Aci mass heat-loan-carlfawcett-csg
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The Mass Save速 Heat 0% Loan Program, operational since 2006 and made permanent in 2008, has successfully financed over $131.7 million in energy efficiency improvements with an approval rate of 60-90%. By offering accessible loans of up to $25,000 for residential customers, the program addresses financial barriers to upgrading heating systems and enhancing energy efficiency. Key eligibility criteria include having a residential account with participating utilities and completing a home energy assessment.
Aci mass heat-loan-carlfawcett-csg
- 1. Mass Save速 HEAT 0% Loan Program How it is Motivating MA Homeowners October 16, 2012 ACI New England Carl Fawcett Director of Financing Programs
- 3. 2006-2012 HEAT Loan Statewide Results through September 2012 15,914 closed loans $131.7M+ financed Energy Efficiency improvements $8,164 average loan size over last 5 years 60-90% range of loan approvals of applicants by lenders 47 banks and credit unions participating 80% of financing for heating system upgrades One of the most successful financing programs for energy efficiency improvements in America
- 4. Origins of HEAT Loan Program 1986-1990+ Original HEAT 0% residential financing program funded by oil overcharge dollars awarded the Commonwealth of Massachusetts from a federal court case Program directed by DOER using local organizations across the Commonwealth to provide customer and technical support
- 5. Son of the Original HEAT 2005 - MA Heating Energy Assistance and Tax Relief Act signed into law. Act included tax credits to help MA residents with skyrocketing energy costs One provision earmarked funding from residential ratepayer-funded energy efficiency programs for a low interest loan program pilot for residential customers Loans under this pilot were intended to help customers weatherize homes and install efficiency upgrades to their heating and hot water systems
- 6. HEAT Pilot in 2006 DOER decided the Mass Save residential program would operate this pilot No similar financing program in the U.S. at that time Many program details to work out, including creation of lender network, who would provide customer support, and what measures would be eligible for financing Working group of staff from DOER, participating utilities, and CSG created framework Pilot launched winter 2006
- 7. Green Communities Act of 2008 Legislation made HEAT loan financing program a permanent part of the Mass Save residential program Loan product helps incentivize residential efficiency adoption and assists households to overcome cost barrier posed by large capital investments
- 8. Statewide HEAT Loan Organization Sponsor/Territory Administrative Vendor NSTAR (gas and electric) CSG National Grid (electric only) CSG Cape Light Compact Rise Engineering Western Massachusetts Elec. Honeywell New England Gas Honeywell Fitchburg Gas and Electric Unitil
- 9. Characteristics of HEAT Loan Pilot For comparison with current program: Pilot offered 0% and 3% loans depending on income (80% Median) Small number of participating lenders (1-20) Maximum loan $15K, Minimum loan $2K Central AC was not eligible Heat loss calculation was required for heating system replacements No fuel switching was allowed Only occupant owners of 1-4 unit properties were eligible to apply for financing
- 10. 2012 HEAT Loan Program: Eligibility Applicants must have valid residential account number with a sponsoring utility or Cape Light Compact Must have had a Mass Save Home Energy Assessment (HEA) for 1-4 unit properties (see also condo eligibility) Applicant can be occupant or non-occupant owner Municipal electric customers who heat with NSTAR Gas, Columbia Gas or New England Gas may apply; National Grid Gas DOES NOT participate A One Loan One Shot program (some exceptions granted by utilities)
- 11. 3 Types of HEAT Loans Loan Options for Customers Eligible Customer Type Loan Loan Term Amount Owner Occupied Micro Loan $500-$2000 24 Months Owner Occupied Standard Loan $2001- Up to 84 $25,000 Months Non-Owner Occupied Rental Property $5,000- Up to 84 Loan $25,000 Months
- 12. Some Loan Details Loan approval is not guaranteed; customers are eligible to apply once they receive a HEAT Loan Authorization form from loan administrator 47 credit unions & regional banks currently participating Lender determines loan approval or denial Loan approval based on credit and debt-to-income ratio Most loans unsecured; some lenders offer secured loan Most terms are 7 years (except for Micro Loans) Maximum loan amount is $25,000 All loan amounts are net any utility rebates
- 13. Lending Results: Preliminary results from survey of participating lenders Averages from the survey: 86% of loans are approved 755 Av. FICO score 665 Av. minimum FICO score .55% Default rate 1-5 Day processing time for loans by lenders (many lenders offer same-day processing)
- 14. As of April 2012: Some Condo Units Eligible for HEAT Loan All residential electric, and natural gas, individually metered condo units may apply Master-metered condos in complexes are NOT eligible Condo complexes that heat with oil or propane, are NOT eligible to participate Lighting and insulation upgrades for condo units are provided by the utilitys multifamily program - treat the whole complex This program addition is a new opportunity for contractors installing heating, hot water and air conditioning systems
- 15. Eligible Measures HEAT Loan provides financing for energy efficiency improvements that meet program minimum standards Insulation and/or air sealing upgrades Single-pane window replacements Efficient heating systems Air source and geothermal (ground source) heat pumps Ductless mini-split heat pumps/AC Thermostats Domestic hot water system Solar hot water systems Central Air Conditioning installed with QIV (New or replacement) Note: efficiency requirements for heating and DHW upgrades are the same as the GasNetworks, Mass Save propane/oil and Cool Smart rebates.
