It pays to reward energy efficiency

HEATING UP: More than 2,100 Rhode Island homeowners have taken advantage of National Grid’s Heat Loan Program, which offers zero-interest loans to residential property owners for qualifying energy-efficiency improvements. Above, insulation is blown into the walls of a house. / COURTESY NATIONAL GRID
HEATING UP: More than 2,100 Rhode Island homeowners have taken advantage of National Grid’s Heat Loan Program, which offers zero-interest loans to residential property owners for qualifying energy-efficiency improvements. Above, insulation is blown into the walls of a house. / COURTESY NATIONAL GRID

Greenwood Credit Union is seeing multiple advantages to participating in National Grid’s Heat Loan Program, which offers zero-interest loans to residential property owners for qualifying energy-efficiency improvements.
“Greenwood Credit Union is paid 5 percent from National Grid on these loans,” said Will Thibodeau, vice president of retail lending for the Warwick-based credit union. “From our standpoint, it’s a 5 percent loan, but they’re exceptionally high-performing and it’s a benefit to our members,” he said. “If anybody wants to do weatherization or get a new heating system, for instance, change from oil to gas, we can offer them a zero percent interest loan through this National Grid program.”
Although a similar unsecured loan might typically have an interest rate of 10 percent to 13 percent, Greenwood Credit Union considers the benefits that go beyond the interest rate.
“The Heat Loan Program has been a huge success for us,” said Thibodeau.
“Since we began participating in the program in January 2013, we’ve booked more than $2.5 million in Heat loans,” he said. “That’s been in 370 loans and a substantial portion of those are to new members of the credit union.”
A borrower interested in a Heat loan can join Greenwood Credit Union by opening up a share account with $5, said Thibodeau.
“Once the customer becomes a member and gets the Heat loan, we hope they get to see our other products and services,” he said.
Greenwood Credit Union has made the loans for energy-efficiency improvements to borrowers across Rhode Island.
“I think one of the reasons it’s big is because we offer 84-month financing on those loans,” said Thibodeau. “The average Heat loan is $6,700 and if you pay it in 84 months, that’s approximately a $79 payment a month.”
The underwriting criteria is the same as other loans, he said.
“The credit quality on these is phenomenal and we plan to continue as long as National Grid has the program,” said Thibodeau. Across Rhode Island, more than 2,100 homeowners have taken advantage of the Heat Loan Program since it launched in 2011, said Angela Li, National Grid’s lead analyst for Residential Program Strategy at the energy company’s U.S. headquarters in Waltham, Mass.
“[Nearly] $13.5 million has been loaned in Rhode Island since the program started,” said Li.
The zero-interest loans are through participating lenders. In Rhode Island, those lenders are Greenwood Credit Union, Coventry Credit Union, Navigant Credit Union, Capital Good Fund and BayCoast Bank, which is based in Swansea, and has one Rhode Island branch in Tiverton.
“We were looking for a good geographic distribution of lenders and we feel like we’re at a pretty good level now,” said Lee. “We haven’t declined any lenders who want to participate.
“We let the financial institutions do their normal screening for creditworthiness,” she said.
The Heat Loan Program was named to bring attention to efficiency improvements mostly in heating systems and is not an acronym, said Li.
“In Rhode Island and Massachusetts it’s a big program,” said Li.
The majority of qualifying projects for the loan are for more-efficient heating and hot-water systems and improved insulation.
“The program is continuing to grow and one of the factors is the awareness of energy costs,” said Li. “Last winter, a lot of people started to see the value of investing in better insulation.”
National Grid pays lenders the interest on the loan. The funds are from National Grid’s Energy Efficiency Program charge paid by the majority of customers on their monthly bill, she said.
The banks and credit unions get 5 percent interest on the loans from National Grid, said Li.
Capital Good Fund, a nonprofit Certified Community Development Financial Institution that works to provide equitable financial services, gets 10 percent interest on each Heat loan from National Grid.
“Capital Good Fund works with people who may have less-than-perfect credit ratings, people who wouldn’t generally get a loan from the credit union or bank,” said Li. “We don’t want cost to be a barrier to customers who deserve the same access to this program.” “We get 10 percent on the loans from National Grid because we’re doing slightly riskier loans,” said Capital Good Fund Executive Director Andy Posner.
“We’ve done 31 loans for a total of $110,000 in the last 18 months under the Heat Loan Program,” he said.
“We decided to participate because it’s interest-free to the borrower and we think it’s an opportunity for improvements in home health and safety, energy efficiency and cutting down on greenhouse gas emissions,” said Posner.
The loans are available to owner-occupied, single-family homes, as well as owner-occupied and nonowner occupied properties with up to four residential rental units. Loan amounts and loan types vary by lender.
“It’s quite a popular loan and it is a wonderful way for people to save energy,” said Dan Briand, senior vice president and retail lending manager for BayCoast Bank, which has been participating in the program for three years.
“We’ve had good performance on these loans and for us, it’s a case of doing well by doing good,” he said.
“BayCoast Bank has done more than 1,000 of these loans totaling more than $7 million since we started in the program in 2011,” said Briand.
“Since we started doing these loans, we’ve seen the base of borrowers broaden,” he said.
“At first it seemed like it was more to engineers or other people who were aligned with sustainable energy – who were close to the ground on the subject,” he said.
”Now the program is more well-known and one of the first calls to action is that people can get a free home-energy assessment,” said Briand. “That way they can find out if they can save money on insulation or a new heating system. You don’t have to have a degree in engineering to save money on your heating bill.” •

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