Energy Efficiency Loans
A Loan That Pays Itself Back!

Energy efficiency improvements are extremely cost-effective for home and business owners, but the upfront costs often act as a barrier to energy and financial savings. In order to address the resulting energy efficiency gap, some states have embraced innovative financing models to offer low-interest loans for home and business energy improvements. Only a small amount of seed capital is required to launch an energy efficiency loans program that will save homeowners money and give positive returns on investment to the state.

The Warehouse for Energy Efficiency Loans (WHEEL) is an independent organization that works with state programs to provide private capital to help create low-interest state loan programs. One example is Pennsylvania’s Keystone HELP, the state program that WHEEL originated from. After exhausting public funds for the HELP program, the Treasury sought to raise private capital to continue it. In 2010, WHEEL was created through the collaboration of the Pennsylvania Treasury, the Energy Programs Consortium, and the National Association of State Energy Officials. After raising funds from investors including Citibank, Ford, and Rockefeller, WHEEL began purchasing unsecured home energy efficiency loans and using them as collateral for rated asset-backed notes. As a result, homeowners can take out low-interest loans up to $20,000 to finance energy efficiency improvements. To date, Keystone HELP has supported nearly $90 million in residential loans resulting in 12,000 energy efficiency improvements and consistent returns to the Treasury of over 5%. Outside of Pennsylvania, WHEEL is already being utilized in Kentucky and Cincinnati, and is currently expanding to Florida, New York, and Indiana.

States could establish its own program and partner with WHEEL to finance energy efficiency and gain positive returns. By authorizing a significant amount of support capital, states can become WHEEL sponsors and coordinate with WHEEL so that its government and homeowners can tap the potential of energy efficiency and the resulting cost-savings, as well as creating large demand for energy efficient technologies.