Leave a Comment:
1 comment
No surprise there … the US experience with programs to promote household energy efficiency, even with heavily subsidised interest rates (under 5%) and detailed energy audits done by specially vetted professionals at no cost to the householder, have had far lower take-up rates than had been expected. And that experience is with the loans administered by the lenders or a local authority – designated loan program administrator, not confounded with utility bills.
Even the assurance of special certifications for the builders who do the energy efficiency installations to improve the building envelope or the heating plant is not enough to attract a lot of participation.
The problem lies less in program design or who administers the loans and how they are paid back than it does in whether there is value for money in the short term. That is, greater energy efficiency will pay off more and more over time, as energy costs rise (with continued reliance on fossil fuels), but it may not pay off next month — or for a few years — and householders won’t enter into loans that they do not see paying for themselves, given the current economic uncertainties.
What are needed are loan terms that involve lower payments now, so savings are realised, but higher payments later, when fuel costs have risen, so the loan gets paid off. Perhaps a few years of “interest only” loan payments, followed by full payments including payback of principal could work.
Another alternative is to assure borrowers that their loan payments will not exceed their energy savings. But that approach would require there to be an institution with the financial resources to make up the difference in the early years.