Home energy upgrade plan finally kicks off, with $60m of low cost loans for solar, batteries and electrification

Days after getting the hurry along in Senate Estimates, Federal Labor's Home Energy Upgrades Fund is up and running.

The federal government’s green bank has allocated $60 million to the provision of low interest green loans to help finance residential energy efficiency upgrades, including for high performance electric appliances and “battery-ready” solar for existing Australian homes.

The Clean Energy Finance Corporation says the money, taken from the Albanese government’s $1 billion Home Energy Upgrades Fund, will allow fintech outfit Plenti to offer green loans with interest rate discounts of up to 2.74% per annum.

Eligible customers can also get a further 0.6 per cent discount on the green loan if they sign up to a virtual power plant through Plenti’s point-of-sale platform, GreenConnect, taking the eligible total discount available up to 3.4 per cent annually.

This means that, on a loan balance of $25,000, for example, a household could save up to $3,531 in interest over seven years, compared with the Plenti standard green loan rate.

“We recognise that navigating the home energy upgrade installation process can be a challenge for many households,” says CEFC head of consumer finance Grace Tam.

“That’s why we’re working with co-financiers such as Plenti, who offer support to customers to help them make home energy technology decisions that suit their homes and their budgets.”

Tam says the discounted Plenti green loan will be open to application from June 05, 2024 and distributed through accredited and eligible equipment installers.

Better late than never

The inaugural HUEF investment comes just days after energy department officials came under fire over the slow progress of the fund, which was set up in 2023 to fast-track improvements in Australia’s notoriously energy inefficient housing stock.

“People around this table can afford to have solar, potentially a battery, induction cook stove, drive an EV and you’re basically not paying anything for energy,” independent Senator David Pocock told a Senate Estimates budget hearing on Monday.

“People who can’t afford that are getting absolutely slammed for energy bills and paying international prices for our gas.”

“I’d love to see urgency around helping households with the transition, because people want to do it,” he said.

Assistant Minister for Energy Jenny McAllister told Senate Estimates that the CEFC has been kept busy looking for financing partners after receiving a “very enthusiastic response” from the market.

CEFC CEO Ian Learmonth confirmed this, noting that the three-month market sounding process received proposals outlining more than $850 million in potential green loans from 16 financiers, ranging from major banks, mutual banks, non-banks and fintech innovators.

Learmonth says the proposals covered green mortgages, green personal loans and other innovative green finance products to improve home energy performance for homeowners, renters and strata properties.

“We are confident the market enthusiasm to meet growing consumer demand for green loans will result in competitive financing products that give people more control over their energy use,” he said on Friday.

“Our first HEUF investment has the potential to have a significant impact on consumer behaviour, providing choice of technologies and discounted finance through Plenti and encouraging homeowners to invest to improve their home energy performance.”

The next frontier

McAllister says energy performance and electrification is “the next frontier” for Australian homes, which due to decades of low or non-existent standards and patchy regulation are sometimes referred to as “glorified tents” for their poor thermal efficiency.

This is a major problem on a number of fronts, not least of all cost of living and social equity. At the most basic level, people who live in homes that require a lot of energy to heat and cool are left vulnerable to extreme temperatures and energy price fluctuation.

As Pocock notes, these tend to be the households that can ill afford to invest in new, more efficient appliances, let alone rooftop solar.

“More than 7 million homes were built before national codes included energy performance standards,” McAllister says.

“Just upgrading a house from a 1-star rating to a 3-star rating can reduce energy bills by 30 per cent, and the Fund will help more than 110,000 households access lower cost green loans to do just that.

“Through this Fund there are now more opportunities for families to install solar panels, batteries and other energy efficient devices, to make homes warmer in the winter, cooler in the summer and cheaper to run.”

Plenti CEO Daniel Foggo says discounted finance will help households overcome cost barriers to energy efficiency equipment that will reduce their energy bills.

“We’re confident with our broad distribution, proven technology and experience in delivering government programs, we can help the CEFC extend the benefits of clean energy to consumers,” Foggo said.

The CEFC says it will continue to work with a range of lenders to develop more products to be financed through the HEUF and expects to make further commitments in 2024.

This article was first published on RenewEconomy. You can read it here.

Sophie Vorrath
Editor, One Step Off the Grid
June 4, 2024
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