There’s No Place Like Home: Residential Energy Loan Program Takes Off

The Ligman family sitting on their front porch

It was a banner year for Michigan Saves’ Home Energy Loan Program. Since our first loan was issued in fall of 2009, the organization has helped more than 10,000 customers save money, increase the comfort of their homes and become more energy efficient. This feat was accomplished through a slew of innovative programs and partnerships designed to both educate the public and make financing for energy-efficiency improvements simpler and more accessible than ever before.

A Focus on Comfort

Michigan Saves knows that the benefits of energy efficiency are manifold: money in the bank, a cleaner environment and a more comfortable home.

“The difference was immediately noticeable… the temperature is much more even throughout the house.”
— Brian Catlett

“Although that’s powerful, we find that people are most excited about the added benefit of having a more comfortable, safer home,” says Laura Palombi, operations manager for Michigan Saves. “They feel good about the investment, and they feel good about their home because they’re no longer feeling cold and drafty, or too hot.”

Our Lowest Interest Rate Ever: As Low as 4.25% APR

In 2014, Michigan Saves successfully secured its lowest interest rate ever at  4.25% — meaning more people can afford the upfront cost of a project.

“We are always looking to improve,” says Palombi. “One of the things we heard consistently from our stakeholders, including customers and contractors, was a desire for a lower rate.”

The new rate, which took effect in July, means that an already secure and attractive financing option has become even better. What followed was Michigan Saves’ best month ever in terms of loan activity.

“It’s a very safe product for the lender,” Palombi says. “That’s why this capital is so accessible – there is financing available for up to $30,000 and terms up to ten years.”

And accessible capital is good business for everyone.

“What’s good for our customers is good for our contractors,” says Palombi. “We work really hard to create services, incentives, rebates and programs that align everyone in the energy-efficiency market in a way that provides the most value for all players.”

An example of this is Michigan Saves’ interest rate buydown program, in which utilities participated to buy down the interest rates on the Michigan Saves’ Home Energy Loan Program, achieving rates as low as 0.9 to 1.99% APR. Utility partners in this program included Consumers Energy, DTE Energy, Lansing Board of Water and Light, Wyandotte Municipal Services, SEMCO and the Holland Board of Public Works.

“You can feel that there’s been a quantum leap in the energy efficiency of this home.”
— Dave Peters

Avoiding Energy Drama

Michigan Saves partnered with Consumers Energy, DTE Energy and Dow Chemical to launch a public service announcement based on something we can all relate to: family drama.

The “Avoid Energy Drama” campaign honed in on a root cause of household tension: discomfort related to drafty or too-warm rooms and the resulting strife over the thermostat setting.

“I would say that comfort is 90 percent of our business,” Amanda Godward, owner of the energy-efficiency company Ecointelligent Homes, told Smart Energy in June. “From drafts and ice dams in winter to hot, stuffy rooms and smelly, funky crawl spaces in the summer.”The PSA’s impact exceeded expectations, garnering more than 30 million TV ad and radio impressions, and over $900,000 in media value. The uptake rate was significant as well: of the 11,416 unique visitors to the site, 1,005 completed the sign-up form to connect with Michigan Saves’ staff. Even more people took some other action to find more information on the site, such as access programs and products from partners like DTE Energy, Consumers Energy and Dow Chemical. Many took the first step in their energy efficiency journey by completing an energy assessment of their home.

“It just doesn’t make sense to keep letting our money and our energy go out the window.”
— Ruth Lumpkin

“We have had tremendous support from our utility and industry partners,” says Palombi. “They have been wonderful in helping us take a really novel, out-of-the-box approach to getting people interested in energy efficiency.”

Opportunity Resource Fund

In July, Michigan Saves launched a new program to help those who were initially denied a Michigan Saves loan because of a low credit score. The program gives them another shot at qualifying for financing for energy-efficiency projects.

“There are people that want to do this work, but may have tarnished credit,” says Michigan Saves’ executive director Mary Templeton. “It’s been a tough economy for several years. Many people are now able to pay the loan back because they have an income, even though their credit score remains too low.”

To address this problem, Michigan Saves worked with Opportunity Resource Fund, a nonprofit with a mission to assist people in leading healthy, productive lives, no matter their race or financial situation.

“When they took the temperature on (the inside of) my exterior walls before the work, they measured 45 degrees. Now they’re 65 degrees. All that heat is staying in our house, instead of escaping through our walls.”
— Michael Scholten

“In this program, they don’t look at credit score at all,” says Templeton. “They look at the financials and the applicant’s debt-to-income ratio, but credit score is not a factor in their decision. We’re trying to give as many people as possible the tools to be able to finance energy-efficiency work because we know it will help them financially in the long run.”