Financing as Follow-Through

High initial costs can discourage homeowners from making large investments in energy improvements such as new heating equipment or insulation. Our Community Energy Services (CES) residential program tries to remove this barrier by helping identify available rebates as well as offering financing options such as low interest loans. Homeowners who complete a CES home visit qualify for a 0% Home Energy Loan. To further aid our program participants, CES maintains a list of qualified Minneapolis contractors who can implement the recommended energy improvements.

Lawrence Berkeley National Lab’s 2010 report Driving Demand for Home Energy Improvements explains that energy organizations must go beyond raising awareness and educating homeowners: if their programs are to achieve energy savings, they must sell efficiency. They add, “one touch is not enough” to sell energy upgrades. CES includes an educational presentation and a “home energy visit” or audit. After the home visit, the program follows up with homeowners to help connect them to appropriate resources for financing the improvements we recommend. This provides consistent messaging and follow-through.

Our relationship with contractors works both ways. Financing program staff realized that about three fourths of our business comes from contractor referrals. As a result, they’re focusing on reinforcing existing relationships with contractors and building new ones through outreach and education efforts.

I touched base with Kyle Shannon, one of our CES Energy Counselors, for more info about how homeowners can learn about our financing options.

Anna: Does cost seem to be a barrier to implementing the improvements? How do you approach it as an obstacle?

Kyle:

When we give a ballpark estimate, the homeowner frequently says “oh that’s not too bad!” A lot of people have a bigger number in mind for something like attic insulation. Regardless, a couple thousand is not an easy amount to pay out of pocket.

And that’s where i bring up rebates and loans. A small rebate from a utility can help, and I explain that if it’s necessary to get work done, we have several loans available to homeowners. If they live in Minneapolis, they have 90 days to apply for our 0% loan, and the application only requires one contractor bid. 0% is kind of a no-brainer: it’s very attractive to some homeowners. CEE isn't offering it to make money, we're doing it to help save energy.

Anna: From your perspective, what motivates most homeowners to make improvements? Saving energy? Saving money?

Kyle:

As much as some people like to say that they’re green, saving money on their bills is probably more of a motivator. What influences whether they make a big investment is the return on that investment. And one often overlooked non-energy benefit is the additional comfort in their homes.

Anna: When you perform follow-up calls, do you repeat or provide additional info about our financing options?

Kyle:

I call back anyone we marked as likely to make improvements several weeks after their home visit. The call encourages them to get moving and reminds them that they have 90 days after the visit to apply for that 0% loan. Usually I just leave a message to see if they’ve followed up, make sure they know about all the loans and rebates, and leave them the contact info for our residential loan officer. When I actually reach them, I ask if they’ve made improvements and which contractor they used, just to record that information and collect some feedback.

Anna: Do you think that offering a finance program helps “sell” energy efficiency?

Kyle:

I think it does. A lot of energy improvements aren’t cheap, and our teams often recommend more than one improvement. If the homeowner had already realized that they need a new furnace and our number one recommendation is attic insulation, that can cost $10,000 together. A loan makes it easier to get it all done right away, rather than budgeting to do one thing at a time. People are pretty happy to know that they have financing options. 

Overall, about 30 percent of CES participants follow through with at least one of our recommendations to make major improvements, and many of these homeowners take advantage of our loans to help finance them. Does your organization provide financing options to help “sell” efficiency? Are you considering starting up a loan program? Share your thoughts and questions below!