Low income, high efficiency: new report highlights role of financing for low-income families

A Berkeley report recently discussed in Utility Dive highlights a widespread problem with money-saving energy efficiency programs: they often exclude the low-income families who could stand to benefit the most. These families are disproportionately likely to suffer from climate change impacts like heat waves and extreme weather, and public health impacts from the burning of fossil fuels. They also pay a larger share of their total income to energy costs.

Residential energy efficiency programs reduce energy consumption and greenhouse gases, and save money for participating households. Over time, they also can provide benefits to all users of the grid, by reducing peak demand and avoiding the need for the construction of new grid infrastructure.  The report focuses on California, but its takeaways and case studies for how to bring the benefits of energy efficiency to more families have broader relevance.

Two of the top recommendations from the report are:

Creating a “one-stop shop” to administer all efficiency incentive programs, which would streamline access for low-income residents and owners in particular and reduce the complexity of major projects.

Developing financing mechanisms such as “pay as you save” and third-party “energy budget” arrangements that use utility bills to attract private capital to efficiency investments, a particular challenge for the low-income sector.

These are points that Green Banks are uniquely situated to address. The report highlights the confusion caused by various programs housed under different roofs, and inflexibilities that can make them less effective. Green Banks’ status as dedicated institutions makes them able to play the role of traffic controller between other sources of incentives, and to generate new programs and products and phase out old ones based on changing technology and market conditions.

Green Banks across the country are also coming up with innovative financing mechanisms to help low-income consumers afford efficiency and clean energy improvements. For example, Hawaii’s GEMS program enables renters and low-income customers to install upgrades and tie the repayment to their utility bills. The program is also designed to remove barriers for landlords, by allowing for repayment to be paused during periods that a unit may be vacant.

In Florida, SELF’s My Strong Home Program helps low-income homeowners finance resiliency improvements to their roof, sometimes in combination with other energy efficiency improvements offered by SELF. The loans are repaid through savings on insurance premiums and energy bills, providing a double benefit to these residents.

These are just two examples out of many innovative programs available through the Green Banks of the American Green Bank Consortium.

The Berkeley report discusses a pilot program in California, the California Hub for Energy Efficiency Financing (CHEEF) that will help coordinate between California’s existing programs and explore ways to further support clean energy and energy efficiency financing options. CHEEF is modeled on a bill that CGC cosponsored earlier this year. Increasing coordination of and access to financing is critical for expanding clean energy adoption by low-income consumers, and ultimately benefiting all energy users in the state. The role that CHEEF plays in the market could serve as a potential model for guiding Green Bank activities in other states.

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