The Clean Energy Mortgage
- Energy Futures Group
The Energy Futures Group (EFG) Team has developed an innovative mortgage product that incorporates home energy improvements in the mortgage process. Long-term, low-interest rate mortgage loans are the most cost-effective vehicle to help homeowners and homebuyers upgrade energy features and reduce operating costs of their homes. Yet few mortgage products exist that facilitate significant home energy improvements. The Clean Energy Mortgage allows homeowners and homebuyers to finance energy improvements using a long-term, low-interest rate mortgage, making energy improvements more accessible and affordable while encouraging homeowners and homebuyers to upgrade the energy performance of their home. The EFG Team developed the “EnergyFirst Mortgage”, a Clean Energy Mortgage product that offers a discounted interest rate to homeowners in two counties in Vermont looking to incorporate home energy improvement projects, such as home weatherization, heating system updates, and/or a solar photovoltaic (PV) installation, into the refinancing of their mortgage. The Clean Energy Mortgage is a streamlined package of services that includes a discounted interest rate, Energy Coach services, Automated Energy Model technology, and access to Home Energy Score qualified contractors. The EnergyFirst Mortgage was launched in early 2021, with a goal of enrolling ten projects. The EFG Team trained and helped certify four contractors to become DOE Home Energy Score Assessors and worked with VSECU, a Vermont credit union, to recruit projects. We successfully enrolled ten borrowers in VSECU’s EnergyFirst Mortgage. These borrowers were able to finance energy improvement projects ranging from $25,020 to $81,864, enabling deep energy savings. The average size of the energy improvements of the projects with available data is almost $40,000, with all but one project including a mix of solar PV installation, heating, ventilation and air conditioning (HVAC) upgrades, and weatherization measures. This average energy improvement portion of the loan is 89% larger than the average VSECU energy improvement loan made through the Home Energy Loan. Additionally, the majority of projects (five out of six projects with data on final closed loan amount) increased the size of the loan from the original requested amount to final closed amount, illustrating the benefit of a Clean Energy Mortgage to a lending institution, which can see an increase in loan size in exchange for offering a lower interest rate, and to borrowers for financing a more comprehensive project. While the sample of customers is limited, there were some key findings and lessons learned we took away from this pilot, including the importance of a reduced interest rate in benefiting the borrower and lender and the positive impact of an Energy Coach in the process. Our experience in the Phase 1 pilot shows that the tradeoff between lower interest rate and larger mortgage size is a win-win for lenders and borrowers. VSECU was willing to offer a lower interest rate in exchange for the chance to increase the mortgage size to incorporate home energy improvement measures along with fulfilling their mission to support their members while saving energy. And borrowers are willing to increase the size of the mortgage in exchange for a lower interest rate and the promise of saving energy.
- Research Organization:
- Energy Futures Group, P.O. BOX 587 Hinesburg, VT 05461
- Sponsoring Organization:
- USDOE Office of Energy Efficiency and Renewable Energy (EERE), Energy Efficiency Office. Building Technologies Office
- Contributing Organization:
- VSECU, ClearlyEnergy, Northeast Energy Efficiency Partnerships (NEEP)
- DOE Contract Number:
- SC0020825
- OSTI ID:
- 1813040
- Type / Phase:
- SBIR (Phase I)
- Report Number(s):
- DOE-EFG-20825
- Country of Publication:
- United States
- Language:
- English
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