Financing & Incentives

Key Financing Resources

Financing a project allows building owners to borrow capital and pay it back over time. There are a variety of financing products designed specifically to support energy efficiency or decarbonization projects, often with more favorable terms (such as reduced rates or longer payback periods) compared to a standard equity loan.

• The Department of Energy’s (DoE’s) Financing Navigator has more detailed explanations of financing types and a tool to compare financing options based on the type of building, project type, and financing priorities

• California’s GoGreen Financing offers affordable, accessible financing for energy efficiency and clean energy upgrades to larger multifamily and commercial buildings through its Commercial Energy Efficiency Financing (CEEF) program, which provides flexible terms, competitive rates, and can be combined with utility rebates to maximize savings for property owners.

Financing Options

• Traditional Financing options include commercial loans (including below-market loan options) and capital or operating leases.

• Commercial Property Assessed Clean Energy (CPACE) financing offers California building owners a powerful tool for funding energy efficiency, renewable energy, and water conservation upgrades with minimal upfront costs. This long-term financing mechanism attaches the loan to the property rather than the owner, allowing repayment through a special assessment on property taxes over periods of up to 30 years. For California building owners, C-PACE provides 100% financing with competitive fixed rates, no personal guarantees, and the ability to transfer payment obligations to new owners upon sale. The program is available in most California counties through the California Statewide Communities Development Authority (CSCDA) and other regional PACE programs, making it an attractive option for those seeking to improve building performance while preserving capital and credit lines for other business priorities. Learn more.

• On-Bill Financing (OBF), also known as on-bill repayment, offers building owners a streamlined approach to funding energy efficiency retrofits by attaching repayment directly to their utility bills. Unlike traditional loans or green bonds that require separate application processes and repayment systems, OBF programs through California utilities allow building owners to implement energy-saving improvements with zero upfront costs and zero interest, with repayments structured so monthly energy savings typically offset the added line item on utility bills. This financing option is not suitable for very large projects. It also differs from PACE or conventional loans by eliminating credit checks, avoiding property liens, requiring no collateral, and maintaining a building owner's existing credit capacity for other business needs. On-bill financing offers repayment terms typically ranging from 3-10 years based on projected energy savings. Learn more.

• Green Bonds are are fixed-income securities specifically designed to raise capital for projects with positive environmental benefits, creating a win-win for investors seeking both financial returns and climate impact. The California State Treasurer's Office has established a robust green bond framework to support the state's transition to a cleaner economy. Learn more.

• Energy Savings Performance Contract (ESPC) offers California building owners a unique risk-mitigating approach to financing comprehensive energy efficiency retrofits without upfront capital investment. Unlike traditional financing options or utility programs, ESPCs feature a contractual guarantee from an Energy Service Company (ESCO) that the energy savings will meet or exceed the cost of the improvements over the contract term—typically 10-20 years for California commercial properties. This performance-based model fundamentally differs from conventional loans, green bonds, or on-bill financing by transferring technical and performance risk from the building owner to the ESCO, which conducts detailed energy audits, implements the upgrades, and provides ongoing measurement and verification to ensure savings materialize. For California building owners concerned about project performance or lacking technical expertise, ESPCs provide a turnkey solution where the ESCO's compensation is directly tied to actual energy savings achieved, creating a powerful alignment of interests that other financing mechanisms cannot match. Learn more.

• Efficiency-As-A-Service (EaaS) offers building owners a zero-upfront-cost approach to implementing energy efficiency and decarbonization retrofits through an innovative service-based business model. Unlike traditional financing options that require capital investment or debt, EaaS providers install, own, and maintain energy-efficient equipment in the customer's building while charging a monthly service fee typically structured to be less than the resulting energy cost savings. For California commercial property owners, this arrangement creates immediate positive cash flow while transferring performance risk to the service provider, who is financially motivated to maximize energy savings throughout the contract term. The model is particularly valuable for building owners seeking to preserve capital and credit capacity while still implementing comprehensive retrofits that may include HVAC upgrades, lighting improvements, building controls, and electrification measures. EaaS contracts in California typically run 5-10 years, after which the customer can purchase the equipment, extend the service agreement, or have the provider remove the equipment. Learn more.

• Internal Funding, which refers to the use of an organization’s existing financial resources to pay for projects, is also an option for companies that are comfortable investing their own funds on building improvements. This is theoretically the simplest method, and it allows the organization to avoid debt and capture the full financial benefits of their projects. Learn more.