Energy Focused Financing Gains Momentum

Energy-focused financing is gaining momentum. Renovate America’s HERO PACE program has funded more than 100,000 Energy Star-qualified renovations for single-family homeowners. In total, the HERO program has financed $3 billion in home improvements, and 40% of those have been Energy Star-certified. These renovations have saved homeowners upwards of $1 billion on their energy bills.

“More than 13,500 homeowners across San Diego County have used HERO to make energy or efficiency improvements to their homes since the program first became available here in 2014,” Greg Frost of Renovate America, tells GlobeSt.com. “Over half of the projects in the county financed by HERO have involved energy-efficiency improvements like Energy Star-certified air-conditioning units and replacement windows and doors: these upgrades are projected to save homeowners over $100 million on their utility bills over their expected useful lifetime.”

The HERO PACE program through Renovate America launched in 2011 and was designed to help qualified homeowners make Energy Star-certified improvements to save money on utilities. “PACE programs like HERO only cover qualified home improvements that save energy or water, or that generate renewable energy,” explains Frost. “Energy Star-certified improvements are covered by HERO because they represent the gold standard in energy efficiency, making it easy for consumers to purchase products that save them money and protect the environment.”

Windows, doors and HVAC systems are among the top renovations through the program, but the program has also funded improvements in air-conditioning units, Energy Star-certified reflective roofs, water heaters, lighting fixtures and pool pumps. “We know from customer surveys that 60 percent of our customers turn to HERO to replace a system in their home that has failed or is about to fail,” says Frost. “That’s not surprising when you look at the housing stock in California, the biggest market for HERO. According to the U.S. Census, California has around 9 million single-family homes. The majority of these houses were built before 1980  and are rife with inefficiencies – think single-paned windows and outdated HVAC units. There’s a huge market for the sort of energy-efficiency home upgrades that are covered by HERO.”

Frost expects the volume of these deals to increase thanks to recent legislation that incentivizes energy-efficient projects. “Last year, California passed new legislation, which we supported, establishing a comprehensive consumer-protection and regulatory framework for PACE financing,” he explains. “As those new laws have started taking effect this year, we have seen a dip in originations. But let’s be clear: the new laws have put PACE on a more sustainable trajectory, and we are still expecting the PACE market to grow. We’re convinced that PACE is necessary in order to improve the energy performance of the nation’s aging housing stock, and that the emerging blueprint for PACE in California – where expanded access to affordable financing is delivered with real and sustained consumer protections—will eventually become the standard for PACE in markets across the country.”