What stops banks lending to energy efficiency projects?

Four years after the US credit market crashed, continue to fight energy efficiency projects to secure the financing.

What is the problem? A weak economy, of course. But if it leads deeper to energy efficiency, and renewable energy on-site - the problem.

It is not the lack of interest in green electricity. On the contrary, says Angela Ferrante, Director of the alternative energy solutions at Energi, a Massachusetts has Ruckversicherungs Gesellschaft, the insurance and risk-management products for the energy industry.

Installations are banks lending, projects, partly because the number of customers now knocking on their doors, who are interested in funding for energy efficiency and Solar Green.

"If they hear it from their customers, much convincing as hearing about green so and so in the newspaper it is" she said.

Also see the banks of energy efficiency as a new market opportunity. Energy efficiency is fast growth and strong Government support, especially in the expensive energy markets in California and the Northeast are experiencing.

"Banks with new rules face and try to see what products they in can diversify", Ferrante said.

But lenders are terrified when they begin to evaluate the risks associated with energy efficiency and on-site solar.

For example, energy efficiency and solar companies often based their sales pitch to the customer about the guaranteed energy savings. Many deals are structured in such a way that the customer for the geothermal energy with money on energy costs saved pays. What happens if something goes wrong and the energy savings do not materialize? Is the Bank for the loan may collect? And what serves as collateral? Is the loan in default, the Bank go into the House, Office building or factory and ribs from the solar panels, lighting, efficient engines or insulation? Probably not.

Energi tries, "green energy projects for lenders and energy developers with new products from insurance and warranty-de-risk". Such a product warranty insurance, energy savings backstops the promised energy savings, even for small contractors and energy service companies (ESCOs).

Larger ESCOs could such guarantees on their own due to their size and their clientele, the market often provide financially stable 'Mash'--urban/College/schools/hospitals. But it was difficult for smaller businesses and entrepreneurs to provide companies and households, to do the same.

In order for such insurance products could be "Game changer," said Kevin Kaminski, Energi senior Vice President for alternative energy solutions. Warranty insurance smaller energy companies have the same favourable conditions as the bigger players - offer your customers the option, and the smaller companies can take literally the deals of the Bank as a low-risk proposition.

Federal funding and incentives are scarce, is the green energy industry innovation in financing such as Energi probably more and more to see the products. Solar gardens are another example of the emerging innovation as well as real estate investment trusts and master limited partnerships (MLPs), a form now allows for oil and gas investment but non-renewable energies. To learn more about solar gardens and MLPs, see my article "U.S. renewable energy: new financial models" in the issue of November 2012 in Platts Energy Economist. More information on green energy and risk find Energi free Guidebook, ' risk reduction for reference Guild for new energy finance. "

ELISA Wood is a long-time energy efficiency energy markets, their free newsletter is available at RealEnergyWriters.com