DOE Home Weatherization Looks More Like PACE – $120 Million To Speed Up Efforts

August 19, 2010

PACE is dead. But the Department of Energy is turning up the heat under its home weatherization – or more accurately retrofit – efforts.

The department said Thursday that 31,600 homes across the country were weatherized in June, a record. The target for the summer: 80,000. It also said that for the first time, weatherization will include renewable energy – such as solar – along with energy-efficient appliances, cool roofs and tankless water heaters.

To fuel the effort, Energy Secretary Steven Chu on Thursday awarded $120 million of Recovery Act funds to more than 100 organizations to expand programs and undertake pilot projects.

With PACE, or Property Assessed Clean Energy, on the sidelines, alternate efforts to improve the energy efficiency of homes and buildings have been necessary. PACE came to a near halt this spring and summer when Fannie Mae, Freddie Mac and Fannie regulator, the Federal Housing Finance Agency, barred lenders from writing mortgages for PACE homes. (PACE programs, which were taking root in 23 states, typically lend government money to homeowners and place special assessments for repayment on property tax bills.) Fannie and company worried PACE liens would receive priority over mortgage leans in the even of defaults.

To mimic the work of many PACE programs, Chu said the government would now permit weatherization programs to install renewable energy – solar panels, solar heating systems and wind turbines – as well as cool roofs, insulation, high-efficiency appliances, tankless water heaters, combination boilers for heat and hot water, in-home energy monitors and ductless heat pumps. In other words, weatherization begins to look more like energy retrofit.

Retrofit projects in 27 states will get $90 million of the money. The work will be performed by 103 local companies. An additional $30 million will support 16 pilot projects targeting low-income households and testing new ways to finance retrofits and new technologies.

For instance, one program in Washington, D.C., received $2.6 million to improve energy efficiency at 2,500 eligible housing units. A $1.25 million loan loss reserve will be set up so nearly $8 million in private loans can be made to homeowners.

Another $850,000 will go to a program in Utah to create a revolving loan program offering low-interest financing to low-income households.

The Energy Department said its weatherization program created 13,000 jobs for carpenters, electricians and other workers during the second quarter.

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Posted by Mark Boslet

Another Setback For PACE

July 1, 2010

PACE’s goal of simple, easily accessible home energy finance hit another roadblock last month when a California judge held up distributing $30 million to get local programs off the ground.

The legal dispute delays or slows PACE programs in 23 counties across the state. California has been among the leaders in PACE, or Property Assessed Clean Energy, financing, with two-third of the state scheduled to have working programs by year’s end.

Under PACE, homeowners borrow government money for home energy improvements and repay the loans as assessments on their property tax bills. Municipalities sell bonds to come up with the cash.

Lawsuit holds up $30 million that would jumpstart California programs

The legal wrangling pits PACE’s two greatest constituencies – energy-efficiency contractors and solar installers – against one another. Both hope to benefit from the flow of government money.

In the suit, the Western Riverside Council of Governments – representing 16 southern California cities – lays claim to $20 million of the $30 million in PACE funding. Its application for the money was turned down because the region wants to make it easy for homeowners to install solar panels. In doing so, it rejects a state requirement that homes reduce energy use 10 percent or more with energy retrofits before considering solar. The requirement is typical of PACE programs.

The California Energy Commission instead awarded the money to San Francisco, Los Angeles, and the counties of Sonoma, Sacramento and Humboldt. The Western Riverside Council of Governments protested the decision, but was told it failed to appeal by the required deadline. It filed suit, and the court ordered its appeal to be heard.

Riverside country officials did not respond to several requests for comment.

The impact on the state is far reaching. Michael Levy, chief counsel for the California Energy Commission, said the 23 counties granted the money plan to leverage more than $370 million of tax credits, utility rebates and other funding to jumpstart energy retrofits at homes and businesses and create 4,353 jobs. The financial limbo also backs the state up against a deadline: the federal recovery act money paying for the PACE initiative needs to be distributed by Sept. 30 or used for another purpose.

