Clean Energy Reserve Program
The Clean Energy Reserve program will be established in legislation to be introduced by Assemblywoman Nancy Skinner. The program will be housed in the Office of the State Treasurer. The purpose of the program is to reduce the cost to residential and commercial property owners who want to install energy efficiency improvements, on-site renewable energy generating technologies like photovoltaics, or electric vehicle charging equipment. Instead of direct subsidies to property owners, the program will provide a reserve or other credit enhancements to qualified lenders, in order to decrease risk for lenders and reduce interest rates for borrowers.
In 2010 the Legislature enacted urgency legislation establishing a program, called PACE (Property Assessed Clean Energy), to allow willing property owners to finance renewable energy and water efficiency improvements in their homes and businesses through an added assessment on their annual property tax. Federal housing finance agencies subsequently disallowed the program, ruling it interferes with the ability of mortgage lenders to recover their funds in the event of foreclosure. The ruling is being challenged by the California Attorney General.
The Clean Energy Reserve program is designed to achieve the same goals as the PACE program:
- Increase demand for energy efficiency and distributed small-scale renewable energy technologies.
- Create green jobs.
- Reduce interest rates on loans to property owners.
- Increase capital availability by reducing risk to lenders.
- Leverage available funds.
WHAT THE BILL DOES
The bill will direct the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) to administer a Clean Energy Reserve program to make it easier to finance energy efficiency and water efficiency improvements and the installation of renewable energy generation technologies and electric vehicle charging equipment on residential and commercial properties. Using $50 million in the Renewable Resources Trust Fund that was already designated for the PACE program, the Clean Energy Reserve program will provide a backstop for lenders against the risk of occasional loan loss, allowing the lender to lower its rates and thereby lowering the borrowing cost to property owners.
Under the program, lenders, not property owners, will apply to the CAEATFA for credit enhancements to secure its loans for energy efficiency, water efficiency and renewable energy technologies. The bill will establish criteria for lenders to meet, to ensure low loss ratios and allow greater leveraging of available funds.