The Community-Based Energy Investment Act

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Act IV of Energize America

Contents

Objective

To enable local communities across America to deploy community-scale energy projects suited to their locale and available resources by making private, low-interest financing available.

Description

Local communities around the country already use bonds to finance energy efficiency and renewable energy programs. Structured so that the energy savings and produced energy have a greater annual value than the cost of the bond, these programs have enabled communities like San Francisco to invest in their energy future. The Community-Based Energy Investment Act provides funding for energy-saving investments and renewable energy production from bonds that are paid off via those savings, and which lower total community energy costs. These combined energy efficiency and production programs can provide annual returns of well over ten percent, which provides a path for continuing investments in these arenas.

Structuring these bonds, however, is an expensive process requiring significant expertise and skills which many state and local communities cannot afford. The federal government shall establish a program within the Department of Energy bringing together this expertise and hiring advisors from the financial community to help local and state governments establish bond programs to fund energy efficiency and renewable energy programs. The federal government will assist in the structuring of program elements, from technical surveys, to balancing efficiency and production elements, to offering bond model options. This act will make available up to 10 percent of the project cost (matching the amount invested by the local authorities), with the balance of funding coming from the private market, thus ensuring the commercial validity of each project. The agency will help ensure that the realized energy savings can be monetized to repay the loans – e.g., the energy savings will be greater each year than the funds required to pay back the loans.

Benefits

The Community-Based Energy Investment Act will allow local communities to launch energy projects most suited to their local requirements and conditions such as weather, availability of resources, commercial or residential needs, and presence of specialized local competences or industries. By providing up to $1 billion of seed money, the Act will facilitate up to $10 billion per year of local and state investments in energy efficiency and renewable energy production.

These bonds will serve a critical purpose by using Federal, State, and Local government expenditures to spur development of expertise and private industry capabilities to meet local requirements for energy efficiency and renewable energy specialists for construction, installation, and maintenance of these new systems. The investments will also provide a strong market environment welcoming of new technologies and approaches for energy efficiency and renewable energy programs that are suitable across all the different climates of the United States.

Investment

The Community-Based Energy Investment Act will cost approximately $1 billion per year in matching funds for local and state governments, along with $100 million per year for administration expenses.

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