Market Priming and Financing

Market priming and financing policies and programs kick-start markets for high-efficiency technologies by creating economies of scale and facilitating reduction of costs to end consumers.

Learn more via the Market Transformation Programs and Energy Efficiency Fund toolkits below.

Market Transformation Programs

Market transformation programs encourage manufacturers to increase production and marketing of high efficiency products, through incentive (rebate, grant, loan, tax credit, etc) or volume guarantee (bulk procurement), leading to economies of scale, which ultimately have the effect of lowering prices, driving consumer adoption (virtuous circle).

Procurement Programs

Bulk procurement refers to programs to purchase large volumes of high-efficiency equipment by a single buyer or by aggregating demand. The most common example of this is the bulk purchase of efficient equipment such as LED bulbs by government agencies and utilities to induce economies of scale and lower the purchasing price of the efficient equipment.

Public procurement programs provide guidance to agencies with regard to public sustainable acquisition requirements related to energy consuming products.  The goal of public procurement is to help government agencies improve energy efficiency across the full range of their operations. Second, it creates economies of scale, growing markets for energy efficient technologies and thereby encouraging industry to produce more of them at competitive prices.

Incentive program

Access to finance is often cited as a barrier to adoption of high-efficiency technologies, especially by low-income consumers. Incentive programs lower financial hurdles in order to grow the market for very high-efficiency equipment or building efficiency measures and encourage economies of scale. For example, a consumer might receive a rebate after purchasing a high-efficiency refrigerator that has a higher upfront cost than less efficient appliances on the market. The key to scaling these programs is to develop schemes by which investments in the program are paid back by another benefit to government funds, or to society as a whole.

Multiple options exist to design an incentive program. Incentives can be paid directly to consumers or “upstream” at the point of production. They can be implemented through retailers or directly from manufacturers with cash rebates, payments through utility bills, tax incentives, or green mortgages.

Technical Assistance Toolkit

In order to design impactful bulk procurement and incentive programs, EE4D deploys the following toolkit:

Energy Efficiency Fund

Energy efficiency funds provide essential resources for implementing energy efficiency programs and address the lack of affordable financing for energy efficiency and the lack of end-user incentives for investing in energy efficiency.

A fund’s main objective is to use public monies to leverage private investment in energy efficiency.

The main challenge of developing a public fund is establishing mechanisms that sustain and increase the funding level over time. Moreover, because large capital transfers are involved, it is critical to ensure transparency and validation of results by establishing a clear, robust process for reporting, monitoring, verifying, and evaluating costs and benefits of funding allocations.

Technical Assistance Toolkit

In order to design impactful bulk procurement and incentive programs, EE4D deploys the following toolkit:

© 2020 Energy Technologies Area, Berkeley Lab