Can financing deliver significant private capital and rapid growth in home energy efficiency improvements? A key element may be attracting secondary-market investors to buy the efficiency loans and thereby replenish funds for a new round of lending. A new policy brief from Lawrence Berkeley National Laboratory, led by efficiency financing expert Peter Thompson, details how two creative financing entities crafted a ground-breaking deal with several novel features that may offer valuable lessons for future efficiency financing transactions.
The policy brief, Selling an Energy Efficiency Loan Portfolio in Oregon: Resale of the Craft3 Loan Portfolio to Self-Help Credit Union, provides insight into the recent transaction of an on-bill energy efficiency loan portfolio between two mission-oriented lenders, Craft3 in Oregon and Self Help in North Carolina. Craft3 works with local utilities and Clean Energy Works (CEW) program to provide consumer energy efficiency loans for home energy upgrades in Oregon and Washington. The transaction is notable for the many innovative design elements of the Craft3 loans, including: long loan terms (up to 20 years), on-bill collection, and novel underwriting approaches. The case study illustrates how certain design decisions can sometimes both facilitate the objectives of efficiency financing programs and possibly present challenges for the sale of a portfolio of energy efficiency loans.
The policy brief explores:
- The motivations for the sale and how the transaction benefited both parties;
- The process that the two parties went through to finalize the transaction;
- How the design of the CEW/Craft3 program impacted the terms of this transaction and how the deal was structured; and
- Lessons that efficiency program administrators can take from the transaction.
This case study is the latest in the LBNL Clean Energy Financing Policy Brief series. These working papers highlight emerging financing models, important issues that financing programs face, and how these issues are being addressed.