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Maximizing Energy Efficiency Investments for Positive Cash Flow

Learn about the benefits of investing in energy efficiency as a long-term financial strategy rather than an expense. Discover how to calculate ROI, payback periods, and align payments with savings to achieve positive cash flow. Explore programs like the Weatherization Assistance Program and incentives from Efficiency Vermont to support efficiency improvements in homes.

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Maximizing Energy Efficiency Investments for Positive Cash Flow

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  1. Paying for Energy EfficiencyPaul Markowitz, Program Manager

  2. Efficiency as an Investment • Money used for energy efficiency is an investment -- not an expense • To invest -- to commit money in order to gain a financial return • To spend -- to use up or pay out • Energy investments --return on investment (ROI) comes from future energy savings • Compare energy investments with other investment options, e.g. savings accounts 2

  3. “ROI” vs. “Payback period” • “Return on investment” (ROI) is a better measure of value than “payback period” • Payback = time needed to generate savings equal to the initial investment • ROI vs. payback • 20-year payback = 5% return on investment • 10-year payback =10% return on investment • Major energy retrofits usually have a ROI of 10-20%

  4. Positive Cash Flow • “Total cost” is frequently less important than “positive cash flow” • Longer-term financing • Aligns the period of payment with the period of the savings (life of the measures) • Allows for most or all of the required investment to be paid out of savings 4

  5. Align the period of payment with the period of the savings Annual Costs  Annual Savings  Eight Year Loan Period Annual Savings Annual Costs   Twelve-Year Loan Period 5

  6. The Hand Home

  7. Paying for Efficiency Investments • Weatherization Assistance Program – for qualifying households • Incentives from Efficiency Vermont pay for a portion of the work– up to $2,000 per home • Low-interest loans from participating lenders (credit unions and banks) 4%-9% • Federal tax credits (up to $500) for 10% of cost of weatherization materials (insulation, spray foam etc.)

  8. Weatherization Assistance Program • Free diagnostic and improvement services for low-income Vermonters, operated by Community Action Agencies and other agencies • Call 211 – State hot-line

  9. Home Performance with ENERGY STAR • Up to $2,000 in incentives from Efficiency Vermont for qualifying projects • Extra $500 bonus for projects completed by August 31, 2013 • Covers principally thermal efficiency improvements (insulation and air sealing) and improvements to heating system • Hire participating contractor certified by Building Performance Institute • Also $5000/building for multi-family buildings

  10. Other Programs • Vermont Gas: Vermont Gas provides free energy audits and covers 1/3 to 1/2 the cost of retrofits for qualifying homes • NeighborWorks program: offers low-interest loans for all income levels • Numerous Vermont banks and credit unions: offering home equity (secured) and personal loans (unsecured) • Do-it-Yourself Home Energy Efficiency Program: eligible for same incentives as regular Home Performance program

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