Energy efficiency (EE) stands out among capacity resources in its ability to offer economic and social benefits at least cost, as well as its accessibility to all segments of the market. But commercial development of EE has lagged this potential. To “ripen” the market, a major scale-up of EE finance is needed, and this paper, part of RAP’s Global Power Best Practice Series, examines strategies for meeting that goal. Two key barriers to EE finance scale-up are the lack of a pipeline of well-prepared projects ready for investment and the lack of financial products that are sufficiently tailored for this market. Finance alone is not enough to move the EE market, it must be accompanied by institutional capacity-building that encourages project development. The report explores the various types of EE finance programs, including examples from North America and around the world that have driven EE investment. It also lays out strategies for scaling up investment, including analysis of the market, its gaps and risks, and areas that present opportunity. Among its recommendations are the development of a best practices toolkit, the use of models such as Energy Savings Purchase Agreements (ESPAs) and EE feed-in tariffs to acquire direct savings, leveraging market intermediaries, and marketing that fosters a culture of investment in EE.
Strategies for Energy Efficiency Finance
December 18, 2014
- John MacLean