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With some of the coldest winter temperatures in the United States, Vermonters spend $800 million a year on heat, according to some estimates. That’s approximately $1,300 a year per capita for heating expenses alone, making these expenses a major financial burden and energy efficiency a priority for many of our members. Indeed, we found that members often sought short-term loans during the cold winter months to help pay for heat.
With Vermont households’ reliance on fossil fuels—oil, propane, kerosene, and natural gas—to stay warm, the state of Vermont has committed to aggressive energy efficiency and renewable energy goals that aim to produce 90 percent of Vermont’s energy needs through renewable energy and increased efficiency by 2050. The state plan also includes goals to foster economic security and independence by creating jobs in efficiency and local renewable energy projects and keeping dollars close to home in Vermont.
Even with these statewide energy goals and the burden of high energy costs, VSECU learned that only 20 percent of all home energy audits performed converted to actual home improvements. Vermont homeowners did not have the resources to pay upfront for the upgrades recommended as part of the energy audit, which often included adequate home air-sealing, insulation, and heating system upgrades.
These combined factors inspired us to develop VGreen energy savings loan products, a suite of unique and flexible energy savings solutions to benefit our members and communities and to safeguard Vermont’s environmental legacy. VGreen provides low-cost financing for qualifying projects or purchases that improve the energy efficiency of members’ homes or modes of transportation. These products are designed so that borrowers are often able to cover their loan payment using the funds saved through their energy improvements, making the investment cash flow neutral.
VSECU offers multiple VGreen products to finance solar and efficiency projects, renewable or alternative energy upgrades, home energy improvements, heating systems, energy efficient appliances, green vehicles, bicycles and more. Borrowers are provided long-term loan options at rates that are up to 5 percent less than the standard personal loan rate, with 100 percent project financing so there are no upfront costs of improvements, upgrades, and energy efficiency purchases.
By incentivizing energy efficiency and renewable energy projects and purchases, VGreen has been popular with members and the state. Since launching the program in 2012, VSECU has granted more than 1,800 VGreen loans, totaling over $30 million. In 2015, VGreen generated our highest loan volume increase, with a 94 percent lift over the previous year. Further, because of the nature of the projects and purchases financed through VGreen, these loans have proven to be very low-risk with a negligible default rate, enabling us to keep rates low and increase the maximum unsecured loan amounts. Our experience with these loans informs our approach to improving and expanding the program to encompass new technologies and eligible purchases.
Recognized for our commitment to energy savings and our successful and creative financing strategies, VSECU has become the statewide leader in energy and renewable financing and the go-to partner for the state of Vermont’s energy initiatives. The Vermont Department of Public Service has awarded VSECU three grants to further reduce interest rates for eligible projects and investments. With these grants, we offer the state-funded Heat Saver Loan program focused on thermal energy improvements and products and Community Solar Loan program that makes participation in community solar projects more affordable. Demonstrating our leadership in this area, VSECU is the only approved lender for the Community Solar Loan and one of only two for the Heat Saver Loan.
This partnership with the state has resulted in incredible savings for our members, with Heat Saver Loan borrowers seeing an average savings of $2,000 over the life of the loan, on top of the standard VGreen savings. In total, these grant programs have resulted in more than $400,000 in interest savings for members thanks to our state’s forward-looking renewable energy programs. Additionally, the Heat Saver Loan program has leveraged a 6-to-1 ratio of private to public funds, making this a great investment of public dollars as the state works to achieve its Comprehensive Energy Plan goals.
Our experience in residential green lending has also been extended to business members through VBiz. This full-service commercial lending department allows Vermont businesses to take advantage of financing options to improve energy efficiency or add renewable energy options to reduce their utility expenses and meet their environmental missions.
In support of our vision to empower possibilities to foster social, financial and environmental prosperity and our commitment to promoting environmentally sound choices for our member-owners and employees, VGreen solutions have been an important and impactful addition to our loan portfolio.
CUES member Chuck Karparis is SVP/lending, and Laurie Fielder is VGreen program director for $700 million VSECU, Montpelier, Vt.
