Let's Stop Wasting Our Power: Energy Efficiency will Create Jobs and make our Communities, Cities and the Environment Cleaner
By Bruce Schlein, Director Corporate Sustainability, Citi April 07, 2014 12:36 PMIt's estimated that there is $1 trillion in cost savings currently locked up in the form of inefficient appliances, furnaces, water heaters and other energy-wasting parts of our built environment. We have a tremendous untapped opportunity to create jobs and invest in our communities and cities today by making energy efficiency upgrades in our homes. By using more efficient appliances and other easy-to-implement solutions, the average household stands to save nearly $400 per year.
While the potential savings from changes are great, the barriers are high. The cost of the average residential energy efficiency improvement project is $8,000 to $10,000. The opportunity to make improvements usually surfaces as a result of an emergency: a furnace, water heater or air conditioning system fails and either needs to be repaired quickly or be replaced with the more costly option of an energy-efficient unit.
Most of us haven't saved enough to do such costly upgrades. In these emergency situations, we simply need the problem fixed--there's no time to wait to see if we can get a loan for an energy-saving upgrade. So we continue with the status quo, and - as an unintended result - we keep wasting power.
But the status quo is changing. Kilowatt Financial is making clean energy and energy efficiency upgrades convenient and accessible through fast, low-cost financing. Kilowatt is a startup that leverages deep experience in consumer finance with a desire to "crack the energy efficiency code" and unlock the demand for more residential solar power and energy efficiency improvements.
Kilowatt has created algorithms to speed up the homeowner credit approval process for both energy efficiency upgrades and solar panel installation. Working through an approved contractor, in over 80% of cases a homeowner can get a credit answer within fifteen seconds. That, combined with low-cost capital, helps residents tap their share of the estimated $1 trillion in cost savings available from energy efficiency upgrades.
Warehouse debt facility and securitization help from Citi spur progress. "We recently closed a $100 million warehouse debt facility with Citi," says Kilowatt Chairman and CEO Dan Pillemer. "It allows us to lend at a very competitive cost, but with great flexibility and fast response to consumers and contractors. Homeowner energy efficiency improvements have historically been difficult to finance because of the small scale of individual projects and the need for fast, accurate credit decisions. This facility from Citi helps us remove those barriers, and grow."
The financing provided by Citi is a first for consumer-oriented energy improvements. Marshal Salant, Head of Alternative Energy Finance at Citi notes, "The move is significant not just because it is a first, but because it enables securitization of this market. Institutions such as pension funds and insurance companies will now be able to invest in this area, where before they have lacked opportunities due to scale."
Kilowatt Financial has already helped more than 20,000 households finance energy efficiency improvements or convert to solar power. To date, that is the equivalent of taking almost 8,300 cars off the roads, and keeps 39,000 metric tons of carbon out of the atmosphere. With the new debt facility and securitization made possible by Citi, Kilowatt Financial is accelerating its progress, and making our communities, cities and the environment cleaner and safer.