What’s the Buzz About QECBs?

posted in: Government, Investment | 0

April 22, 2015

By Susan Rosenthal, Energy Programs Consortium

 

What’s the Buzz About QECBs?

Southeast States Among National Leaders in Total QECB Issuances

We’re always on the lookout for innovative financing solutions that can help public and private organizations fund energy efficiency programs. That’s why we’re so excited about Qualified Energy Conservation Bonds (QECBs) and the opportunity they present for the Southeast. QECBs are federally-subsidized debt instruments that can help local and state municipalities reduce their cost of capital for qualified energy conservation and renewable energy projects by up to 3.5 percent (70 percent of the bond issuance rate), making the terms of financing of energy efficiency improvements extremely attractive for property owners. What does this mean for local and state organizations in the Southeast? Read on to find out what the buzz is all about.

Background

QECBs were originally authorized by Congress in the 2008 Energy Improvement and Extension Act and the total allocation available to states was increased to $3.2 billion under the American Recovery and Reinvestment Act of 2009. Each state received an allocation and the legislation required that they “shall” suballocate a portion of the allocations to large local governments who can either chose to use them for projects or waive them back to the state. QECB users can finance diverse types or projects including, but not limited to, the implementation of green community programs (including the use of grants, loans, or other repayment mechanisms to implement such programs); projects to reduce energy consumption in publicly owned buildings by at least 20%; and projects for certain renewable energy facilities.

QECBs in the Southeast

Of the $3.2 billion in total QECB allocations, Southeast states received an allocation of just over $776 million. Of this allocation, around $166 million of QECBs are known to have been issued, which leaves almost $610 million remaining or projects throughout the region. Kentucky and Alabama are among the leading states nationwide for QECBs issued. A recent issuance by Lexington/Fayette Urban County Government in Kentucky took the state’s total issued to $44,197,000, an impressive 99.79% of its allocation. Alabama continues to make steady progress in its use of QECBs with a consistent pattern of issuances taking its total issued to $39,325,325, 81.3% of its allocation.

While the Southeast as a whole has only issued 21% of its total allocation, it has been home to some innovative uses of QECBs including two exciting Green Community Programs. In North Carolina, a program that uses QECBs to finance renewable energy projects on agricultural land has had four issuances totaling around $8 million, all for solar installations. South Carolina also has a successful green community program that has had two issuances to date. In 2014 the program featured the first known use of QECBs for the purchase of compressed natural gas (CNG) vehicles with a $2 million issuance for a commercial trucking company. This program also has the most recent known issuance on March 19 of this year, a $5.25 million transaction to finance an Energy Savings Performance Contract for a school district.

To help foster the momentum in the Southeast region, the Southeast Energy Efficiency Finance Network will be hosting a QECB webinar on April 30, 2015 at 2:00 pm EST. Participants will have a chance to learn about specific QECB projects in their own states, some of the challenges in using QECB funds, and about the great potential QECB financing offers to both the private and public sectors. Join us and learn what the buzz is all about!

To learn more about QECBs and for a complete list of state allocations, click here.

To register for the April 30 webinar, click here.

The Southeast Energy Efficiency Network would like to thank Susan Rosenthal, Energy Programs Consortium, [email protected], for providing the content for this week’s blog post.