Investment and Financing

Industry estimates of annual energy efficiency investments vary due to differences in how efficiency investments are defined, how the data is collected, and what data are available. According to the IEA, incremental investments in energy efficiency across buildings, transportation, and industry sectors have fallen in the U.S., from a peak of $51 billion in 2016 to $42 billion in 2018 (in 2018$), while overall energy efficiency investment has largely stalled globally.1 However, AEE reports revenue growth in certain energy efficiency subsectors, such as building efficiency ($83 billion in 2018, up 10% from 2017), and the sales of hybrid electric vehicles and plug-in electric vehicles ($70 billion, up 8% from 2017).2

Studies show that the ESCO market had been growing steadily since the 1990s but is reaching a plateau in recent years, with industry revenue rising from approximately $3.8 billion in 2004 to $5.1 billion in 2011, and then remaining largely flat at $5.2 billion in 2014 (nominal dollars).

In contrast, LBNL has estimated that the market potential for the U.S. ESCO industry – including through Energy Savings Performance Contracts (ESPCs) – could reach $92-$201 billion ($2016).3

Property Assessed Clean Energy Programs (PACE) investments, including commercial (C-PACE) and residential (R-PACE) investments, experienced significant growth from 2012 to 2016. However, while C-PACE investments nearly doubled from $72 million in 2016 to $142 million in 2017, R-PACE investments fell by 6% over the same time period, to $1.1 billion.4 In 2017, cumulative PACE investment reached $3.5 billion.

Led by the Connecticut Green Bank and New York Green Bank, the most mature in the country, U.S. Green Banks5 have stimulated cumulative investment of more than $3.6 billion in clean energy, including energy efficiency.6

While overall energy efficiency-specific breakdowns are not available, the Connecticut Green Bank reports closing 1,329 energy efficiency projects in 2018, while the New York Green Bank has invested $52.4 million in energy efficiency projects to date and has $83.0 million in active pipeline projects.7 However, incremental Green Bank investments fell in 2017 and 2018 relative to 2015-2016.