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Published byMiya Hammitt Modified over 9 years ago
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1 Paying for Energy Efficiency Paul Markowitz, Program Manager
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2 Money used for energy efficiency is an investment -- not an expense To invest -- to commit money in order to gain a financial return To spend -- to use up or pay out Energy investments --return on investment (ROI) comes from future energy savings Compare energy investments with other investment options, e.g. savings accounts Efficiency as an Investment 2
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3 “ROI” vs. “Payback period” “Return on investment” (ROI) is a better measure of value than “payback period” Payback = time needed to generate savings equal to the initial investment ROI vs. payback 20-year payback = 5% return on investment 10-year payback =10% return on investment Major energy retrofits usually have a ROI of 10-20%
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4 Positive Cash Flow “Total cost” is frequently less important than “positive cash flow” Longer-term financing Aligns the period of payment with the period of the savings (life of the measures) Allows for most or all of the required investment to be paid out of savings 4
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5 Align the period of payment with the period of the savings 5 Annual Costs Annual Savings Annual Costs Eight Year Loan Period Twelve-Year Loan Period Annual Savings
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6 The Hand Home Financing Scenario (7 year personal loan at 7.50% interest) Total project cost/amount borrowed ($8,277) Total interest($2,387) Total cost($10, 664) Annual energy savings$2,422 Total energy savings during repayment period $16, 954 Total cash flow during repayment period $6,290
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7 Paying for Efficiency Investments Weatherization Assistance Program – for qualifying households Incentives from Efficiency Vermont pay for a portion of the work – up to $2,000 per home Low-interest loans from participating lenders (credit unions and banks) 4%-9% Federal tax credits (up to $500) for 10% of cost of weatherization materials (insulation, spray foam etc.)
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8 Weatherization Assistance Program Free diagnostic and improvement services for low-income Vermonters, operated by Community Action Agencies and other agencies Call 211 – State hot-line
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9 Home Performance with ENERGY STAR Up to $2,000 in incentives from Efficiency Vermont for qualifying projects Extra $500 bonus for projects completed by August 31, 2013 Covers principally thermal efficiency improvements (insulation and air sealing) and improvements to heating system Hire participating contractor certified by Building Performance Institute Also $5000/building for multi-family buildings
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10 Other Programs Vermont Gas: Vermont Gas provides free energy audits and covers 1/3 to 1/2 the cost of retrofits for qualifying homes NeighborWorks program: offers low-interest loans for all income levels Numerous Vermont banks and credit unions: offering home equity (secured) and personal loans (unsecured) Do-it-Yourself Home Energy Efficiency Program: eligible for same incentives as regular Home Performance program
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