What Michigan’s Clean Community Financing Ecosystem can teach other US regions

Unlocking affordable clean energy opportunities through strengthened regional financing ecosystems

Across the United States, rising energy prices, an ongoing affordability crisis, and compounding reliability and resiliency issues are driving demand for energy solutions that lower monthly bills and keep the lights on for households and small businesses.

Clean energy technologies can meet these needs by lowering energy use and costs. As a result, significant momentum has grown across the clean energy and community development financing ecosystem, mobilizing a range of financial institutions, including:

• Community lenders seeking technical assistance, capitalization funding, and capacity building opportunities to grow clean lending portfolios.
• Green banks seeking new partnerships, product deployments, and opportunities for scale
• Regional banks mapping opportunities to enhance Community Reinvestment Act (CRA) lending while integrating portfolio level investment opportunities for new asset classes.
• Philanthropic organizations seeking catalytic investment opportunities to drive community development objectives.

These organizations and others are building local strategies and piloting a range of clean community financing initiatives. Still, many community clean energy projects face common challenges in achieving scale as they often do not satisfy mainstream capital’s credit box.

Absent the federal funding that aimed to address these challenges, an opportunity has emerged to strengthen regional financing ecosystems that leverage individual organizations’ strengths and improve coordination across regional priorities, barriers, and opportunities. These ecosystems play a significant role in building a more resilient capital base and developing the place-based infrastructure to scale clean energy investment that delivers solutions with outsized economic and community impact.

RMI is exploring what a strong regional financing ecosystem needs in practice and how local circumstances and market realities may shape priorities, opportunities and partnerships. This article outlines eight lessons for strengthening regional clean community financing ecosystems, using Michigan as a case study.

Lessons from Michigan’s Clean Community Financing Ecosystem

RMI, in partnership with the Michigan Climate Investment Hub (the Hub), hosted a roundtable discussion in early 2026 to build a shared understanding of the current realities across Michigan’s clean community financing ecosystem. Discussions focused on priority market opportunities, partnerships, and identifying strategic next steps.

Across four market segments — single-family residential, multi-family residential, small business lending, and MUSH (Municipalities, Universities, Schools and Hospitals) — insights from Michigan demonstrate how other regions can accelerate clean energy opportunities in their communities.

The Michigan clean community financing ecosystem has strong institutional density and alignment, represented by diverse capital sources, actors, products, and offerings targeting emerging opportunities across the state. The ecosystem includes:

• Michigan Saves, the nation’s oldest green bank, which has facilitated over $790 million in energy improvements with a 30:1 private capital leverage ratio. It also hosts a vetted contractor network of over 1,500 partners.
• Two Community Development Financial Institution (CDFI) coalitions — the Michigan CDFI Coalition and the Detroit CDFI Coalition — represent a significant share of Michigan’s more than 44 certified CDFIs. Together, they chair a joint climate committee that drives ambition and provides technical assistance. They use a four pillar strategy to fill local gaps: advocacy, collaboration, sharing and learning, and growth.
• A dedicated Commercial Property Assessed Clean Energy (C-PACE) marketplace, administered through Lean and Green Michigan, that includes 62 local governments representing 85% of Michiganders. Since 2015, it has facilitated 89 projects and mobilized $315 million in private investment.
• Local impact capital providers, like The Kresge Foundation, play a key role in keeping clean energy projects moving forward. They provide catalytic capital, technical assistance, capacity building, market building and strong partnerships across Michigan’s CDFI network.
• Regional banks, such as Fifth Third, are expanding beyond CRA activity and increasing their role in clean community lending in Michigan. They leverage partnerships, intermediaries, and green banks, as well as innovative financing models such as equity equivalent investments and tax equity programs.

Strong coordination across state actors in Michigan has attracted national interest from organizations such as Inclusiv, Justice Climate Fund, and Local Initiatives Support Corporation, which have developed dedicated strategies and state-specific commitments to complement existing coordination efforts. When transparent market signals show how, where, and when national organizations can play a catalytic role in delivering value and creating opportunities, they respond.

One of Michigan’s strengths is that organizations are organically coordinating through bilateral engagement, as well as organized forums for strengthening collaboration. These forums have recently taken shape in partnership with the Michigan Climate Investment Hub (the Hub), established in 2025 as an anchor institution designed to attract and accelerate climate investments across the state.

Organizations like the Michigan Environmental Council, Michigan Energy Innovative Business Council, and Michigan Energy Michigan Jobs Coalition are also bringing together businesses, utilities, policymakers, and financial institutions to develop policies, rate designs, and collaborative approaches to capitalize on clean energy economic growth and community development opportunities. Stakeholders across the state recognize a need to continue to align around shared priorities across market segments (more in Lesson 4) to put ideas into practice.

Early state adoption of efficiency and energy waste reduction policies helped build momentum for clean energy in Michigan. That momentum is reinforced by strong state level initiatives, such as the Department of Environment, Great Lakes, and Energy (EGLE) Office of Climate and Energy’s MI Healthy Climate Plan, which provides technical assistance programs, multi-stakeholder coordination efforts, grant and funding challenges, and communications and promotional strategies.