The dispute is only the latest to engulf PACE. In May, Fannie Mae and Freddie Mac roiled PACE efforts when the two mortgage lenders suggested they would shun homes with PACE payments, or liens. They fear a PACE loan would get priority over their mortgages in the event of a default.

The Fannie Mae and Freddie Mac letter put the brakes on PACE programs across the country, including in San Francisco, where officials stopped approving PACE applications this month.

The council of governments’ dispute creates another layer of uncertainty. “It really dramatically impacts our program,” says Johanna Partin, director of climate protection initiatives for San Francisco.

San Francisco kicked off the nation’s largest PACE program in April and hopes to use the $2 million it won from the California Energy Commission to lower PACE interest rates to about 7 percent from an estimated 8.5 percent. (An even lower interest rate is planned for low-income households.)

The city found a small amount of money from another source to move ahead with its interest rate reduction effort. But the money filled the gap only because the city received a trickle of 20 PACE applications. The Fannie Mae and Freddie Mac controversy slowed interest.

A similar setback is facing John Haig, energy and sustainability manager for Sonoma County. Haig expected to use his $2.6 million award to lower the cost of energy audits, market PACE to residents and get financial advice on selling bonds. None of this can take place.

“Not having the grant causes us difficulty in going to the next phase,” says Haig. Sonoma’s program continues with $1 million in municipal funding.

An even greater impact confronts the 14 counties of the CalforniaFirst initiative, which includes Sacramento County. The counties qualified for $16.5 million to kick off PACE, but now the efforts are on hold. “The level of uncertainty does cause tension across the program,” says Peter Ucovich, a senior planner with Sacramento County’s infrastructure finance section.

Ocovich says Sacramento isn’t likely to begin approving homeowner financing until the Fannie Mae and Freddie Mac issue is resolved. But two hurdles are worse than one.

The California Energy Commission is to appear in court on Friday to attempt to free the money. But of course no one knows the outcome of the hearing

Talk to PACE officials across the state and the only acceptable resolution: is one that let the programs move ahead.

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Posted by Mark Boslet

Recurve Raises $8 Million From Lowe’s, Others

June 23, 2010

If you need more proof that big-box home-improvement retailers are sold on the home-energy retrofit business, here it is.

Home-energy remodeler Recurve said Wednesday that it raised another $8 million. High on the list of investors is Lowe’s Companies, the North Carolina home-products chain with 1,700 stores in the United States and 14 million customers.

Latest investment show big-box home improvement retailers, like Lowe's, see gold in home energy retrofits

The retailer, which has been courting renewable energy companies in recent months, made a $4 million equity investment in the San Francisco start-up, joining existing investors RockPort Capital Partners and Shasta Ventures. The investment doubles to $16 million the money Recurve has raised since its founding six years ago.

CEO Pratap Mukherjee says the unusual investment is evidence of Lowe’s interest in its year-long partnership with Recurve. The two companies market a co-branded energy-audit and retrofit service in a handful of Lowe’s San Francisco Bay area stores. Lowe’s also sells solar panels from Akeena Solar.

The arrangement has been successful, says Mukherjee, who declined to offer sales figures or deal volume. It also isn’t likely to the last among energy contractors and home-products companies.

Apparently just about every big retailer and home products company is eying the retrofit business with increasing interest, including big names, such as The Home Depot, Masco and Johns Manville.

Already several have made stabs at the market. In March, Masco launched its WellHome energy audit and retrofit service in seven cities with plans to expand by the end of the year.

The Home Depot has a consumer Website where homeowners can self-diagnose home energy efficiency. It also struck a deal this year to have SolarCity install solar panels for its customers.

With 70 million homes in the U.S. in need of $10,000 energy retrofits, “I think everybody sees the tremendous potential,” says Mukherjee.

Recurve, formerly Sustainable Spaces, says it will use the new money to expand its suite of energy-retrofit software and to add to its sales and service staffs.

