Choose between two options to pay for your next energy-saving project
Financing can help eliminate the upfront cost by breaking project costs down into smaller monthly payments This guide breaks down two different financing options and helps you make the right choice for your home or property.
Energy efficiency projects can save you hundreds of dollars in your home or rental property. Simple, low-cost projects like changing lightbulbs or changing filters can make an impact on your comfort. Larger projects, like comprehensive weatherization or heat pumps may come with a higher upfront cost, but they also achieve greater savings. While those savings pay back the upfront cost over time, the initial investment may put projects out of reach for many people.
That’s where being able to pay for the project on a monthly basis could be helpful. Low or no-interest loans can eliminate the upfront cost and allow your savings to cover the cost of monthly payments. In many cases, you can use no- or low-interest financing for the whole project and the financing can be structured so that the amount you save on your energy bills is greater than the amount you spend on your monthly loan payment. You can feel the immediate benefit of your energy efficiency projects without feeling the pinch in your bank account.
How does it work? Watch this quick video to learn more about the benefits of financing your energy efficiency project.
Efficiency Vermont offers two different options to help pay for efficiency projects in homes or rental properties: The Home Energy Loan and the Weatherization Repayment Assistance Program (WRAP). Both can eliminate the upfront cost for homeowners, maximize Efficiency Vermont incentives, and break the cost into easy monthly payments. Depending on your unique situation, one option may be more appealing to you. Read on to understand which option might be right for your next efficiency project. Looking to finance your business’s energy-saving project? Check out our guide. Or contact us to learn more about options for business or rental property owners.
No matter what financing option you use, you’ll still dramatically reduce your upfront cost, maximize your rebates, and quickly feel the benefit of your project. One option may be more appealing to you depending on your priorities. We’ve compared the two options side by side below so you can understand the benefits of each.
| WRAP | Home Energy Loan | |
|---|---|---|
| Incentives | Yes, eligible | Yes, eligible |
| Term | Up to 15 years | All Loans: Up to 15 years, 0% Interest: Up to 5 years |
| Utility | Burlington Electric Department, Green Mountain Power, Ludlow Electric, Vermont Electric Coop, VGS | All utilities (VGS customers have some limitations on eligible projects) |
| Interest | 2% interest for all loans | 0% interest for low- and moderate-income Vermonters for terms up to 5 years. For all others, interest rates vary from 1.99% to 6.99% based on income level and loan term |
| Project Eligibility | The project must include weatherization completed by an Efficiency Excellence Network contractor | Eligible projects include weatherization, heat pumps, central wood pellet heating systems when completed by an Efficiency Excellence Network contractor; cord wood and pellet stoves, and ENERGY STAR appliances |
| Credit Check | No | Yes |
| Lenders | Vermont Housing Finance Agency | NeighborWorks of Western Vermont, Opportunities Credit Union, Vermont State Employees Credit Union |
We’ve outlined a sample loan scenario below for a weatherization project with a 5-year loan term.
| Weatherization Project Cost | $12,700 | |
|---|---|---|
| Efficiency Vermont Incentives | -$9,500 | |
| Weatherization Project Cost (after incentives) | $3,200 | |
| Loan Term | 60 months (5 years) | |
| Monthly Energy Bill Savings | $66.58 ($799/year) | |
| Monthly Payment (with fees and interest) | WRAP $59.92 ($719/year) |
HEL $53 ($640/year) |
The Home Energy Loan is a no- or low-interest loan specifically offered to help pay for energy projects in your home or rental property. You can finance 100% of your energy project, up to $20,000, with loan terms up to 15 years. Low- and moderate-income Vermonters can qualify for 0% interest on loan terms up to 5 years. Loans with longer terms or for higher-income households have higher interest rates, ranging from 1.99%-6.99%. Even these interest rates are below other home improvement loans, making the Home Energy Loan a smart choice for energy-related home projects. The loans are quick to process, closing in as little as two business days with low-to-no closing costs.
What kinds of projects qualify for the Home Energy Loan?
The Home Energy Loan can be used for a variety of energy projects where you work with a qualified Efficiency Excellence Network contractor. These include weatherization, heat pumps, and advanced wood heating systems. The Home Energy Loan can also be used to cover the upfront cost of ENERGY STAR® appliances and pellet and cordwood stoves.
Customers who take out a Home Energy Loan will pay it back directly to their lender. Under the Weatherization Repayment Assistance Program (WRAP), customers pay for their energy upgrades on their utility bill. This type of program is known as “on-bill financing.” The energy savings should more than cover the cost of the loan, helping customers experience savings immediately without adding a new bill to think about. Given the customer’s payment history with their utility, WRAP has no credit check requirement. Customers can receive loan terms of up to 15 years with low interest rates no matter their household income. If a participant moves, the next occupant of the property will take over the payments.
What kinds of projects qualify for WRAP?
WRAP helps Vermonters pay for weatherization projects. It can also include financing for heat pumps and advanced wood heating systems if they are paired with the weatherization project. Just like the Home Energy Loan, you must work with a qualified Efficiency Excellence Network contractor. You also must have 12 months of positive bill payment in a participating utility’s territory. Participating utilities are Burlington Electric Department, Green Mountain Power, Ludlow Electric, Vermont Electric Coop, and VGS.
Rebates and financing work hand in hand to help residential property owners experience savings faster. When you finance your project through WRAP, any available incentives will be factored into your loan. That means your total loan amount will be the upfront project cost after incentives. Effectively, any available rebates will lower your monthly payment and help you feel the benefit of your energy improvements more quickly.
Both the Home Energy Loan and WRAP are valuable tools for moving forward with an energy efficiency project without the upfront cost. Which product you choose depends on what’s most important for you.
The Home Energy Loan might be the right choice if…
- Your household income qualifies for a 0% loan
- You’re comfortable with a loan term of 5 years or less
- Your project doesn’t include weatherization
- Your utility doesn’t participate in the WRAP program
WRAP might be the right choice if…
- You have 12 months of positive bill payment at a participating utility (Burlington Electric Department, Green Mountain Power, Ludlow Electric, Vermont Electric Coop, or VGS)
- Your project includes weatherization
- You want the convenience of paying for your efficiency project as part of your utility bill rather than adding a new bill to worry about
- You’re looking for a longer-term loan
- Your household income falls into the “high income” tier for the Home Energy Loan
No matter what option sounds like the right fit, you can get started on your efficiency project today by reaching out to an Efficiency Excellence Network contractor.
