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Unsecured financing options, provided by specialized financial institutions and often marketed by partner energy contractors, require review and approval based on the personal credit of the borrower and other factors. Secured financing options, like a home equity line of credit or second mortgages, use the property or other assets as collateral for the lender, and often leads to lower interest. It’s important to review all available options and understand the relative benefits and risks before making a financing decision. Energy Upgrade California's website can provide California property owners with comprehensive information about a range of options to consumers, including information about credit enhancements and other mechanisms to reduce borrowing costs and credit risk.
Other innovations in financing options for commercial owners include Energy Services Agreements, or ESAs. ESAs closely resemble solar power purchase agreements, where a private entity finances, installs, owns, and maintains certain energy installations, and through special agreements with the owner, receives payments set at or below their pre-retrofit utility costs. This unique structure makes it possible to finance deeper retrofits at minimal liability to the property owner, and may allow for favorable accounting treatment.
Finally, property owners in some California utility service areas have the option of considering “on bill” financing, which has been successfully implemented in some utility territories, including PG&E. Under this model, applicants are screened for credit through payment history and other indicators, and if approved, can borrow funds to install energy saving equipment and other upgrades. The customer then pays it back with a level, amortized charge on their normal bill. Projects are designed to generate savings and corresponding financing payments that match pre-retrofit utility bill charges. The California Public Utilities Commission, which regulates the State’s utility companies, is planning to launch new programs to offer a wide range of enhanced financing options to residential and commercial customers in 2013. See the California Energy Efficiency Finance Project for more information.
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