The company unveiled the first module of the software in April, a program to automate home energy audits. It has 10 contractors using the beta product and plans a commercial release in the third quarter.

The software should be a boon for business. Two hundred companies across the country have expressed interest in using it, says Mukherjee.

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Posted by Mark Boslet

Dispute Over PACE Energy Retrofit Financing Goes To Washington

May 24, 2010

A week ago, California Attorney General Edmund Brown dashed off a worried letter to federal officials defending California’s PACE financing for home energy retrofits.

A week earlier, government lenders Fannie Mae and Freddie Mac released a vague lenders’ notice apparently critical of the innovative program. Brown worried the notice could derail efforts to expand the Property Assessed Clean Energy financing to 28 million Californians by September.

Now the dispute is the subject of discussions in Washington with efforts to remaking the energy profile of the nation’s homes hanging in the balance.

Notice from federal lenders Fannie Mae and Freddie Mac caused confusion, says California Attorney General Brown, with the future demand for home energy retrofits hanging in the balance.

The low-interest PACE loans allow homeowners to borrow for home energy-efficiency improvements, including solar installation, and repay the loans over the 20 years. The government raises the money by selling bonds. The repayments are added to property tax bills and the 20-year loans stay with homes when they are sold.

This final feature is what alarmed Fannie and Freddie. Would the liens keep the two lenders from underwriting mortgages for the properties, especially if the energy remodeling didn’t translate into higher property values? Participating homes would have higher tax bills than other comparable properties. Wouldn’t they be at a disadvantage in the market place?

Apparently, the dispute is being hashed out among housing officials in Washington. Their decision, however, will have an impact beyond California as states such as New York, Colorado and New Mexico are moving ahead with the program.

In California, PACE has already proved its popularity. In Sonoma County alone, 800 solar and other projects have been soaked up $30 million in financing. Energy remodelers say that along with President Obama’s HOMESTAR energy retrofit initiative now moving through Congress, PACE should spark a boom in business. And it should cut energy use at homes and businesses – about 40 percent of the nation’s demand.

In his May 18 letter, Brown, who is running for governor, said Fannie’s and Freddie’s advice notices “caused confusion and concern among California PACE stakeholders (and may have) serious financial implications for participating local governments and the thousands of homeowners and small businesses currently participating in these programs”

He said California has earmarked a substantial portion of $570 million in funds for PACE. The goal is to “support green manufacturing jobs and thousands of additional jobs associated with installation and maintenance of energy efficiency and renewable energy projects,” he said, calling for a withdrawal of the notice.

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Posted by Mark Boslet

Energy Retrofitter Recurve Unveils Software For Energy Contractors

April 19, 2010

Home energy retrofits are beginning to seep into the American consciousness. Contractors, though still small and few in number, report encouraging growth.

The PACE financing program in San Francisco and soon elsewhere in California, should draw new builders into the business. PACE, or Property Assessed Clean Energy, allows homeowners to borrow for their energy improvements and repay the loans as if they were tax bills.

The energy audit software should enable Recurve and contractors who use to conduct more audits and run energy simulations on site.

In Washington, D.C., President Obama’s $6 billion energy retrofit program, Home Star, is moving toward a vote in the House. The program would offer $3,000 rebates for home efficiency improvements.

The stars would seem to be aligning. “We just see this industry exploding,” says Adam Winter, co-founder and senior vice president at Recurve, a San Francisco home energy remodeler. “We see such opportunity in the market right now.”

And yet, even as more Americans turn to home retrofits in the battle against global warming, the industry will face a new hurdle: getting all the work done. Up to now, energy remodeling has been a labor intensive, time-consuming process. Recuve acknowledges that the first step – a home energy audit – can be a three-hour inspection, at the end of which an inspector returns to the office, enters pencil-written notes into a computer and runs an energy simulation.

Recurve says it is time to replace manual with automation. The company announced Monday a suite of software it hopes will simplify retrofits for contracts across the country. The software is still in beta testing, but is anticipated to be available commercially by the end of the third quarter.

