The department offers low-interest loans to public K-12 schools, public colleges and universities, hospitals and local governments for energy-saving investments and energy-efficiency projects to reduce energy use and cost. These loans can be used for various equipment including high efficiency lighting fixtures and lamps, combined heat and power systems, renewable energy systems, waste heat recovery, high efficiency pumps and high efficiency heating, ventilation and air conditioning (HVAC) systems. These loans can also be used for building shell improvements, such as insulation and other infiltration measures, and other measures that reduce energy use and cost.
Loan recipients repay the loan with money saved on energy costs as a result of implementing energy-efficiency projects. By using loan financing, the loan recipient's tax dollars are freed up for essential services or other capital improvements. The loan recipient also benefits from reduced energy costs and increased comfort of building occupants. The money saved can then be used to repay the loan. An energy-saving loan for schools and local governments is not defined as debt and therefore does not count against debt limits or require a public vote or bond issuance.
Loan Terms and Repayment
The interest rate for the FY23 loan cycle is set at 2.50%, with a loan repayment term of typically 10 years or less. An administrative fee of 1% of the loan principal will be added to the repayment amount. This is a reimbursement program. Once a project is complete, the loan recipient submits a reimbursement request and final project cost report, along with itemized invoices and canceled checks, to the department's Energy Loan Program Clerk for review and reimbursement.