Energy upgrade financing (EUF) schemes constitute mechanisms to finance energy efficiency solutions via an agreement between three or more parties; at a minimum, the building owner, the local government or utility and a finance provider. The building owner agrees to carry out environmental upgrade works. The building owner, council and finance provider voluntarily enter into a EUF. Then the finance provider agrees to advance funds to the building owner for the environmental upgrade works. The local government collects repayments for the environmental upgrade works through an appropriate tax or rates system (via on-bill financing) and then passes the repayments on to the finance provider. The building owner can subsequently ask tenants to contribute towards the upgrade cost through the savings achieved with the energy efficiency upgrade.

Instrument category

Leasing and asset finance models

Implementation status

Moderate - tried and tested

Enabling conditions and success factors
  • Well developed local government system for collection of tax or rates.
Instrument benefits
  • Overcomes high upfront costs that are often a barrier to progress.

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