States are implementing many policies that affect the economics of energy efficiency, renewable energy, and combined heat and power (CHP). Such policies make investments more attractive by reducing cost barriers, lowering risk, and reducing regulatory compliance costs. These include targeted funding and incentive programs that increase investment in energy efficiency, renewable energy, CHP, and services by residents, industries, and businesses in their state.
Over the past three decades, states have diversified their programs from grants and loans into a broader set of programs that target specific markets and customer groups. This diversification has led to program portfolios with greater sectoral coverage, a wider array of partnerships with businesses and community groups, and reduced risk associated with programmatic investments in energy efficiency, renewable energy, and CHP.
The types of funding and financial incentive programs discussed in this chapter include:
- Direct cash incentives including grants, rebate programs, and performance-based incentives.
- Tax incentives.
- Loans and financing programs such as revolving loans, property assessed clean energy (PACE) financing, energy performance contracting (EPC), credit enhancement, and energy-efficient mortgages (EEMs).
- Green banks.
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