Project Financing

Government-Supported Financing Resources

Qualified Energy Conservation Bonds

A Qualified Energy Conservation Bond (QECB) is a bond that enables qualified state, tribal and local government issuers to borrow money at attractive rates to fund qualified energy conservation projects. A QECB is among the lowest-cost public financing tools available because the U.S. Department of the Treasury subsidizes the issuer’s borrowing costs.

Issuers may choose between structuring QECBs as tax credit bonds (i.e., bond investors receive federal tax credits in lieu of — or in addition to — interest payments) or as direct subsidy bonds (i.e., bond issuers receive cash rebates from the Treasury to subsidize their interest payments). Both tax credit and direct payment bonds subsidize borrowing costs; thus far, most QECBs have been issued as direct subsidy bonds, due to lack of investor appetite for tax credit bonds.

A QECB issuance takes several months to structure, market, price, and close. Qualified issuers should select eligible projects and consult their bond counsel for more information on the QECB opportunity.