The Delaware Green Energy Fund was created in 1999 as the part of the deregulation of Delaware's electric utilities. Under the 2005 Delaware renewable portfolio standard (RPS) legislation, municipal utilities were allowed to opt out of the compliance schedule if they contributed to the Green Energy Fund for investor-owned utilities or created their own green energy fund with an equal surcharge. In 2010 the Delaware RPS was amended by SS 1 for S.B. 119 and the section (26 Del. C. § 363) detailing the obligations of municipal utilities was slightly revised. While these amendments changed several other opt-out requirements, the provision mandating green energy fund contributions in the event of an opt-out remains unchanged.

The Delaware Municipal Electric Corporation (DEMEC), a joint action agency and wholesale electric company representing the state's nine municipal utilities, opted out of the RPS requirements on behalf of the municipal utilities, and the utilities created their own funds. This Municipal Green Energy Fund is an independent, self-administered fund separate from the State's Green Energy Fund. The DEMEC green energy funds support the municipal Green Energy Program Incentives, which include rebates for solar electric, solar heating, geothermal heat pumps, and wind power. As of Febuary 2016, only three member utilities- City of Dover, City of Newark, and City of Milford- use their fund to provide grants to its customers; other member utilities have discontinued to provide individual grants, they have reserved their funds only for community based projects. 

DEMEC municipal utility members include: Newark, New Castle, Middletown, Dover, Smyrna, Seaford, Lewes, Clayton and Milford. Each municipal utility has its own distinct fund. Customers of one utility cannot access another utility's fund revenues. As a result, some of the utilities' funds are very limited. Estimated funds held by participating members, as of 2016, are as follows:

• City of Dover: $10,000
• City of Newark: $40,000
• City of Milford: $20,000
• City of Seaford: NA
• City of Lewes: NA
• Town of Middletown: NA
• City of New Castle: NA
• Town of Smyrna: NA
• Town of Clayton: NA