Community Efficiency Financing (CEF)

Community Efficiency Financing (CEF)

GMF’s Community Efficiency Financing (CEF) initiative helps municipalities roll out local financing programs for home-energy retrofits in low-rise residences.

CEF aims to address the up-front costs that impede many homeowners from undertaking home energy retrofits while simultaneously establishing a track record for successful, enduring financing models that can be scaled across Canada.

CEF functions as an innovation fund, seeking to create new pathways to support home energy upgrades, and is exploring several innovative financing models, including PACE programming, on-bill financing by utilities and partnerships with third-party lenders. 

Two GMF-funded projects, Halifax Solar City and Toronto Home Energy Loan Programs (HELP), have been pivotal in shaping the CEF initiative. These projects demonstrated the feasibility and benefits of residential energy upgrades through financing mechanisms, such as PACE. Their success stories have provided valuable insights, enabling GMF to refine its approach and expand the CEF program to include a broader range of financing options and support structures, ensuring more municipalities can access the capital needed for sustainable energy projects.

CEF succeeds by empowering municipalities and their partners to design tailored programs that reflect local needs and priorities. The flexible approach builds experience with a diversity of financing models and terms, while delivering benefits that extend beyond energy savings and emissions reductions. For example, municipalities can choose to devote up to 30 percent of their financing to non-energy upgrades for participating households, such as water conservation improvements, climate resilience upgrades or health and safety measures.

CEF introduced two new funding streams in June 2023:

• A seed stream to support underserved jurisdictions and underrepresented financing models, such as utility on-bill and third-party lender financing, aimed at helping more communities introduce home energy retrofit financing programs while promoting a broader range of financing models
• A growth stream that enables existing CEF programs and applicants to scale and replicate their efforts.  The new streams are the result of a program review conducted at the half-way point in CEF’s federal mandate

The adjustments were meant to increase program uptake in provinces and territories that had not yet launched capital programs with CEF funding and accelerate the adoption of a wider diversity of funding models, beyond PACE financing. The shift in program structure aims to raise the bar on program innovation by extending a wider mix of funding models to all regions of Canada and prioritizing applications that: 

• Target deeper energy retrofits
• Set out to achieve higher GHG reductions
• Deploy new strategies for local capacity-building
• Introduce new approaches to stakeholder engagement or project administration

All of these new measures are tailor-made to meet Canadian communities where they are, align with the enabling legislation in different provinces and territories and breaks down barriers to innovation and results by de-risking innovative financing models, both public and private.

In 2023-24, CEF was proud to approve its first project in Newfoundland and Labrador, a residential retrofit program in St. John’s that combines third-party direct financing for home energy upgrades with an energy concierge service that addresses financial and implementation gaps at no cost to the homeowner.

Third-party direct lending is transformative as it leverages private dollars to scale up delivery and more fully meet local needs. In a province (such as Newfoundland and Labrador) that does not currently allow PACE financing, CEF enables a third-party delivery model that can also be extended to surrounding small communities that have insufficient resources to deliver their own energy retrofit loan programs. 

In addition to helping meet local needs in the province with the highest rate of energy poverty, where many homes are still heated by oil, GMF expects this project to demonstrate a delivery model that can be adapted to other Canadian jurisdictions facing similar obstacles and challenges.

Scaling for impact: CEIP supports PACE programs across Alberta

CEF program replication can be tailored to provincial specifics. In Alberta, the Property Assessed Clean Energy (PACE) financing model enables local efficiency financing programs to implement PACE solutions and coordinate through a centralized regional program administrator, the Clean Energy Improvement Program (CEIP). This legislative framework has led to a significant influx of similar CEF applications from Alberta, all adopting the PACE model and managed through CEIP.  

To date, there are CEIP programs in 18 communities in Alberta, demonstrating an effective and tested financial mechanism across the province. 

How we build capacity: CEF Community of Practice fosters knowledge sharing with local programs

As GMF continues to support capacity development, the CEF Community of Practice remains a crucial forum for engagement and knowledge exchange among municipalities and their partners working on local financing programs for home energy upgrades. In 2023-24, the Community of Practice met six times, offering over 80 practitioners, representing 55 municipalities and partner organizations across Canada, a dedicated space to connect with peers, discuss common challenges, and adopt best practices. A recent third-party evaluation by the Centre de Leadership et d'Évaluation confirmed this forum provided members with valuable knowledge and resources, enhanced their networks and strengthened their capacity for program implementation.