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Picking up the Fruit: Financial Support for Energy Efficiency
Brian LipsNC Solar Center / DSIRE
NC State University
NCSL Energy Policy SummitJuly 20, 2009
"When it comes to saving money and growing our economy, energy efficiency isn't just low hanging fruit; it's fruit lying on the ground. The most prosperous, competitive economies of the 21st century will be those that use energy efficiently. It's time for America to lead the way.”
– Secretary Chu, June 29, 2009
The DSIRE Project
www.dsireusa.org
Database of State Incentives for Renewables & Efficiency
• Created in 1995
• Managed by NC Solar Center in partnership with IREC
• Funded by U.S. DOE
• ~2,000 RE & EE financial incentives & regulatory policies
• Federal, State, Local, Utility
• > 200,000 unique visitors/month
• Rebates (45 state-administered programs in 13 states; 710 utility-administered programs in 43 states )
• Loans (45 state-administered programs in 29 States; 162 utility-administered programs in 29 states)
• Grants (23 state-administered programs in 14 states; 26 utility-administered programs in 11 states
• Tax Incentives (20 States, 37 Programs)• Property Tax Financing Authorization (9 States)• Federal Update
Financial Incentives for Energy Efficiency
Public Benefits Funds for Energy Efficiency
State PBF participation is voluntary
www.dsireusa.org / July 2009
RI: $16M in 2007
MA: $123M in FY2007
NJ: $81M in FY2007
CT: $94.42M in FY2007
VT: $24.75M in FY2007
PA: Unknown
IL: $3M in FY2009
NY: $93M in FY2007
WI: $69M in 2007
MT: $8.9M in 2007
OH: $5.6M in 2007
MI: $60M in FY2007-- Mostly Low-income
NH: 19.9M in FY 2007
DC: $4.1M in FY2007
DC
OR: $38.9M in 2007
CA: $567M in 2007
State PBF
17 states + DChave public benefits funds
(~$1.2 billion in 2007)
Funding Levels provided by ACEEE
Rebate Programs
• 45 State-administered programs in 13 states• 710 utility-administered programs in 43 states• Range from highly specific incentives for certain residential
equipment to broad programs for custom commercial and industrial projects
• DSIRE captures incentives offered by every investor-owned utility, and municipal and cooperative utilities with 25,000 or more customers
Rebate Programs for Energy Efficiencywww.dsireusa.org / July 2009
CT: NJ: P
P
U
U
U
U
U
U
U
U
U
U
U
MA: U
UMD: U
U
U
U
U
U
U
U
U
U
U U
NH: U
U
U
U
U
U
U
U RI: U
U
U
U
U
U
U
U
U
U = Utility-Administered Programs= State-Administered Programs
Loan Programs for Energy Efficiency
• 45 state-administered programs in 29 States• 162 utility-administered programs in 29 states• Majority of state programs are revolving loan programs• Many state loans initially funded with Oil Overcharge
Restitution Money• Many funds may get a boost with Stimulus Funds
Loan Programs for Energy Efficiencywww.dsireusa.org / July 2009
CT: UMA: U
U
U
U
U
U
U
U
U
UUU
U
U
U
U
U
RI: U
U
U
NH: U
U
U
U
U
U
UU
U = Utility-Administered Programs= State-Administered Programs
Grant Programs for Energy Efficiency
• 23 state-administered programs in 14 states• 26 utility-administered programs in 11 states• DSIRE only captures information on grant programs with
recurring funds; not one-time grant solicitations
Grant Programs for Energy Efficiencywww.dsireusa.org / July 2009
U = Utility-Administered Programs= State-Administered Programs
U
CT: U
U
UU
U
NH: UU
U
U
U
Tax Incentives for Energy Efficiency
• Tax credits, deductions, property tax exemptions and sale tax exemptions
• Tax credits:– MD, NY, NM: tax credit for sustainable/green buildings– IN, KY, MI, MT, OR: tax credit for equipment purchases
• “Sales Tax Holidays” for Energy Star products increasingly popular --- 4 new states in 2008
Tax Incentives for Energy Efficiencywww.dsireusa.org / July 2009
20 states have adopted Tax
Incentives for Energy Efficiency
Personal tax credit(s) only
Corporate tax credit(s) only
Personal + corporate tax credit(s)
Sales Tax Exemption
Tax Deduction Property Tax Incentive(L = Local Option)
CT:
MD: L
L
