S 1126

112th CONGRESS
1st Session

S. 1126

To amend the Energy Independence and Security Act of 2007 to authorize the Secretary of Energy to insure loans for financing of renewable energy systems leased for residential use, and for other purposes.

IN THE SENATE OF THE UNITED STATES

May 26, 2011

Mr. WHITEHOUSE (for himself, Mr. ALEXANDER, and Mr. UDALL of Colorado) introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources


A BILL

To amend the Energy Independence and Security Act of 2007 to authorize the Secretary of Energy to insure loans for financing of renewable energy systems leased for residential use, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the `Renewable Energy Access through Leasing Act of 2011' or the `REAL Act of 2011'.

SEC. 2. LOANS FOR FINANCING OF RENEWABLE ENERGY SYSTEMS LEASED FOR RESIDENTIAL USE.

    Subtitle A of title IV of the Energy Independence and Security Act of 2007 is amended by inserting after section 413 (42 U.S.C. 17071) the following:

`SEC. 414. LOANS FOR FINANCING OF RENEWABLE ENERGY SYSTEMS LEASED FOR RESIDENTIAL USE.

    `(a) Purposes- The purposes of this section are--

      `(1) to encourage residential use of renewable energy systems by minimizing upfront costs and providing immediate utility cost savings to consumers through leasing of those systems to homeowners;

      `(2) to reduce carbon emissions and the use of nonrenewable resources;

      `(3) to encourage energy-efficient residential construction and rehabilitation;

      `(4) to encourage the use of renewable resources by homeowners;

      `(5) to minimize the impact of development on the environment;

      `(6) to reduce consumer utility costs; and

      `(7) to encourage private investment in the green economy.

    `(b) Definitions- In this section:

      `(1) AUTHORIZED RENEWABLE ENERGY LENDER- The term `authorized renewable energy lender' means a lender authorized by the Secretary to make a loan under this section.

      `(2) RENEWABLE ENERGY SYSTEM LEASE- The term `renewable system energy lease' means an agreement between an authorized renewable energy system owner and a homeowner for a term of not less than 5 years, under which the homeowner--

        `(A) grants an easement to the renewable energy system owner to install, maintain, use, and otherwise access the renewable energy system; and

        `(B) agrees to--

          `(i) lease the use of the system from the renewable energy system owner; or

          `(ii) a power purchase agreement.

      `(3) RENEWABLE ENERGY MANUFACTURER- The term `renewable energy manufacturer' means a manufacturer of renewable energy systems.

      `(4) RENEWABLE ENERGY SYSTEM- The term `renewable energy system' means a system of energy derived from--

        `(A) a wind, solar (including photovoltaic and solar thermal), biomass (including biodiesel), or geothermal source; or

        `(B) hydrogen derived from biomass or water using an energy source described in subparagraph (A).

      `(5) RENEWABLE ENERGY SYSTEM OWNER- The term `renewable energy system owner' means a homebuilder, a manufacturer or installer of a renewable energy system, or any other person, as determined by the Secretary.

    `(c) Authority-

      `(1) IN GENERAL- The Secretary may, on application by an authorized renewable energy system owner, insure or make a commitment to insure a loan made by an authorized renewable energy lender to a renewable energy system owner to finance the acquisition of a renewable energy system for lease to a homeowner for use at the residence of the homeowner.

      `(2) TERMS AND CONDITIONS- The Secretary may prescribe such terms and conditions for insurance under paragraph (1) as are consistent with the purposes of this section.

    `(d) Limitation on Principal Amount-

      `(1) LIMITATION- The principal amount of a loan insured under this section shall not exceed the residual value of the renewable energy system to be acquired with the loan.

      `(2) RESIDUAL VALUE- For purposes of this subsection--

        `(A) the residual value of a renewable energy system shall be the fair market value of the future revenue stream from the sale of the expected remaining electricity production from the system, pursuant to the easement granted in accordance with subsection (e); and

        `(B) the fair market value of the future revenue stream for each year of the remaining life of the renewable energy system shall be determined based on the net present value of the power output production warranty for the renewable energy system provided by the renewable energy manufacturer and the forecast of regional residential electricity prices made by the Energy Information Administration of the Department.

    `(e) Easement-

      `(1) IN GENERAL- The Secretary may not insure a loan under this section unless the renewable energy system owner certifies, in accordance with such requirements as the Secretary shall establish, consistent with the purposes of this section, that the renewable energy system financed will be leased only to a homeowner that grants an easement to install, maintain, use, and otherwise access the renewable energy system that includes the right to sell electricity produced during the life of the renewable energy system to a wholesale or retail electrical power grid.

      `(2) ASSUMABLE LEASE- The renewable energy system lease shall specify that the renewable energy system lease can be assumed by new homeowners.

