While many perceive funding to be the biggest hurdle for ZNE implementation, there is mounting evidence that ZNE goals can be achieved within typical construction budgets. The National Renewable Energy Laboratory provides a resource for Cost Control Strategies for ZNE Buildings that includes best practices for keeping costs low throughout the ZNE process. Several strategies already discussed throughout the Hub, particularly around building an integrated task force and conducting stakeholder engagement throughout the process, can end up saving costs in the long run by streamlining design, planning, and construction phases.
Identify Funding Sources
In addition to cost reduction strategies, several funding sources are available for various activities and stages of implementation.
The State’s Greenhouse Gas Reduction Fund (GGRF) provides funding to State agencies and programs that advance GHG mitigation efforts within transportation, energy, and natural resources. Funding allocations can be viewed here. Programs that fund clean energy and energy efficiency efforts include:
- Community Services and Development Low-income Weatherization Program
- Department of Water Resources Water-Energy Grant Program
- CEC’s Energy Efficiency in Public Buildings Program
Utilities can provide funding for energy efficiency measures through a variety of strategies and funding programs. Some of these strategies include:
- On-Bill Financing: The utility pays upfront for energy efficiency upgrades and installations and adds a charge to the participants’ utility bill until all costs are repaid.
- Savings By Design: Savings By Design offers design assistance, Owners Incentives, Design Team Incentives, and Energy Design Resources for nonresidential, new construction projects within participating utility territories. Services begin in the project design phase and continue through construction completion.
PACE providers can cover upfront costs for energy efficiency, renewable energy, and water conservation upgrades to residential, multifamily, and commercial buildings. The loans for upfront costs are repaid over a pre-determined term through the property tax bill. PACE providers in California include:
- HERO Program
- California First
- Ygrene Works
- Green Finance San Francisco
- County of Los Angeles program
- mPower Placer
- Sonoma County Energy Independence Program
Renew Financial developed the PACE model and offer additional financing opportunities and support.
The Hazard Mitigation Grant Program helps communities implement hazard mitigation measures and increase resilience to natural hazards. ZNE projects may be able to gain FEMA funding if tied to energy resilience strategies.
CPUC Funding Opportunities
- Electric Program Investment Charge (EPIC)
The program specializes in affordable financing for renewable energy and energy efficiency projects, supporting investments in clean energy technologies that provide benefits to the electricity ratepayers of PG&E, SDG&E, and SCE. EPIC funds clean energy research, demonstration and deployment projects that support California’s energy policy goals and promote greater electricity reliability, lower costs, and increased safety.
- Self-Generation Incentive Program (SGIP)
Provides rebate incentives to support existing, new, and emerging distributed energy resources. SGIP funds qualifying technologies include wind turbines, waste heat to power technologies, pressure reduction turbines, internal combustion engines, microturbines, gas turbines, fuel cells, and advanced energy storage systems.
- California Solar Initiative
Solar rebate program for customers of the investor-owned utilities. This program funds solar on existing homes, existing or new commercial, agricultural, government and non-profit buildings. This program funds both solar photovoltaics (PV), as well as other solar thermal generating technologies.
CEC Funding Opportunities
- Energy Efficiency Financing Program
The program offers unsecured loans of up to $3 million to public agencies to pay for energy feasibility studies and installation of energy saving measures. The interest rate is 1% for a term up to 20 years for cities, counties, special districts, public universities and colleges (except community colleges) and public care institutions. The loan requires the agency to pass a resolution to participate and to execute a promissory note with the CEC. This program funds energy efficiency, renewable energy, demand response and other energy-related projects.
- New Solar Homes Partnership
The partnership provides financial incentives and other support to home builders to encourage the construction of new, energy efficient solar homes.
iBank Funding Opportunities
- Statewide Energy Efficiency Program (SWEEP)
Program for small, medium and large-scale energy efficiency upgrades and projects for California’s public municipality, university, school, and hospital borrowers. SWEEP Projects include comprehensive efficiency improvements to new and existing facilities that save energy. The program funds advanced metering systems; energy efficiency; energy management and/or control systems; demand response programs; water conservation, wastewater management, pipeline, mining/extraction and similar end-use processes; lighting and control systems; Heating, ventilation and air conditioning systems (HVAC); building envelope improvements; occupant plug load management systems; other electrical load reduction; and thermal and electric energy storage.
