Loan Program Aims To Ease Burden Of Home Energy Retrofits

State Says “Concierge” Will Help Homeowners Through The Process

APRIL 29, 2024…..Hoping to accelerate the switch to clean energy technologies, the climate bank at MassHousing announced a new financing product Monday that aims to make $20 million in loans available over the next two years to help homeowners cover the costs of things like heat pumps, electric vehicle charging stations, weatherization, and more.

The Massachusetts Community Climate Bank’s first consumer product, the Energy Saver Home Loan Program, will attempt to take some of the pain out of one of the most crucial parts of Massachusetts’ clean energy transition: getting homeowners to make complicated and costly changes so they won’t rely on fossil fuels and will be more efficient.

Home energy improvement projects eligible for financing will include “roof replacement and oil tank removal, home weatherization, electrical system upgrades, heat pumps, new efficient appliances and fixtures, and installation of rooftop solar panels, battery storage and EV charging stations,” MassHousing said.

But small-bore projects will not qualify, MassHousing said projects “must reduce total energy usage by at least 20 percent” to receive financing. The Massachusetts Community Climate Bank has tabbed $20 million to fund up to 1,000 loans over the next two years, though the Healey administration said the loan program “is designed to be scaled up with federal Inflation Reduction Act resources.”

“The Massachusetts Community Climate Bank addresses two of our most pressing challenges — climate change and the high cost of housing,” Lt. Gov. Kim Driscoll said. “This new consumer loan program will help us move forward on our climate goals and make housing more affordable.”

In addition to a minimum 50 percent reduction in emissions by 2030, Massachusetts is required to reduce emissions by at least 75 percent by 2040 and at least 85 percent by 2050, all compared to the baseline of 1990 emissions levels. Policies like carbon sequestration are expected to help the state get the rest of the way to net-zero emissions by 2050.

The building sector is responsible for more than 25 percent of greenhouse gas emissions in Massachusetts, and can be responsible for as much as 70 percent of total greenhouse gas emissions in the state’s cities. The state’s Clean Energy and Climate Plan calls for a 49 percent reduction in greenhouse gas emissions from residential heating by 2030, and a 95 percent reduction by 2050.

And because buildings last for decades, the state is emphasizing retrofits (as opposed to building new efficient structures) as part of its decarbonization strategy. Officials previously estimated that more than 80 percent of the buildings that will exist here in 2050 are already built.

Assistance from the Energy Saver Home Loan Program will come in the form of a 20-year subordinate mortgage, with interest rates ranging from 0.5 percent to 2 percent, depending on household income. Borrowers do not have to put any money down and the maximum loan amount is $100,000. Loans will include an 18-month interest-only period, “providing consumers with low-cost bridge financing for clean energy incentive and rebate programs,” and will be serviced by MassHousing’s Mortgage Servicing Center.

The program is available to Massachusetts homeowners who qualify under income and housing stock criteria. To be eligible, a homeowner must earn less than 135 percent of the area median income are eligible for financing — from less than $124,875 in Berkshire County to less than $190,775 in greater Boston, MassHousing said.

“Low- and moderate-income families disproportionally carry the burden of both climate change and the high cost of housing. Programs like this will help provide affordable financing options for homeowners to support our clean energy transition,” Gov. Maura Healey said in a statement.

The University of California’s Lawrence Berkeley National Laboratory published a report in 2022 that analyzed 1,739 energy upgrade projects across the country, including 375 projects in Massachusetts, between 2010 and 2020. It found that while the median project cost was $8,740, “most projects did not have the energy savings or carbon reductions required to meet climate goals.”

In order to consistently reach energy and carbon dioxide emission reductions of 50 percent or greater (considered “significant” by the researchers), project costs had to be at least $40,000 to $50,000 per home, the study said.

“These results show that in order to scale home decarbonization, significant cost reductions are needed. In addition, incentives need to increase to be more aligned with the real-world cost of completing these projects, and R&D should be focused on reducing costs for the measures most impacting [carbon dioxide equivalent emissions] reductions.”

The Healey administration’s announcement of the financing program touted its “high-touch program model” meant to provide lots of customer service and interaction so the switch from fossil fuels to electricity is as smooth as possible for homeowners.

When a homeowner applies, they will be connected with a “concierge service provider” (CSP) in their part of the state (either All In Energy, the Cape Light Compact or CET). That CSP will determine a homeowner’s eligibility and then connect them with Abode Energy Management, the statewide “energy service provider” (ESP). The ESP will conduct an assessment of the home, create a decarbonization plan and work with the homeowner to select a contractor for the project. The CSP will help the homeowner pick a lender and apply for the loan.

MassHousing said the CSP, ESP and lender will “provide you with support throughout the life of your project.”

“For the first time, low and moderate-income homeowners will have concierge support — a real person — to walk them through, every step of the way, what needs to be done to make their home more energy efficient, switch to clean energy, and take care of coordinating all the eligible rebates in addition to flexible low-cost financing,” Climate Chief Melissa Hoffer said. “The Community Climate Bank took the initiative to find out what customers want, and designed a program that delivers. This will be a hassle-free experience for busy homeowners.”