What Is a Green Energy Loan?

Program and Site Under Construction

AB811 Financing and Implementation

In cooperation with local banks and non-profit groups involved in greenhouse gas reduction, Green Energy Loans (GEL) has put in place a program to offer AB811 financing of energy efficiency retrofits, solar PV and solar thermal systems for residential and commercial properties.

The AB811 structure for repayment of loans via a tax lien on real property requires an interested city to either create its own Contractual Assessment Program (CAP) or participate in a CAP created by the County within which the city is located. For cities not already part of an existing CAP, one will be created for them by GEL, subject to City Council Resolution adopting the program.

After the CAP is formed, GEL will arrange with one of its participating banks to provide a Line of Credit (LoC) to the City, for use by the City making AB811 loans to properties within its jurisdiction. The LoC can only be used for AB811 loans. The LoC will be secured by assignment of the tax liens associated with the City’s AB811 borrower properties. There is no General Fund exposure for participating cities. The initial LoC will be $2 million, and can be adjusted as needed to respond to property owner demand. Once there are $2 million in CAP loans, the bank will purchase those loans from the City. The purchase will recharge the City’s LoC. Then the City can begin a new round of loans to the next interested property owners.

For cities not wishing to staff the AB811 program internally, private providers are available to administer the CAP. Home and commercial audits which produce reports establishing a cost-effective loan amount, and the recommended application of the loan proceeds, are available through agreement with the Climate Protection Campaign and/or through independent HERS II raters. The audits follow the HERS II protocol.

Property owner interaction with the program is available on the Project DX web site, which can produce all documentation needed by the City for compliance with the AB811 CAP. The City will need to designate a staff member with authority to sign the CAP loan agreements with participating property owners. However, all other work required by the program can be done online and through contract providers paid from proceeds of the AB811 loan.

Energy efficiency retrofits and solar installations are provided by private contractors who, upon certification, are listed on the Project DX web site, and available for selection by the property owner. All work, including initial audits and building performance testing upon work completion, is paid for on a per loan basis from the loan proceeds.

Residential Energy Efficiency Analysis

High utility bills are not the only symptoms of an inefficient house. Drafts, rooms that are too cold or too warm, cold floors, musty smells, and window condensation are all indicators of a poorly performing house. A home should be comfortable, provide healthy indoor air quality, be safe, and operate cost-effectively.

Most homes have one or more of the above problems, but they don’t have to. Home performance analysis is the first step in resolving poor performance issues. Here is a description of how a home performance analysis works:

First, Reduce (Energy Use)

Residential energy efficiency analysis — also known as “whole-house home performance analysis” — uses building science criteria, onsite test procedures, and analysis software to identify a home’s energy savings opportunities, recommend an upgrade plan, provide savings/cost estimates, and verify the upgrade results.

Each house includes three interde­pen­dent systems: (1) an air barrier (that prevents air from leaking into or out of the building shell), (2) a thermal barrier (that keeps heat from transferring through the building shell), and (3) a heating, ventilation, and air conditioning (HVAC) system (including furnace, air conditioner, and duct system that provide a stable indoor air temperature). Making improvements to one system affects the other systems.

These three items together determine a home’s heating/cooling demand, which can represent from 50 to 80 percent of the home’s total energy use.

To obtain site-specific home performance data, a qualified analyst uses test equipment including:

• Blower Door: Creates a pressure difference between inside and outside for measuring total leakage in the building shell and identifying actual air leaks
• Duct Blaster: Pressurizes the duct system to identify the location of leaks in the ducts and connectors
• Infrared Camera: Measures the temperature of the walls, ceiling, and floor to detect missing or inadequate insulation
• Carbon Monoxide Detector: Detects poorly performing and dangerous gas combustion appliances

The use of this test equipment allows the analyst to monitor and confirm building shell and duct sealing measures, identify insulation upgrade opportunities, confirm proper indoor ventilation, and ensure safe operation of gas appliances such as furnaces and hot water heaters.