    `(f) Discount or Prepayment-

      `(1) IN GENERAL- To encourage the use of renewable energy systems, the Secretary shall ensure that a discount given to a homeowner by a renewable energy system owner or other investor or prepayment of a renewable energy system lease by a renewable energy system owner does not adversely affect the mortgage requirements of the homeowner.

      `(2) CONSULTATION- In carrying out this subsection, the Secretary may consult with agencies and entities involved in oversight of home mortgages.

    `(g) Eligibility of Lenders- The Secretary may not insure a loan under this section unless the lender making the loan is an institution that meets such requirements as the Secretary shall establish for participation of renewable energy lenders in the program under this section.

    `(h) Certificate of Insurance-

      `(1) IN GENERAL- The Secretary shall issue to a lender that is insured under this section a certificate that serves as evidence of insurance coverage under this section.

      `(2) CONTENTS OF CERTIFICATE- The certificate required under paragraph (1) shall describe the fair market value of the future revenue stream for each year of the remaining life of the renewable energy system.

      `(3) FULL FAITH AND CREDIT- The certificate required under paragraph (1) shall be backed by the full faith and credit of the United States.

    `(i) Payment of Insurance Claim-

      `(1) FILING OF CLAIM- The Secretary shall provide for the filing of claims for insurance under this section and the payment of the claims.

      `(2) PAYMENT OF CLAIM- A claim under paragraph (1) may be paid only on a default under the loan insured under this section and the assignment, transfer, and delivery to the Secretary of--

        `(A) all rights and interests arising under the loan; and

        `(B) all claims of the lender or the assigns of the lender against the borrower or others arising under the loan transaction.

      `(3) LIEN-

        `(A) IN GENERAL- On payment of a claim for insurance of a loan under this section, the Secretary shall hold a lien on the underlying renewable energy system assets and any associated revenue stream from the use of the system, which shall be superior to all other liens on the assets.

        `(B) RESIDUAL VALUE- The residual value of the renewable energy system and the revenue stream from the use of the system shall be not less than the unpaid balance of the loan amount covered by the certificate of insurance.

        `(C) REVENUE FROM SALE- The Secretary shall be entitled to any revenue generated by the renewable energy system from selling electricity to the grid when an insurance claim has been paid out.

    `(j) Assignment and Transferability of Insurance- A renewable energy system owner or an authorized renewable energy lender that is insured under this section may assign or transfer the insurance, in whole or in part, to another owner or lender, subject to such requirements as the Secretary may prescribe.

    `(k) Premiums and Charges-

      `(1) INSURANCE PREMIUMS-

        `(A) IN GENERAL- The Secretary shall fix and collect premiums for insurance of loans under this section, that shall be--

          `(i) paid by the applicant renewable energy system owner at the time of issuance of the certificate of insurance to the lender; and

          `(ii) adequate, as determined by the Secretary, to cover the expenses and probable losses of administering the program under this section.

        `(B) DEPOSIT OF PREMIUM- The Secretary shall deposit any premiums collected under this subsection in the Renewable Energy Lease Insurance Fund established by subsection (l).

      `(2) PROHIBITION ON OTHER CHARGES- Except as provided in paragraph (1), the Secretary may not assess any other fee (including a user fee), insurance premium, or charge in connection with loan insurance provided under this section.

    `(l) Renewable Energy Lease Insurance Fund-

      `(1) FUND ESTABLISHED- There is established in the Treasury of the United States the Renewable Energy Lease Insurance Fund (referred to in this subsection as the `Fund'), which shall be available to the Secretary without fiscal year limitation, for the purpose of providing insurance under this section.

      `(2) CREDITS- The Fund shall be credited with--

        `(A) any premiums collected under subsection (k)(1);

        `(B) any amounts collected by the Secretary under subsection (i)(3); and

        `(C) any associated interest or earnings.

      `(3) AVAILABILITY- Amounts in the Fund shall be available to the Secretary for--

        `(A) fulfilling any obligations with respect to insurance for loans provided under this section; and

        `(B) paying administrative expenses in connection with this section.

      `(4) EXCESS AMOUNTS- The Secretary may invest in obligations of the United States any amounts in the Fund determined by the Secretary to be in excess of amounts required at the time of the determination to carry out this section.

    `(m) Ineligibility for Purchase by Federal Financing Bank- Notwithstanding any other provision of law, no debt obligation that is insured or committed to be insured by the Secretary under this section shall be subject to the Federal Financing Bank Act of 1973 (12 U.S.C. 2281 et seq.).

    `(n) Regulations-

      `(1) IN GENERAL- The Secretary shall issue such regulations as are necessary to carry out this section.

      `(2) MULTIFAMILY HOUSING- In issuing the regulations, the Secretary shall ensure that multifamily housing units are eligible for programs established by this section.

      `(3) TIMING- Not later than 180 days after the date of enactment of this section, the Secretary shall issue interim or final regulations.

    `(o) Termination of Authority- The authority of the Secretary to insure and make commitments to insure new loans under this section shall terminate on the date that is 10 years after the date of enactment of this section.'.

END