Credit regulations must change to enable low-income earners to electrify

When Katherine McConnell started her finance company Brighte back in 2015 her mission was to get more solar panels on rooftops – to make more houses sustainable by offering zero interest loans.

And while sustainability is still Brighte’s mission, McConnell now wants to make the whole gamut of renewable energy resources affordable and accessible for everyone.

Brighte has since evolved and grown into a one stop shop helping to finance and install solar, batteries, heating, cooling, heat pumps, EVs, and induction cooktops. They offer finance products such as zero interest loans, green loans and personal loans.

And Brighte is not just a finance company. They work directly with approved tradies who supply and install appliances, and they also administer government energy and electrification programs in the ACT and Tasmania.

Whilst Brighte has financed over 100,000 solar installations, she says a major stumbling block to Australia scaling up consumer renewable energy resources is low-income earners can’t access finance because of Australia’s credit regulations.

“The credit regulations are set up in a way that financiers can only provide credit to parties that can afford to make the repayments,” McConnell told the SwitchedOn Australia podcast.

“[They] will not be able to access finance from the private sector under current credit regulations.”

McConnell considers this is a market failure and would like to see the credit regulations changed to make finance more accessible for low-income earners.

“Government has to intervene, to be able to step in where the private market can't provide a solution by itself.”

McConnell argues that there is not enough incentives for householders to accelerate the lifecycle of a gas appliance, which they have recently bought, and may last 10 or more years.

“If there are societal benefits for changing those appliances the government has to intervene,” she says. “They should provide incentives to the household to do that today.”

“The government can step in to create credit products, [for instance] subsidies for concessional finance, to enable those parties to access credit that removes the upfront cost.”

In addition, she believes a Government plan with specific dates, deadlines and targets by which things need to happen, is imperative.

Legislation and regulations provide manufacturers, and industry with an understanding of what has to be put in place, and what the expectations are, “so you can start to steer the ship in the direction that you want it to go.”

McConnell points to the ACT which has been at the forefront of Australia’s clean energy transition and where the Government has set specific dates and targets to get householders off gas.

“There are also regulations that have been put in place and changes to laws in Canberra, where there is a legal requirement that by certain dates landlords have [installed] a certain base standard of thermal comfort in homes that they are renting.”

Although McConnell thinks the $1 billion in cheap loans for home electrification that the Federal Government announced in the last budget, is a welcome initiative, she believes it’s essential the government sets a framework around what they want that $1 billion to achieve.

“They should have clear targets around the number of households and the types of equipment they'd like to see changed.”

She also believes a program administrator is needed to oversee the $1 billion.

“This is the type of role that Brighte provides in government programs today in the ACT and in Tasmania.”

Brighte is the official finance and administration partner for Tasmania’s Energy Saver Loan Scheme, which provides zero-interest loans up to $10,000 to assist householders, landlords, businesses and not-for-profits access energy efficient products, from solar panels and hot water heat pumps, to insulation and other energy efficient appliances.

In the ACT, Brighte is the financier and administrator of the Sustainable Household Scheme, which offers zero interest loans of between $2000 and $15,000, to purchase energy efficient upgrades and renewable energy resources, including electric vehicles.

You can hear the full interview with Katherine McConnell on the SwitchOn podcast here.