Energy Improvement Loan Program (EILP)

Summary

North Carolina's Energy Improvement Loan Program (EILP) is available to businesses, local governments, public schools, community colleges, and nonprofit organizations for projects that include energy efficiency improvements and renewable energy systems. Loans with an interest rate of 1% are available for certain renewable-energy and energy-recycling projects. Eligible renewable-energy projects generally include solar, wind, small hydropower (less than 20 megawatts) and biomass. Loans with a rate of 3% are available for projects that demonstrate energy efficiency, energy cost savings or reduced energy demand. Energy conservation projects usually include improvements to HVAC systems, energy management controls, high efficiency lighting and building envelope improvements. Loans are secured by bank letter-of-credit (non-applicable for local governments and school systems).

In order to qualify for the EILP, a project must (1) be located in North Carolina; (2) demonstrate energy efficiency, use of renewable-energy resources, energy cost savings or reduced energy demand; (3) use existing, reliable, commercially-available technologies; (4) meet federal and state air and water-quality standards; and (5) be able to recover capital costs within the loan's maximum term of 10 years through energy cost savings. Note that letter-of-credit fees do not apply to government agencies and public schools.

The Energy Improvement Loan Program statute states that the program must show that the value of the loan can be repaid from the direct utility cost savings. EILP is focused on the utility cost savings resulting from energy conservation strategies or reduced energy consumption as a result of energy generated by a renewable energy system. Selling power, tax credits, depreciation, rebates and other incentives, are not considered direct utility cost saving measures under current loan program rules. An energy cost escalation rate of no more than 3% can be considered in estimating utility costs into the future.