financing

This guide from the Environmental and Energy Study Institute outlines various capital sources and risk management strategies for municipal electric utilities developing on-bill financing (OBF) programs for energy efficiency and clean energy projects.

• Municipal electric utilities can use several credit enhancement strategies to manage risk from borrower defaults and lower borrowing costs. These include Loan Loss Reserves (LLR), which typically range from several percent up to 10% of allocated capital; Loan Guarantees, which can cover 100% of potential losses; Debt Service Reserve Funds (DSRF) to handle overdue payments; and Subordinated Capital, which absorbs default losses before senior capital is affected.
• Various public and government funding mechanisms are available for energy-efficiency programs. While the American Recovery and Reinvestment Act previously provided significant funding, current public funding is described as less robust. Other options include qualified energy conservation bonds (QECBs) subsidized by the U.S. Department of the Treasury, and USDA programs for rural electric utilities serving populations of 20,000 or fewer, or non-profit rural utilities in areas with populations of 50,000 or fewer (the latter offering zero-interest loans up to $1 million and grants up to $300,000).
• Internal utility reserves are the most common capital source for OBF programs among municipal public power utilities. These can be structured as revolving loan funds. Other utility-based options include ratepayer funds collected via a utility tariff based on kWh usage.
• External private and market-based financing options include private lending institutions (such as banks, credit unions, and community development financial institutions), foundations providing seed funding for innovative pilots, and secondary markets using revenue bonds, asset-back securitizations, and loan portfolio sales.

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} }