A home performance analysis will determine if a home needs:

• Air Sealing: Air sealing means identifying and sealing leaks in the building shell to minimize the “stack effect” in which warm air rises and escapes out the top of the home through leak points while drawing cooler air in from below creating a continuous uncontrolled air flow and loss of energy. A well sealed house reduces the need for heated/cooled air to maintain a stable indoor temperature.
• Duct Sealing/Redesign: The duct system of the typical California home leaks 30 percent. Duct sealing prevents the loss of heated/cooled air; duct redesign resizes the duct system according to current industry best practices that allow the HVAC system to function more efficiently.
• Insulation Upgrade: Improving insulation, especially in the attic, reduces the conductive movement of heat out of the house in the winter and into the house in the summer. Improving insulation reduces the demand for heating/cooling and enables the installation of smaller, more efficient heating/cooling systems.
• HVAC Upgrade: HVAC systems are traditionally oversized to compensate for the typical leaky building shell found in most homes. In a home that has been air sealed and well insulated, a new HVAC system can be installed that draws less energy and has a higher efficiency rating. Among the alternatives to the standard natural gas furnace are hydronic (forced-air and radiant) and geothermal systems.
• Hot Water Heater Upgrade: Producing hot water via natural gas or electric water heaters typically uses 20 percent of a home’s energy budget. Efficiency can be improved by installing a high-efficiency unit and insulating hot water pipes.
• Appliance Upgrade: Appliances (e.g., refrigerator, dishwasher, clothes washer, TV, computer) can use as much as 20 percent of a home’s total energy demand. A home analysis will identify old inefficient appliances and recommend energy-saving upgrades.
• Lighting Upgrade: This very cost-effective upgrade includes switching to compact fluorescent light bulbs (CLFs)
  or light-emitting diodes (LEDs) and upgrading light fixtures where needed to take CFLs and LEDs.
• Water Conservation Upgrades: Electricity is used to pump water to the faucet and to remove wastewater to a treatment/ reclamation facility. Water conserving appliances (i.e., dishwasher, clothes washer), low-flow water fixtures (e.g., toilets, showerheads, faucets), and water conserving irrigation systems reduce this electrical load.

Second, Produce (Renewable Energy)

Once a home’s energy efficiency is improved, it may be a good candidate for renewable energy production. Every day, the average home receives abundant renewable energy in the form of sunlight that warms its roof and walls. That energy can be captured to heat water and generate electricity without creating greenhouse gas (GHG) emissions that contribute to climate change.

Energy generated onsite is very efficient because it avoids the high energy losses (up to 70 percent of energy yield) experienced when electricity is generated at centralized plants and transmitted across the utility grid. Solar hot water and/or electric systems stabilize electric energy costs and protect against rising prices in the world energy market over the long term. In addition, solar systems often qualify for government rebates that improve the cost-effectiveness of the initial investment.

Efficiency Success Requires Qualified Vendors

How an efficiency measure is implemented is just as important as which measure is implemented (e.g., the actual R-value performance of insulation is directly related to whether it has been properly installed).

The U.S. Environmental Protection Agency and the U.S. Department of Energy sponsor a national program called Home Performance with ENERGY STAR (HPwES). According to HPwES, a successful residential efficiency program needs trained analysts and contractors1 certified in home performance techniques including home analysis/diagnostics; air sealing, insulation installation, and HVAC evaluation; health and safety standard compliance; and project management.

Efficiency success is directly tied to (1) the consistent scientific implementation of analysis and upgrade measures, (2) effective education of and communication with the homeowner, and (3) providing access to affordable financing and incentives.

It takes qualified professionals to help homeowners achieve maximum energy savings/GHG reduction results.

Use Energy Savings to Pay Loan

The GEL report also includes an estimate of how much money you may expect to save each month in reduced energy costs when you follow the report recommendations. You and your lender may use the estimate of monthly energy savings to create a loan package in which the money saved each month from lower energy and water bills covers the loan payment. (Please note that individual results will vary. Participating GEL lenders will not require that you use the loan proceeds as recommended. GEL cannot guarantee that your energy savings will offset your loan payments, even if you follow the recommendations for use of the loan proceeds. Only you can determine if taking a Green Energy Loan is in your best interest.)

More than Saving Money

A More Comfortable Home

An energy efficient home not only costs less to run, but is also more comfortable, which means less fiddling with the thermostat and even heating/cooling in each room of the home.

Increased Property Value

Just as a kitchen or bathroom renovation does, improving your home’s energy efficiency adds thousands of dollars to its resale value.

Reduced Carbon Footprint

Most of the energy used to operate your home creates greenhouse gas emissions that contribute to global warming. Improving your home’s energy efficiency reduces your personal carbon footprint.