The General Assembly of Maryland authorized the Community Energy Loan Program (CELP) for implementation as of July 1, 1989. Originally funded with $3.2 million in seed money, CELP provides local governments and nonprofit organizations in the State a unique opportunity to reduce their operating expenses by identifying and installing energy conservation improvements. CELP allows borrowers to use the cost savings generated by the improvements as the primary source of revenue for repaying the loans. This neutral budget impact makes CELP an attractive financing opportunity for interested organizations.

Loans under the Program can be made to eligible nonprofits, including hospitals and private schools, or local governments, including public school systems and community colleges. (Eligible applicants may not have a mission that is primarily religious or fraternal.) The program is open continuously throughout the fiscal year to accept applications, and CELP staff is available to work with applicants in completing the application forms and explaining program requirements. Currently, CELP funds approximately $1.5 million in new projects each fiscal year.

Projects considered for funding can include those that: save energy; are performed in a building owned or leased by the applicant; are installed in a building that has existing heating and/or cooling systems; and have a simple payback of seven years or less. All costs necessary for implementing an energy conservation project can be considered for funding, including the technical assessment, reasonable fees for special services, plans and specifications, and the actual costs of construction.

Up to 40% of each year's allocation, or approximately $600,000, is available per loan. Applications are reviewed and ranked to achieve the best distribution of funds throughout the State and among the eligible organizations. Each loan is negotiated separately and the applicant is required to make a contribution to the project, although the contribution does not have to be in cash. The interest rate is negotiated by individual loan and is guaranteed to be below market rate. The current average interest rate is approximately 3.5%.

Semiannual payments are made by the applicant beginning in the second year of the loan. The first year is deferred to allow the applicant time to complete the energy project and to begin to realize savings. The maximum repayment term on any loan is the simple payback of the project, plus the one year of deferral.

By offering the Community Energy Loan Program as a revolving loan fund rather than a one-time grant, Maryland is able to maximize the use of the funds. Repayments and interest earned by the fund will allow the program to continue making loans for the foreseeable future. To date, 47 loans have been made providing $10,791,000 for energy efficiency improvements.

Please address questions & comments via email to meainfo@energy.state.md.us or call 1-800-72-ENERGY and ask for the CELP Manager.