Investigation into the establishment of a corporation for energy financing. Final report

Performance contracting addresses one of the most significant barriers to energy projects, which historically has been the lack of funding. However, there are barriers to the use of performance contracting in New York. Lack of information on the part of building managers and financial institutions, a need for ongoing, intensive technical assistance to users, complex procurement procedures and regulations, and the number of small projects with high transaction costs are all reasons why performance contracting has not been used to a greater extent in New York and elsewhere. The creation of two new organizations, one within New York State government, and one a private, nonprofit organization, could address several of these barriers. The Office for Energy Financing could be created as a pilot program within the Energy Authority to offer information, brokering, pooling, and project-management services. Over time, the Office should be able to reduce market barriers and transaction costs that limit private investment in energy projects. This organization would raise and distribute funds by tapping both public and private sources of investment capital.