Monday, March 1, 2010

It seems so straight forward

By Pierce Jones

Energy Finance District (EFD) and Property Assessed Clean Energy (PACE) programs facilitate low interest loans for residential energy efficiency retrofits and renewable energy systems that decrease a homeowner’s utility bills.  But the loan has to be repaid. Paul D’Arelli made an excellent point in his posting last week. He said that to ensure the long-term success of their EFD (or PACE) programs, local governments should develop those programs such that property owners are likely to realize energy savings sufficient to offset the cost of their new assessments. I think it’s critically important that homeowners not find themselves upside down in their EFD loans.

Like many utility-operated demand side management (DSM) programs, a basic residential energy efficiency retrofit loan program could cover a range of upgrades including: weather-stripping, caulking, duct leakage repair, attic insulation, hot water system upgrade, some windows and some HVAC upgrades.  Using Energy Gauge® software, we calculate that for a somewhat energy inefficient house, the energy savings from these type upgrades should be from 30-40%.  For a somewhat energy inefficient 2,000 ft2 Florida home that uses ~25,000 kWh/yr the total annual electric bill would be ~$3,000/yr (@ $.12/kWh).   So, a 30-40% savings would range from about $900 to $1,200 per year.  For a given home, a suite of upgrades could cost anywhere from $5,000 to $10,000.  So, what’s the payback? 

If you get a 40% savings and only spend $5,000, an EFD loan could be paid off in as few as five years (even at interest rates as high as 8%).  However, if you only get 30% savings and the retrofits cost $10,000 then it could take more than 15 years to pay off the loan even at very low interest rates (5%).  An efficiently run EFD loan program that is focused on high impact energy conservation retrofits can pay dividends to homeowners very quickly as long as we keep our eye on the ball.  As long as the programs stay focused on measurably decreasing household energy use, I’m confident that residential energy efficient retrofit loans can provide tremendous benefits to Florida communities - including job creation.

No comments:

Post a Comment