Austin's Home Performance with Energy Star Program: Making a Compelling Offer to a Financial Institution Partner

March 18, 2011 Austin’s Home Performance with Energy Star Program: Making a Compelling Offer to a Financial Institution Partner Launched in 2006, over 8,700 residential energy upgrades have been completed through Austin Energy’s Home Performance with Energy Star (HPwES) program. 1 The program’s lending partner, Velocity Credit Union (VCU) has originated almost 1,800 loans, totaling approximately $12.5 million. Residential energy efficiency loans are typically small, and expensive to originate and service relative to larger financing products. National lenders have been hesitant to deliver attractive loan products to this small, but growing, residential market. In response, energy efficiency programs have found ways to partner with local and regional banks, credit unions, community development finance institutions (CDFIs) and co-ops to deliver energy efficiency financing to homeowners. VCU’s experience with the Austin Energy HPwES program highlights the potential benefits of energy efficiency programs to a lending partner. Encouraging Home Energy Upgrades in Austin The city of Austin, Texas has been operating residential energy efficiency programs since 1982. In 2006, Austin Energy (AE), the nation’s ninth largest community-owned public utility, launched a Home Performance with Energy Star (HPwES) program. Over 8,700 energy upgrades have been completed through this initiative to date. HPwES participants may choose rebates of up to 20 percent of the upgrade’s cost or low-interest unsecured financing through the program’s partner, Velocity Credit Union. 1 Austin Energy buys down the interest rate on these loans to between 0 and 6 percent depending on the This is the second in a series of LBNL Clean Energy Program Policy Briefs. Using case studies, these working papers highlight emerging program models, important issues that new programs face, and how these issues are being addressed. The work described in this Policy Brief was funded by the Department of Energy Office of Energy Efficiency and Renewable Energy, Weatherization and Intergovernmental Program under Contract No. DE-AC02- 05CH11231. Please direct questions or comments to Mark Zimring (mzimring@lbl.gov). DISCLAIMER This document was prepared as an account of work sponsored by the United States Government. While this document is believed to contain correct information, neither the United States Government nor any agency thereof, nor the Regents of the University of California, nor any of their employees, makes any warranty, express or implied, or assumes any legal responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by its trade name, trademark, manufacturer, or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof, or the Regents of the University of California. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof or the Regents of the University of California. As part of its Better Buildings grant from the Department of Energy, Austin Energy recently ran the ‘Best Offer Ever’ promotion in which participants could receive both rebates and financing. Over 300 comprehensive energy upgrades are expected to be completed through this initiative. A DOE case study with more details on the ‘Best Offer Ever’ is forthcoming.