Carl Fawcett of Conservation Services Group (CSG), an Alliance Associate and Energy 2030 Endorser, authored this piece as a guest post for the Blog to Save Energy. 

For homeowners, investing in energy efficiency programs should be a simple decision — a proven method to reduce their energy footprint and realize the savings on their energy bill. Yet the challenges of financing efficiency improvements prevent households from realizing these benefits. The fragmented market of existing loan programs make it difficult for many homeowners to access or secure the resources they need, limiting the environmental benefits and cost savings possible through energy efficiency upgrades or retrofits. A new alliance between Conservation Services Group, CUNA Strategic Services, and LendKey proves these challenges can be overcome. Homeowners now have easier access to loans they can use to make energy efficiency upgrades.

Among other things, fluctuations in real estate markets and home equity loan rates and policies have plagued energy efficiency financing programs since the mortgage crisis. At one point, it appeared that Property Assessed Clean Energy (PACE) financing might work in the residential market, but the program stalled in the face of increased criticism — and nothing stepped in to fill that gaping void.  

The best way to encourage homeowners to make important energy efficiency retrofits may also be the most straightforward: make it easier for them to strike a favorable agreement with credit unions to borrow. Under the Home Performance Loan ™ product, CUNA’s network of over 6,500 credit unions nationwide solves the dilemma of access. Consumers can borrow between $2,500 and $25,000 on 7-10 year terms through unsecured loans, amortizing improvements that add value and save money, not assuming more housing debt. LendKey makes the process even easier by greatly reducing the time from application to approval to fund disbursement.

Improving access to capital is also a win for utilities and other entities that participate in energy efficiency programs. As the industry embraces strategies to drive higher customer satisfaction, many are exploring innovative ways to support residential energy retrofitting. The Home Performance Loan product enables more progressive utilities to buy down interest rates to provide even more incentive for homeowners to go ahead with suggested retrofits. The customer wins, and so too do the participating utilities and agencies.

The Home Performance Loan product draws inspiration from the success of the Mass. Heat Loan initiative. Thanks to Massachusetts utilities, the interest rate for the program is zero percent. This drives participation that enables the industry in Mass. to hit program benchmarks while spawning a successful market for trade professionals that provide retrofits. These same benefits are also encouraged by the Home Performance Loan product.

Both the Heat Loan initiative and the new Home Performance Loan product prompt consumers to think on a broader scale. Utilities’ rebates for new light bulbs or appliances have an important place, but loan programs encourage homeowners to think of household energy more holistically. Once this happens — and financial barriers no longer exist — the logical next step for many homeowners is obvious: fix the problems as soon as possible.

Products such as the Home Performance Loan also encourage local reinvestment: doing the retrofit work — and getting a loan to do so — is all done close to home. It involves a local credit union, local contractors and locally-trained energy efficiency experts. As the program scales in a particular region or state, additional benefits accrue to this entire local ecosystem. This idea of national coordination but local fulfillment is well-suited to a nation that has few if any universal standards for energy efficiency programming. So, while energy efficiency programs will differ markedly from state to state, financing can now be a constant. Products like the Home Performance Loan provide the industry with some consistency that is likely to drive greater participation, greater savings and even more impressive energy efficiency gains nationwide.

Although we have a patchwork of efficiency policies and programs nationwide, we can still establish consistency in how we provide access to capital. By doing so, we’re removing a historic barrier to doing what’s best, not only for each homeowner — wherever they may reside in the U.S., but also for our environment and economy as a whole. This isn’t simply another loan, it’s a potential game-changer in the long and important history of energy efficiency.