces and compressed air systems. There are important opportunities to save energy by implementing best practices and energy saving technologies. Manufacturers are using a variety of financing strategies to fund energy efficiency, some of them quite innovative.

interior of neoclassical building with desks and lamps with green lampshades

Energy consumption in state and local government buildings totals 980 trillion Btus annually – more than half of the total energy use of all government-owned buildings in the United States. With a 20% improvement in energy performance, these buildings could save $6 billion annually in avoided energy costs. Energy efficiency in the public sector reduces operational costs, frees up much-needed funding for public priorities, and demonstrates good stewardship of taxpayer dollars.

contemporary building with solar panels on roof

There are more than 18 million market-rate and affordable multifamily housing units in the U.S., and one in six American households resides in a multifamily building. Financing energy efficiency, renewable energy, and water conservation projects in multifamily buildings can be challenging as the sector’s diversity, complexity, and unique characteristics create barriers to implementation, but new financing mechanisms and other resources are creating opportunities for building owners.

Emergency Hospital Building Exterior

The healthcare sector accounts for over 4.1 billion square feet of floor space in the United States and spends over $5 billion annually on energy. Energy costs can consume 1-3 percent of a typical healthcare facility’s operating budget, which often represents an estimated 15% or more of profits. The sector has been a market leader in the adoption of innovative internal funding strategies for energy projects, and other common financing solutions for energy efficiency and renewable energy include leases, loans, and energy savings performance contracts (ESPCs).

Building with neoclassical facade

The higher education sector accounts for over 5 billion square feet of floor space in the United States and spends an estimated $6 billion annually on energy costs. Higher education institutions play a unique role in their communities as labs for innovation and research, and many schools are using innovative financing strategies to implement energy efficiency and renewable energy. The sector has been a market leader in the adoption of energy savings performance contracting (ESPC) and, more recently, green revolving funds. Other common financing approaches include leases, loan and debt financing, and other forms of internal funding.

Financing Toolkits

Finance and Resilience

The Finance and Resilience Roadmap is designed to help commercial building owners develop a plan for measuring, managing, and mitigating resilience risk. It is the result of the Department of Energy's Finance and Resilience Initiative, which brings together leading experts from finance, insurance, real estate, and other fields to foster clarity, collaboration, and guidance on emerging resilience issues and how they affect energy and financial performance in buildings.

two people reviewing schematics at a construction site
Commercial PACE Financing for New Construction

This toolkit provides energy resources and energy project case studies for building owners and developers to take advantage of commercial PACE for new construction.

Two energy meters
A Guide to Efficiency-as-a-Service

This toolkit provides resources and project case studies for building owners, operators, and occupants that may want to take advantage of efficiency-as-a-service to improve energy and water performance in their facilities.

solar panel
Financing for Resilience with Commercial PACE

This toolkit provides an overview of CPACE financing to help building owners, operators, and occupants improve resilience in their facilities.

Green Piggy Bank
Green Revolving Funds

This toolkit provides cross-sector guidance on establishing a green revolving fund to overcome the common barrier of dedicated funding. A green revolving fund is an internal capital pool that is dedicated to funding energy efficiency, renewable energy, and/or sustainability projects that generate cost savings. A portion of those savings is then used to replenish the fund.

Financing Option Fact Sheets

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What is Internal Funding?

Internal funding refers to the use of an organization’s existing financial resources to pay for energy efficiency, renewable energy, or other generation projects, rather than seeking external financing. This is often the most simple and direct method for funding projects, and it allows the organization to capture the full financial benefits of energy projects rather than paying a portion to a financing provider. Methods for internal funding include operating or capital budget expenditures, self-funded energy savings performance contracts (ESPCs), capital investment funds, revolving loan funds, and internal carbon pricing.

power lines with a sunrise in the background

What is a Power Purchase Agreement?

A Power Purchase Agreement (PPA) is an arrangement in which a third-party developer installs, owns, and operates an energy system on a customer’s property. The customer then purchases the system's electric output for a predetermined period. A PPA allows the customer to receive stable and often low-cost electricity with no upfront cost, while also enabling the owner of the system to take advantage of tax credits and receive income from the sale of electricity. Though most commonly used for renewable energy systems, PPAs can also be applied to other energy technologies such as combined heat and power (CHP).

Brick storefronts

What is Lease Financing?

A lease is a simple financing structure that allows a customer to use energy efficiency, renewable energy, or other generation equipment without purchasing it outright. The two most common types are on-balance sheet capital leases and off-balance sheet operating leases. Solar leases are a unique structure available for solar energy projects, and public sector organizations can also take advantage of tax-exempt leases. At the end of the lease, the customer may have the option to purchase the equipment, return the equipment, or extend the contract, depending on the type of lease used. Lease financing is offered by many equipment manufacturers and vendors as well as third-party lessors. (Note that operating leases must be reported on balance sheet as of 2019-2020.)

