Energy Efficiency Revolving Loan Fund

Apply for the EE RLF Bridge Loan here: Application Link

NOW ACCEPTING APPLICATIONS - Energy Efficiency Revolving Loan Fund

The Illinois Environmental Protection Agency (“IEPA”) Office of Energy, in partnership with the Illinois Finance Authority & Climate Bank (“IFA”), is excited to announce the launch of a new Energy Efficiency Revolving Loan Fund (“EE RLF”) Capitalization Grant Program made possible by the Bipartisan Infrastructure Law (“BIL”) and the U.S. Department of Energy (“US DOE”). This program aims to support and accelerate energy efficiency projects statewide, with a special focus on assisting nonprofits, public entities, and underserved communities.

The EE RLF will introduce a specialized Bridge Loan to help nonprofits and public entities finance building electrification, energy storage, and distributed generation projects. Federal tax credits have traditionally been nonrefundable, meaning that if their tax credits exceed the amount owed in taxes, they would not get refunded. This poses a problem for nonprofits and local governments because they do not pay taxes and, subsequently, could not receive these incentives. Under the Inflation Reduction Act (“IRA”), these groups are now eligible for direct payments for their clean energy projects instead of tax credits. However, the delay in receiving these payments can hinder project implementation. We have seen similar problems in Illinois with the receipt of Illinois Solar for All incentives upon project completion and a lack of up-front funding.

To minimize this gap, IFA’s Bridge Loans will offer low-interest, short-term financing up to $1,000,000. Loans are available for up to 24 months, with no monthly payments required until receipt of direct pay tax credits from the U.S. Treasury and/or receipt of Solar for All incentives from the Illinois Power Agency. In select cases, the Authority will also consider participating with a Project Lender to finance project costs not covered by IRA Tax Credits and IL Solar for All incentives. These financing solutions ensure that nonprofit and public entities can participate fully in the clean energy transition.

The EE RLF aligns with Illinois' commitment to clean energy and sustainability, supporting the State's climate goals and the Biden Administration's Justice40 initiative, which aims to direct 40% of the overall benefits of federal investments in climate and clean energy to disadvantaged communities.

The Authority will be frequently accepting stakeholder feedback to continuously refine its Bridge Loan product. The Authority will be hosting several stakeholder engagement sessions to solicit feedback from relevant parties. If you are not on the Authority's email list and are interested in participating in these conversations, please email federalfunding@il-fa.com.

Key features of the program include:

Loan Amounts: Ranging from $50,000 to $1,000,000
Term: Up to 24 months
Interest Rate: Below market, low interest rate

Eligibility Requirements:

Eligible Entities: Nonprofits and public entities eligible for the IRA Direct Pay provisions, entities eligible for Illinois Solar for All project incentives, or owners/operators of commercial or multifamily buildings eligible for IRA Tax Credits.
Project Certification: Must be certified to receive federal funds and comply with utility-specific interconnection requirements.
Project Costs: Must be consistent with U.S. Treasury requirements.
Energy Audit: Projects must be paired with a standardized energy audit as per U.S. Department of Energy guidelines.
Application Proof: Evidence of Direct Pay application submission to the U.S. Treasury or Part II approval from Illinois Solar for All.

Initially focused on commercial and public buildings, the program has the potential to expand into the residential sector and develop additional loan types as demand and capacity allow. This strategic flexibility ensures that the EE RLF can adapt to evolving market needs and continue to drive significant energy savings and environmental benefits across Illinois.

To learn more about the Energy Efficiency Revolving Loan Fund Capitalization Grant Program, please visit: Energy Efficiency Revolving Loan Fund Capitalization Grant Program | Department of Energy.

FAQs

What is the Energy Efficiency Revolving Loan Fund?

The fund will provide Bridge Loans to public sector, nonprofit, and commercial building owners who complete qualifying clean energy projects eligible for Direct Pay. The fund will also provide Bridge Loans to entities eligible for Illinois Solar for All renewable energy credits (RECs). Building owners can use these loans to bridge the gap between project installation and receiving their federal direct pay, tax credit, or REC payment. The EE RLF has been capitalized by a grant from the US Department of Energy.

When will Bridge Loans become available?

The Bridge Loan product is available now!

What is a Direct Pay Tax Credit?

Most of the clean energy funding from the federal Inflation Reduction Act comes in the form of nonrefundable income tax credits, meaning that if the credits cover more than is owed on taxes the difference is not refunded. However, public sector entities, like counties, school districts, and nonprofits are exempt from income taxes entirely, excluding them from receiving these incentives. To make this funding accessible to the public sector and nonprofits, the US Treasury will now directly give a rebate (called a direct-, or elective-, pay tax credit) to public sector and nonprofit entities who complete projects that would qualify for tax credits.

How much are Direct Pay Tax Credits worth?

The Inflation Reduction Act includes several tax credits that can provide up to 50% of the cost of a qualifying clean energy project. See this guide or this White House fact sheet for more information on available tax credits. All credits have a base rebate amount which is increased for conforming to certain labor, material, and community requirements.

What are Illinois Solar for All project incentives?

Illinois Solar for All incentives take the form of Renewable Energy Credits ("RECs"). One Renewable Energy Credit (“REC”) is equivalent to 1 megawatt-hour of renewable electricity produced. RECs represent the environmental value of the electricity generated from renewable resources like solar panels, but not the electricity itself. Whoever owns the RECs has the right to say they used that renewable power. RECs are a key driver in both solar programs. A home solar photovoltaic system might generate 50-200 RECs over 15 years. By participating in Illinois Shines or ILSFA, the AV sells the RECs from an eligible solar project to an Illinois electric utility or the IPA and receives payments for the value of 15 or 20 years of RECs. REC payments reduce the cost of the system to customers and support the long-term growth of the Illinois solar market. Selling RECs will not affect the photovoltaic system’s production or net metering credits. Each year, the solar programs publish REC prices, which vary based on project location, size, and type. Proceeds from REC sales are an important source of project revenue. Project REC payments scale with the system size and generation. As a reminder, REC payments through Illinois Shines and Illinois Solar for All are only available to Approved Vendors.

What types of buildings are eligible?

Eligible buildings include for public- and privately-owned commercial buildings, including those owned by nonprofits, and multifamily buildings with five or more units located in Illinois

Who can use Bridge Loans?

Loans will be available to nonprofits and public entities eligible for the IRA Direct Pay provisions, entities eligible for Illinois Solar for All project incentives, and owners/operators of commercial or multifamily buildings eligible for IRA Tax Credits.

What kind of projects qualify for Bridge Loans?

The loans can be used for energy efficiency assessments and upgrades resulting from an energy assessment that meets certain criteria. Health and safety improvements and solar energy systems can also be eligible for the loans if they are recommended by a US DOE approved standardized energy audit. Some energy assessments may not meet the criteria for a loan.

What is a standardized energy audit?

The US DOE requires the use of software that uses BuildingSync and recommends the use of their proprietary Audit Template software, which utilizes BuildingSync. See a full list of audit requirements here.

What Are the Bridge Loan Terms?

The Illinois Climate Bank is in the process of determining the exact terms of the loan, and will be working with lenders, contractors, and interested stakeholders to finalize those details before late November. Stay tuned to this page for more information on opportunities for input and program terms.