WASHINGTON, D.C. — The U.S. Department of Energy (DOE) today announced a first-of-its kind study that confirms energy efficiency loans are generally low risk, have historically been repaid at a high rate, and perform well compared to other asset classes. The study also highlights the opportunities for financial institutions to support the transition to a cleaner, more efficient building stock. With states and local governments set to receive billions of dollars in funding for clean energy deployment under the Bipartisan Infrastructure Law, this study reinforces the impact financial institutions will have as partners in retrofitting America’s building stock and the crucial role energy efficiency loans will play in cutting costs for American families and reaching President Biden’s net-zero carbon economy by 2050. 

“Energy efficiency is the lowest cost clean energy resource we have,” said U.S. Secretary of Energy Jennifer Granholm. “The findings in this study are a compelling invitation to financial institutions to invest with homeowners, states, and local governments to maximize clean energy deployment under the Bipartisan Infrastructure Law and beyond.” 

The study, titled Long-Term Performance of Energy Efficiency Loan Portfolios, produced by the State and Local Energy Efficiency Action Network, DOE, and Lawrence Berkeley National Laboratory shows energy efficiency loan performance compares favorably to other asset classes, like prime auto loans. The study also informs a long-standing barrier of access to credit for energy efficiency improvements among low-income and underserved communities. Specifically, the study finds that high-credit borrowers repay loans at a strong rate. The findings should signal to financial institutions that they can benefit from investments in energy efficiency and help to increase access to low-cost capital for disadvantaged communities.  

While the performance of energy efficiency lending has generally been understood to be strong, the data from this study significantly expands the volume and sophistication of public evidence. The report analyzed over 50,000 residential energy efficiency loans from four large programs in Connecticut, Michigan, New York, and Pennsylvania. Notably, three of these programs have track records of more than a decade. 

Request for Information

In tandem with this report, DOE released a new Request for Information (RFI) to collect best practices for designing revolving loan funds. The Bipartisan Infrastructure Law provides $250 million to States to implement the Energy Efficiency Revolving Loan Fund Capitalization Grant Program. Funding provided through this program will enable States to capitalize revolving loan funds and provide grants to conduct commercial and residential energy audits, energy upgrades, and retrofits of building infrastructure. This RFI will solicit input from a broad range of stakeholders — states, private lenders, investors, labor unions, community development organizations, environmental justice organizations, and disadvantaged communities — to inform program guidance and ensure the program achieves the goals of the Biden Administration. 

For more information on the study, attend the Energy Efficiency Loan Performance Roundtable Discussion on April 7, 2022. The Roundtable will highlight opportunities for continued growth of energy efficiency lending to stimulate the transition to a cleaner, more efficient building stock, expand access to capital for disadvantaged communities, and maximize the impacts of the Bipartisan Infrastructure Law. Register for free here. 

Download the full study or one-page overview document.