While state-level programmatic support can be subject to administrative uncertainty, the level of interest across Michigan is suggestive of a long-term, systemic transition that is currently underway. This is displayed by EGLE’s Growing Green Lending Challenge, a dedicated blended-capital program designed to accelerate capacity building, foster partnerships, and drive innovation in Michigan’s clean energy lending ecosystem – which received over a dozen partnership proposals and ultimately announced four winners of the challenge.

Additionally, local jurisdictions have been charting a path forward in defining city leadership by integrating climate into long-term strategy planning for affordability, reliability, resilience and economic growth.

The city of Ann Arbor has developed the A2 Zero Carbon Neutrality Plan, a comprehensive climate partnership plan underpinned by commitments to 100% clean and renewable energy by 2030, a reduction in vehicle miles traveled, residential electrification, energy efficiency and resiliency.

Other communities like the city of Holland and Marquette County have partnered with their local utilities and EGLE to pilot the MiHER Program for residential and multifamily home energy efficiency and electrification upgrades in 2024, which has subsequently been rolled out statewide.

These kinds of initiatives provide early momentum for ecosystem actors to coordinate around and build self-sufficiency.

Institutional density is important, but equally so are the products, tools, and solutions at work across the ecosystem. In Michigan, stakeholders are showing up across market segments with products and solutions designed to address specific barriers to accelerating the local clean community lending and investment opportunity. This suite of solutions includes:

• Origination partners focused on addressing affordability and financial access gaps.
• Risk mitigation tools such as loan loss reserves (LLRs), guarantees, and interest rate buy-downs facilitated by concessional capital.
• Bridge financing products offered through local financial institutions and green banks.
• Aggregation and warehousing to free up balance sheet capital for originators, encourage participation, and attract institutional investors.
• Capitalization funding providing a diverse pool of funding sources for local institutions to scale lending activity and capacity.
• Liquidity pathway support to address capital market access barriers through standardization support, balance sheet commitments, and secondary market development.

While there is strong shared commitment and optimism across the ecosystem in Michigan, organizations naturally focus on different market segments, barriers, and community-specific solutions aligned with their missions. This diversity can make broad discussions on clean community financing less effective for aligning around clear, market-specific priorities. While large forums are valuable for building momentum and awareness, more targeted, segment-specific working groups are often needed to drive practical collaboration and scalable solutions.

For example, the roundtable facilitated by RMI and the Hub surfaced small businesses as a market segment of shared interest across actors, representing a sizable investment opportunity and impact potential for clean energy lending. However, there remains a need for affordable financing products that can align timelines and project sizes with lender expectations and tenures, paired with technical assistance to help build clean technologies into capital expenditure plans. And even within the small business market, not all solutions look the same.

Without technical support, capital alone will not deploy effectively.

In addition to financial products and services, a number of organizations are actively working to enhance technical assistance programs and coordination efforts across the ecosystem to help build capacity, coordinate priorities, and deploy fit-for-purpose solutions.

Energy prices, workforce, and policy shape what financing models will succeed.

Michigan has some of the nation’s lowest gas prices, and highest electricity rates, presenting a challenge for incremental clean energy lending and associated electrification projects. These dynamics reduce the affordability of many residential clean energy technologies, as shown in RMI’s Green Upgrade Calculator and Market Readiness Map. These challenges are compounded by a limited supply of specialized workers, such as high-efficiency HVAC installers, compared to surrounding states.

While bundling certain technologies presents an economically viable pathway for lifetime savings, it also introduces higher upfront capital demand, financing costs, and misaligned loan tenures and payback periods. This creates additional barriers for many communities with limited access to affordable financing.

Targeted risk absorption can unlock private capital and build markets.

Local institutions directly addressing affordability (i.e. community lenders and green banks) need sufficient balance sheet capacity and flexibility. Loan loss reserves and guarantees can help create capacity and build a track record of performance that lowers risk, while simultaneously building portfolios of attractive assets. Still, the availability of concessionary capital is a limiting factor in scalability. Many places face a difficult reality in competing with peers for limited concessionary capital sources.

Our roundtable surfaced interest from participants in aligning around shared priorities and opportunities to coordinate the best use of this capital to create opportunity for all stakeholders and move beyond bespoke use cases to regional strategies and portfolio level approaches.

Project pipelines are shaped before financing enters the picture.

Understanding true sources of demand is critical in channeling efforts, building strategy, and engaging stakeholders where most effective. While much of the emphasis over the past few decades has been on the need for consumers to drive demand and capital allocators to provide workable financing solutions, in many sectors the real drivers of demand are more nuanced.

Stakeholders of the Michigan clean community financing ecosystem recognized that for a sector like multi-family residential, there is a clear lack of programmatic development across the AEC industry to integrate clean energy solutions into designs, specifications, and manufacturer relations. Absent investor requests, many designers, developers, and contractors are likely to default to business-as-usual where they have existing manufacturing and supply chain relationships. Roundtable participants pointed towards a role for subnational financing ecosystems to help catalyze coordination with AEC industry leaders, noting Passive House Pennsylvania as one model leading the way that could benefit Michigan.

Conclusion

There is more work to be done in Michigan, but the state is one of the leaders in building a collaborative and innovative ecosystem to support clean energy deployment and community development. As such, there is a lot to learn from their experience. Stakeholders across the policy and finance landscape in other states should take these lessons and apply them in their own contexts with the goal of developing resilient financing ecosystems that empower their communities to deploy clean and cost-saving technologies