According to the whitepaper, Green Bank Accounting: Examining the Current Landscape and Tallying Progress on Energy Efficiency, the US has witnessed a steady progress in attracting energy efficiency funds from the private sector.
The paper gives credit to roles played by utilities, local governments and states in ensuring the private market delivers greater energy savings to customers.
Federal governments have made use of Green Banks to boost investments and accelerate growth of the energy efficiency and renewable energy sectors in the US.
Green Banks are financial institutions designed at state level to address constraints faced by consumers and lenders in financing clean energy projects.
Green Banks use public funds to stimulate private capital.
According to the whitepaper, the majority of Green Banks operating in the US are investing or have plans to invest in both renewable energy and energy efficiency sectors.
Green Banks which have been operating for longer period of time are investing in both the renewable energy and energy efficiency sectors, while newly established Green Banks are focusing on energy efficiency but planning to engage in the renewable energy industry.
ACEEE studied how Green Banks measure the progress of projects they invest in. The organisation found that the financial institutions make use of three metrics in tracking the status of projects deployment.
The measures include fund deployment and project facilitation, leverage ratios and, default and delinquency rates.
Green Banks energy efficiency funding
The majority of banks do currently not have access to track projects deployment as they are still in the planning phase.
The bulk of energy efficiency projects which have recorded significant energy usage reductions were mainly funded by utility firms.
Green Bank projects in the commercial sector amount for 43% of public and private funds, and projects in the residential sector account for 57%. [Tennessee city secures funding for energy conservation].
ACEEE found that institutions such as Green Banks are an important tool towards the growth of the energy efficiency sector in the US. However, they may not be well suited everywhere.
Rather, states and energy efficiency administrators may be able to finance energy efficiency programmes without the establishment of Green Banks.
ACEEE concludes that
- Green Banks are still new and there is high opportunity to expand and improve their offerings such that they cover both the energy efficiency and renewable energy sectors.
- Public policy is important in guiding Green Bank activities in certain markets as without explicit policy directives the investment industry may not be able to generate sufficient incentives to develop specialised financing products for low-income and multi=family energy efficiency markets.
- Data collection measures need to be improved in order to accurately measure the impacts of Green Banks on energy efficiency and renewable energy markets in the US.
Image credit: www.downtoearth.com.