Neoclassical Portico

What is Loan or Debt Financing?

Customers can borrow money directly from banks or other lenders to pay for energy efficiency, renewable energy, and other generation projects. The customer must then arrange the purchase, installation, and management of equipment by a third-party contractor or in-house staff. Loan financing is offered by many equipment manufacturers, vendors, and contractors as well as third-party banks and lenders. Loan terms and availability may be affected by the creditworthiness of the customer, limitations on debt that can be taken on the balance sheet, or current debts held by the customer.

Two grey energy meters

What is Efficiency-As-A-Service?

Efficiency-as-a-service is a pay-for-performance, off-balance sheet financing solution that allows customers to implement energy and water efficiency projects with no upfront capital expenditure. The provider pays for project development, construction, and maintenance costs. Once a project is operational, the customer makes service payments that are based on actual energy savings or other equipment performance metrics, resulting in immediate reduced operating expenses. The energy services agreement (ESA) is the most common type of arrangement, but other models such as lumens-as-a-service and energy subscription agreements are also in use.

Eye glasses and pen on top of sheets of paper that have pie charts and statics printed on them

What are Green Bonds?

A green bond is a fixed income debt instrument in which an issuer (typically a corporation, government, or financial institution) borrows a large sum of money from investors for use in sustainability-focused projects. Green bonds work similarly to a traditional bond issuance, except the funds are slated for use in energy efficiency, renewable energy, or other projects that meet certain sustainability requirements, often formalized in a green bond “framework” developed by the issuer. Green bonds typically involve one or more third-party firms to underwrite, certify, and monitor the bond issuance.

Building with Neoclassical Facade

What is Commercial Property Assessed Clean Energy?

Commercial property-assessed clean energy (CPACE) is a financing structure in which building owners borrow money for energy efficiency, renewable energy, or other projects and make repayments via an assessment on their property tax bill. The financing arrangement then remains with the property even if it is sold, facilitating long-term investments in building performance. CPACE may be funded by private investors or government programs, but it is only available in states with enabling legislation and active programs.

People in yellow hard hats looking at papers

What is an Energy Savings Performance Contract?

Under an Energy Savings Performance Contract (ESPC), an energy service company (ESCO) coordinates installation and maintenance of efficiency equipment in a customer’s facilities and is paid from the associated energy savings. The ESCO typically provides a savings guarantee. The improvements are usually owned by the customer and may be installed with little or no upfront cost if the ESPC is financed. ESPCs are suited for larger ($1 million+), more complex projects with high upfront costs, though they have sometimes been used for smaller projects. ESPCs are also called energy performance contracts (EPCs).

General Financing Resources

This section contains resources related to energy efficiency and renewable energy financing broadly.

Current Practices in Efficiency Financing: An Overview for State and Local Governments
This white paper provides a comprehensive overview of the energy efficiency financing landscape.

Emerging Opportunities and Challenges in Financing Solar
This white paper examines the key topics that must be addressed to achieve the SunShot Initiative's price-reduction and deployment goals.

Federal Financing Programs for Clean Energy
This white paper serves as a guide to U.S. government programs that support the development of clean energy projects in the U.S. and abroad.

Information for Lenders
This webpage serves as a repository for technical assistance and other relevant information for lenders interested in energy efficiency.

Innovations and Opportunities in Energy Efficiency Finance: 2nd Edition (2012)3rd Edition (2013)4th Edition (2014)
This collection of white papers summarize common efficiency financing options with a focus on challenges, legal considerations, and opportunities.

Show Me The Money
This paper briefly reviews primary internal and external efficiency financing strategies and summarizes key market barriers, sectors, and stakeholders.

United States Building Energy Efficiency Retrofits
This white paper provides insights into financing options, markets, and policy impacts.

Image of the Better Climate Challenge Logo


This section contains resources related to energy efficiency and renewable energy financing policies and programs in specific regions, states, and cities.

Coalition for Green Capital
This website includes information about green bank programs in the U.S. and globally.

DSIRE Database
This searchable database provides information on incentives and policies that support renewables and energy efficiency in the U.S.

On-bill Financing: Cost-Free Energy Efficiency Improvements
This website provides information on state legislation relevant to on-bill financing.

PACE Programs Near You
This graphic and database provides a full listing of all residential and commercial PACE programs across the U.S.

State Energy Loan Fund Map
This map provides an overview of state energy loan fund programs, as well as a suite of state energy resources.

Tax Credits, Rebates, & Savings
This database from the Department of Energy provides a list of available tax credits, rebates, and other savings opportunities nationwide.

TIF Districts
This website provides information on tax increment financing (TIF) districts.