The program will enable inspectors to enter data in a laptop while in the field, run simulations immediately and present homeowners with instant price quotes. Instead of two or three audits a week, they should be able to four or five, says Winter.

Recurve’s goal is to be the software powerhouse selling its product (and online service) to businesses getting into energy remodeling. It has been testing the software in house for six months and for three months with six partners. As of Monday, it will expand the testing to several dozen. A handful of other programs are available to contractors, but the company claims its offering is more comprehensive.

What’s more, several other software modules are under development to expand its capabilities, including programs to keep track of customer leads, to manage projects and to enforce best practices in the field.

The company has always had the vision of being a software provider, says Winter, from the day it was founded.

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Posted by Mark Boslet

EPA Strengthens Energy Star Program For Energy Efficient Homes

April 19, 2010

The Environmental Protection Agency raised the bar for the energy efficiency of new homes, strengthening the requirements necessary for them to receive the Energy Star label.

The new guidelines require a 20% improvement over the 2009 International Energy Conservation Code

The new guidelines, released Monday, ensure that new homes qualifying for the Energy Star designation are 20 percent more efficient than those built to the 2009 International Energy Conservation Code. That will translate into 15 percent savings on utility bills.

The previous benchmark was at least a 15 percent improvement over the 2004 International Residential Code – or roughly 20 percent to 30 percent more efficient than standard homes.

The new guidelines will go into effect in January 2011.

So far, more than 1 million Energy Star homes have been built in the United States and 8,500 contractors work to the standards. The EPA estimates that families living the homes saved $270 million on utility bills.

The new measures call for more complete air sealing with insulation and high performance windows. They also require high-efficiency heating and cooling systems. Along with saving money, the improvements should better control moisture, improve air circulation and enhance comfort.

The new guidelines also stress the use of energy efficient lighting and require more complete efforts to use flashing and moisture barriers to keep rain water away from walls, roofs and foundations.

Energy Star homes require verification by inspectors using special diagnostic equipment.

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Posted by Mark Boslet

PACE Funding Should Double Or Triple Retrofit Contractors, Recurve Says

April 13, 2010

San Francisco rolled out this week the nation’s largest financing initiative for residents to turn their homes green.

The $150 million effort will raise money from bonds, and require homeowners who retrofit their houses to improve energy efficiency to repay the debt through a property tax-type levy.

San Francisco's $150 million home energy efficiency initiative is the start of a broad state expansion of PACE, or Property Assessed Clean Energy, financing.

By the third quarter, the program will stretch across much of California. As many as 28 million residents will have access to the so-called PACE, or Property Assessed Clean Energy, financing by the end of September, says Cisco DeVries, president of Renewable Funding, which helps run the program.

So will the money awaken the still nascent home retrofit industry? Will it attract new companies and create new jobs while saving energy?

The answer, according to Matt Golden, founder and president of the retrofit company Recurve, is a definite yes. Golden estimates the number of retrofitters and related companies in the market will double or triple in a year or two. And employment should follow the rise.

“There are a lot of companies on the sidelines” waiting for the market to blossom, including some well established contractors, Golden said in an interview this week.

Today, the San Francisco Bay Area has about a dozen retrofitters and perhaps as many as 20 companies doing energy audits. Construction jobs, as elsewhere in California, are off by about a third and the energy retrofit business has been cut in a half. Suppliers to the industry have suffered as well. Insulation plants are running at 40 percent capacity.

Financing has always been the challenge facing the retrofit industry, says Golden. Until PACE, homeowners have had to rely on home-equity credit lines and other general borrowing, with rates of 12 percent or more and 15-year repayment periods. PACE will offer a 7 percent interest rate and a 20-year payback period.

“The demand isn’t here yet” for retrofits, Golden says. “I believe you have to stimulate this industry. PACE is a huge part of that.”

Still, the program has drawn some criticism from rooftop solar installers, who fear it could steal business from them. Solar incentives help spark that industry, responds Golden. Now there will be greater balance between the two businesses.

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Posted by Mark Boslet

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