- 16. Measures Financed Since 2006 Heating system & DHW: 11,601 Weatherization: 1,575 Windows: 2,103 Central AC: 228 (6 months)
- 17. Residential HEAT Loan Process (Abbreviated) Customer calls Utility and requests a Mass Save Audit; audit is performed Mass Save Audit verifies Customers eligibility to participate in HEAT Loan Customer solicits contractor quotes Program reviews and authorizes proposals; Customer signs check over to Contractor once work completed and passes inspection* Customer receives authorization and receives list of Lenders, applies for Verification Inspection pre-approval Customer closes loan with Lender. Two-party check made in name of Contractor; Lender gives check(s) to Customer
- 18. Application Checklist: A very important part of the heat loan folder. It outlines all of the steps to the program.
- 19. Intake form
- 21. Authorization Form
- 22. Two-party Checks Issued by Lenders, Net any Rebates
- 23. Closed Loans by Year 2010 2011 2012 4500 4000 3500 3000 2009 2500 2000 1500 2006 2007 2008 1000 500 0
- 24. Trends: Volume Volume of loans closed has increased every year Adding new measures such as central AC widens pool Increased marketing by Mass Save utilities and lenders; increase in contractor referrals More word of mouth referrals by customers as program matures Participating customers increase with addition of micro loans and loans for non-occupant owners Large increase in customers participating in the residential efficiency programs in the last 3 years due to program expansion
- 25. Average Loan Size by Year $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 $3,649,346 $5,087,889 $7,428,164 $19,095,819 $27,609,119 $31,975,388 $36,877,721 2006 2007 2008 2009 2010 2011 2012 Average loan amount
- 26. Trends: Size Reasons for loan size increasing: Additional measures now available Whole-house approach motivates customers to do multiple measures Minimum efficiency requirements for equipment increased over time, encouraging customers to invest upfront in more expensive and higher efficiency equipment
- 27. Growth of HEAT Loans $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 2006 2007 2008 2009 2010 2011 2012 2112
- 28. Contractors can. . . help customers master HEAT loan steps Proposals you provide customers should include: Make, model #, and AFUE of equipment being proposed Clearly stated details of equipment to install Itemization of any non loan-eligible work, such as oil tank removal If you present several options, have the customer note which one they are choosing. Encourage them to read HEAT Loan steps and minimum standards for their improvements. If central AC is being proposed, provide a Manual J version 8 load calculation and AHRI certificate. Become familiar with equipment efficiency requirements for HEAT Loan and rebate programs.
- 29. For Minimum Requirements for Energy Efficient Measures, Steps, and Minimum Efficiency Standards: see MassSave.com/heatloan
- 30. Contact Information: MassSave.com/heatloan HEAT Loan Support Line: 1-800-696-8077 for National Grid and NSTAR territories Fax: 508-836-3181 (CSG) Email: MAHTLoan@CSGRP.Com Carl Fawcett, Director of Financing Programs for CSG: carl.fawcett@csgrp.com or 1-800-696-8077
Editor's Notes
- #4: $131,723,446 - exact # through Sept 2012 of financed Energy Efficiency improvements