- Light Emitting Diode Street Lighting Program (LED)
Public financing to municipalities, universities, schools and hospitals to help meet the State’s goals for greenhouse gas reduction, water conservation and environmental preservation.
- Exempt Facility Bonds
Tax-exempt financing for projects that are government-owned or consist of private improvements within publicly-owned facilities, such as private airline improvements at publicly-owned airports. These bonds fund airports, docks and wharves, mass commuting facilities, facilities for the furnishing of water, sewage facilities, solid waste disposal facilities, facilities for the furnishing of local electric energy or gas, local district heating or cooling facilities, qualified hazardous waste facilities, high-speed intercity rail facilities, environmental enhancements of hydro-electric generating facilities, and qualified public educational facilities.
- Public Agency Revenue Bonds (PARBs)
Bond financing for state and local government agencies to expand construction of transportation/transit (airports, ports), water/wastewater system, power generation/transmission system, sewer system, schools, etc.
Sustainable Energy Bond Program
Participating public agencies and nonprofit organizations have the ability to contract with a pre-qualified Energy Service Company to complete energy and water conservation measures. The program participants will receive substantial utility cost savings including a contractual guarantee sufficient to cover the full cost of all retrofit work. The program includes street lighting, building lighting, pumps, HVAC, system controls, boilers, chillers, ducting, windows, partial roofing, toilets, and others.
Fannie Mae Green Financing
Offers three loan programs: Green Rewards, Green Building Certification Pricing Break, and Green Preservation Plus to fund various energy and water conservation upgrades for buildings.
Provides loans for energy efficiency retrofits, sustainable energy projects, and equipment for multi-family housing and businesses. A municipal leasing program also provides funding for schools and public housing authorities.
Create Funding Opportunities
Local governments can further support local communities by creating funding opportunities to advance ZNE efforts. Innovative strategies to broaden your funding toolkit include:
- Energy Efficiency Reserve FundAn Energy Efficiency Reserve Fund is a Loan Loss Reserve credit enhancement strategy that can encourage private lenders and investors to invest in unfamiliar markets, such as emerging ZNE buildings. Local governments can incentivize these lenders by providing partial risk coverage.
- Revolving Loan Fund
A special account into which money is deposited for expenditure without regard to fiscal-year limitations.
- Community Carbon Fund
This type of fund accepts money from local donors who are interested in offsetting their carbon emissions to go toward local projects.
- Regional Energy Networks
- The Energy Network Energy Project Lease Financing
Low-interest loan to public agencies from a private lender. Minimum loan is $250,000, but multiple projects can be bundled under a single loan. This program funds energy efficiency, water conservation, renewable energy projects or other capital improvements
- Home Upgrade – BayREN
Examples of Support for Communities
- City and County of San Francisco: Provides a carbon fund for a range of local projects that offset greenhouse gas emissions close to where they are created. Depending on how much the donor wants to mitigate, the investment can be represented by an entire project, or combined with others to proportionally supply a project.
- City of Watsonville Carbon Fund Program: The local carbon fund program utilizes a unique approach to leverage a new carbon impact fee and rebate structure to incentivize energy-efficient new construction and retrofits above and beyond California state energy code (Title 24) requirements to support statewide zero net energy goals.
Develop and Offer Incentives
Providing incentives and reducing barriers to ZNE implementation is another tool for local governments when pursuing ZNE goals, which can be effective for bringing forward development proposals that include ZNE measures.
Best Practices and Examples for Incentive Programs
- Offer incentives to developers if ZNE measures are incorporated, such as streamlined permitting, fee waivers, or low cost loans.
- Develop a recognition program for ZNE projects.
- Provide competitions, such as the Architecture at Zero Competition (PG&E)
- City of Chula Vista: Hired a full time “code coach” to provide guidance to permit applicants and building developers on current state building and energy codes, and to educate them about ZNE.
Smart Build Santa Barbara (SB2): Santa Barbara County’s incentive program encourages residents and business owners to voluntarily make their buildings energy efficient. The program offers free advice from experts to interested community members and provides incentives for meeting the program’s criteria. The program is split into two tiers: “Ultra Low Energy Verified,” which requires new and existing buildings to exceed Title 24 standards by 30%, and “Zero Net Energy Designed,” which requires new and existing buildings to exceed Title 24 standards by 40% and generate 100% of its energy using on-site renewable sources.