State Launches Loan Fund for Energy Efficiency Retrofits

The state will soon begin loaning out money to businesses that need help replacing old equipment, adding insulation and installing solar panels. The aim of the $50 million fund is to finance energy efficiency projects that more-than pay for themselves.

If all goes as planned, companies could actually be able to pay off their loans and pocket additional savings on their energy bills. At least that’s the pitch. But unlike similar lending arrangements for efficiency renovations, the savings for borrowers are not guaranteed.

Clint Gwin is president of Pathway Lending, which is administering the Energy Efficiency Loan Program. He says companies will still be on the hook to pay the loan, whether the project meets the expected energy savings or not. Gwin says it’s not a sure thing for the lender either.

“There is some risk. I mean, for financial institutions, a lot of the transaction is going to be replacing the lighting in a building that may already have a loan against that building, so there’s really not a lot of collateral for a financial institution to go after.”

Some of the loan money will come from a private bank, Nashville-based Pinnacle Financial Partners. But the state and the Tennessee Valley Authority will also contribute to the $50 million loan fund.

The loans for efficiency projects will be made at five percent interest rates to be paid off over a period of 10 years. Applications are due by November 1st.

Here’s a link to the application.