Stable, long-term incentive, declining over timeStable funding sourceEasy application processAdministrative flexibility to modify programCost-effective quality assurance mechanismTrack program usage & share dataPartnerships with banks, installers, nonprofitsEducation & outreach
Financial Incentives: Best Practices
Property Tax Financing Programs
• Idea first developed in Berkeley, CA• Initiatives are adopted at the city or county level• In most cases, the state must enact legislation to authorize the creation
of local programs• Allows residents and businesses to finance energy projects through a
special assessment on their property tax bill• If property owner moves, the assessment stays with the property• Different ways to fund programs: bonds, general city fund, partnership
with lending institution, Qualified Energy Conservation Bonds
Property Tax Financing Authorization
Enacted State policy
www.dsireusa.org / July 2009
CA: 2008
NM: 2009
CO: 2008
WI: 2009
VT: 2009
10 states have adopted a
Local Clean Energy Financing Policy;
3 states with pending legislation
MD: 2009
VA: 2009
OK: 2009
Pending legislation
TX: 2009 LA: 2009
• The Energy Improvement and Extension Act of 2008 (The Bailout Bill)
• The American Recovery and Reinvestment Act of 2009 (The Stimulus Bill)
Federal Action: A Tale of Two Bills
The Energy Improvement and Extension Act of 2008
• Extended the Investment Tax Credit (ITC) to 12/31/2016• Allows ITC to offset Alternative Minimum Tax• Extends ITC eligibility to utilities• Included small wind in ITC (< 100kW) for first time (Up to $4,000 --- cap
removed by Stimulus Bill)• Included geothermal heat pumps in ITC (up to $2,000 --- cap removed by Stimulus
Bill)• Removed the $2,000 cap on ITC for residential PV• Extended most energy efficiency tax credits for another year• Extended expiration date for the Production Tax Credit (PTC) and expanded it to
include other renewables• Authorized the issuance of qualified energy conservation bonds• Allocated $800 million for new Clean Renewable Energy Bonds (CREBs)
• Allows for cash grants in lieu of ITC and PTC• Removes provisions that make subsidized energy financing reduce the ITC and PTC• Gives DOE $6 billion to issue loan guarantees for renewable energy projects• Removes cap for residential solar water heating, geothermal heat pumps, small wind• Allows PTC-eligible technology to claim ITC or equivalent cash grant• Makes new tax credit for renewable energy manufacturing facilities • Extends and expands tax credit for energy efficient home improvements • Extends bonus depreciation for 2009• Expanded the allowable energy conservation bond volume from $800 million to $3.2
billion • Allocated an additional $1.6 billion for CREBs.
The American Recovery and Reinvestment Act of 2009
CREBs & QECBs
• Issued by government entities (states, cities, counties, territories, Indian tribal governments or any political subdivision thereof)
• Bonds are issued, theoretically, with a 0% interest rate. The borrower pays back only the principal of the bond, and the bondholder receives federal tax credits in lieu of the traditional bond interest.
• Allocation for new CREBs: $2.4 Billion• Allocation for QECBs: $3.2 Billion
– States receiving allocations based on population– States required to distribute portion of allocation to larger cities and
counties
Energy Efficient Home Improvement Tax Credit
• 30% tax credit • Windows, Doors, Insulation, Roofs, HVAC equipment• Capped at $1,500 for all improvements made in 2009 and
2010• Extended and expanded by EIEA and ARRA
Stimulus Funds!!!
• $3.2 Billion for State Energy Programs
• $3.6 Billion for Block Grants• Money starting to flow into
states• Most states have had their
plans approved by the DOE• DSIRE will have information
on new or expanded programs that fit within our scope as information becomes available
"One of the fastest, easiest, and cheapest ways to make our economy stronger and cleaner is to make our economy more energy efficient…By bringing more energy efficient technologies to American homes and businesses, we won't just significantly reduce our energy demand; we'll put more money back in the pockets of hardworking Americans.”
– President Obama, June 29, 2009
