Center for Sustainable Energy

Innovative Clean Energy Financing for Local Governments 

Yolo County developed a cost-effective solution to eliminate its energy bills, generate money for its general fund and reduce the need for budget cuts by installing solar photovoltaic systems on municipal buildings and properties. The county implemented this plan using various revenue-generation methods and financing techniques. 

The lessons from this approach and some of the financing tools used by Yolo County can be leveraged by other local jurisdictions interested in innovative financing for solar installations. 

Yolo County Project Objectives 

  • Create revenue for each year of the systems’ operation
  • Implement projects that required no up-front capital investment

This clean energy project made Yolo County the first California County to

  • Be grid positive (over produce energy, which is sold back to the utility) 
  • Completely eliminate its electric bill
  • Implement bill crediting on this large a scale


To reach its goal, Yolo County selected appropriate utility tariffs as means to generate revenue for the county and to install the greatest amount of solar generation capacity possible. 

Yolo County determined the appropriate system sizes to qualify for Pacific Gas and Electric’s (PG&E) fast-track interconnection process, which eliminates the need for expensive and time-consuming engineering reviews. After determining system sizes and locations, the county then executed multiple low-cost financing mechanisms to fund the system costs. 

The county’s solar future is further enhanced by the Climate Change Compact of Yolo County, a forum for cities, schools and districts to share information about what each jurisdiction is doing to promote community energy sustainability.


Municipal Solar Financing Programs and Tariffs

Financing Programs

  • Tax-Exempt Lease Purchase (TELP)
    TELPs allow a public sector organization to borrow large sums of money from the capital markets to finance major capital projects without having to issue municipal bonds. When properly structured, this type of financing mechanism allows public sector agencies to draw on dollars saved from future utility bills to pay for new, energy-efficient equipment today.

    Eligible public sector organizations: schools, community colleges, universities, local/state governments

  • California Energy Commission 1% Energy Efficiency and Generation Loans 
    Over $22 million in loan funds from the Energy Commission are available for cost-saving energy projects. The Energy Conservation Assistance Account (ECAA) offers 1% interest rate loans for public entities in California installing eligible projects with demand and/or cost-savings such as lighting systems upgrades, energy efficiency and renewable technologies.

    Eligible public entities: cities, counties, public care institutions, public hospitals, public schools and colleges, special districts

  • On-Bill Financing (OBF)
    OBF helps municipalities finance qualifying energy efficiency projects. Qualifying entities can fund energy efficiency projects for zero interest, no fees and repay the loan in monthly installments that are added as a line item on a utility bill. In California, OBF is eligible to nonresidential customers of the investor-owned utilities (IOUs): PG&E, SoCal Edison, SoCal Gas and SDG&E.

    Eligible customers: business, federal, state, county or local government agencies

  • Energy Project Lease Financing
    This flexible low-interest loan from a private lender can be used in conjunction with other utility or public financing, rebates and incentives to finance energy-efficiency, water-saving and renewable energy projects. Minimum loan is $250,000, but multiple projects can be bundled under a single loan with no up-front capital needed. 

    Eligible public entities: cities, counties, public care institutions, public hospitals, public schools and colleges, special districts  

  • California Lease Finance Program (CaLease)
    CaLease allows local agencies to finance equipment through multiple funding institutions who competitively bid on their project. This comprehensive lease management program allows local governments the ability to bid and manage leases without dedicating significant staff time to the process.

    Eligible public entities: local agencies (other than state agency, board or commission)