Green Finance? Yes, energy efficiency is a big issue as it will save us all money in the long term. There are many ways that the government is encouraging people to make investments in energy efficiency upgrades to your home. Green finance options have been growing since 2005 and range from tax rebates to loans to green mortgage options. This article focuses on financing for energy efficiency in the home. For more on financing renewable companies see the following article on securitization of the solar industry.
To help you with your green finance options we have put together the following list of options. Leave a comment if you know more and we will happily add them.
How Does Green Finance Work?
It is a simple financial concept: Homes that use less energy will have lower utility bills. The money that is saved can be counted as income. The addition of this income to your stated income allows you to qualify for a bigger loan to increase your home’s efficiency. These loans only apply to improvements in efficiency you make, not those already in place. To ask yourself if something will qualify, just ask, will it drop the amount of the monthly utility bill?
Green Finance For A Home Purchase.
If you are in the market to buy a home and looking at homes advertised as green homes, it is definitely a case of buyer beware. You need to really do your homework as there is no standard for a green home, you will need to look for the things that will make a home green or energy efficient. HGTV’s frontdoor.com has a good article on what to look for.
Green Finance Mortgage Options.
The FHA has an Energy Efficient Mortgage (EEM)program for upgrades to a new home purchases energy efficiency. The maximum amount of the portion of the EEM for energy efficient improvements is the lesser of 5% of:
• the value of the property, or
• 115% of the median area price of a single family dwelling, or
• 150% of the conforming Freddie Mac limit.
If you are a Veteran there is even an energy efficient option for you from the Department of Veteran Affairs.
Lease options for installing a Rooftop/Yard Solar Power System
There are a number of providers who offer lease options for installing solar panels. Basically it works on the principle that for no money down you will get electricity at about the same cost or often less than you are paying now for a fixed period of time between 10-25 years even though the cost of electricity is going up about 8-10% a year. In return for paying for your system, the provider will be making money on your system after they have paid for it (about 12-15 years depending on what state you live in). The choice depends on your goals. If your goal is simply to lower your electricity bills, then leasing may be the answer for you. If however you want to make an investment with a fairly high rate of return over a long period of time, you should probably opt to buy the system outright.
Here is a list of the lessors we are aware of. As of the time of writing Solar Leasing was only available in twelve states: Arizona, California, Colorado, Delaware, Maryland, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Texas, Washington DC. Google “solar panel lease” in your state though to make sure you have found all the options.
Finally there is an option if your property is to shaded or if you chose to invest in solar as a community or home owners association in your neighborhood through Solar Mosaic
Try this Solar Power Cost Calculator from One Off The Block, one of the most accurate calculator we have found so far.
Non Profits Green Finance Options
The non profit Home Depot Foundation helps to increase the standard of living for moderate or low income families by providing funding to these families for energy efficient improvements and upgrades. If you are interested to find other non profits that provide funding, check with the United Way or with your local housing organization.
Tax Credits And rebates
If you are a homeowner in California you have many options, but don’t worry, there are a lot more incentives for most states than you would think.
The most comprehensive information we have found is at a website called DSIRE. It is a one stop experience for rebate information. Awesome!
The US Department of Energy has a list of all the rebate programs available and is focused on Energy efficiency initiatives. Check for your states programs here. There is also a very specific rebate of 30% for all solar panel, solar water heating systems, wind and geothermal that you have to take advantage of to make your new system affordable.
Utility companies have to build power generation capacity to cover the peak loads while most of the time their facilities run substantially under capacity. Therefore they are interested to try to reduce the peaks and for this reason some utility companies provide grants to their customers to add energy efficient appliances or solar panels and they may purchase the extra electricity as well. Some give the homeowner a grant for weatherizing their home to reduce load. To find out if your utility offers such funding visit their website.