financing

The guide outlines capital sources for municipal on-bill financing, including internal utility reserves, public funding, private lending, and bond issuance. It details risk management tools such as Loan Loss Reserves, loan guarantees, and subordinated capital to reduce borrowing costs and protect lenders from borrower defaults.

• Credit enhancements are used to manage risk from potential defaults and lower borrowing costs. Common strategies include Loan Loss Reserves (LLR), which typically range from several percent up to 10% of the allocated capital, and loan guarantees, which can cover 100% of potential losses.
• Municipal utilities have access to diverse capital sources, with internal utility reserve funds being the most common. Other options include ratepayer funds collected via a utility tariff, public grants from federal and state sources, and private capital from banks, credit unions, and community development financial institutions (CDFIs).
• Bond issuance is used by local governments to fund clean energy and energy-efficiency projects. This includes general obligation bonds, green bonds, and qualified energy conservation bonds (QECBs), the latter of which are subsidized by the U.S. Department of the Treasury.
• The U.S. Department of Agriculture (USDA) provides specific financing for rural utilities. One program serves population centers of 20,000 or fewer for energy efficiency and renewable energy, while a competitive program for non-profit rural utilities in areas with populations of 50,000 or fewer offers zero-interest loans up to $1 million and grants up to $300,000.

APA

Environmental and Energy Study Institute (n.d.). financing. https://www.eesi.org/OBF/munis/financing

Chicago

Environmental and Energy Study Institute. financing. n.d. https://www.eesi.org/OBF/munis/financing.

Wikipedia

{{cite report |author=Environmental and Energy Study Institute |title=financing |url=https://www.eesi.org/OBF/munis/financing |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{environmentalandenergystudyinstitutendfinancing, author = {{Environmental and Energy Study Institute}}, title = {{financing}}, institution = {Environmental and Energy Study Institute}, url = {https://www.eesi.org/OBF/munis/financing}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }