There is a wide range of financial incentives for saving energy. These include corporate, property and sales tax credits or deductions, rebates and grants. The rebate programs can come from utilities or from state and local jurisdictions to encourage green building practices or promote the installation of renewable energy or efficient equipment.
The Database of State Incentives for Renewable Energy (DSIRE) , www.dsireusa.org, provides a convenient method for accessing information about renewable energy and energy efficiency incentives, regulatory policies administered by federal and state agencies, utilities and local organizations. The information is available by state or nationally. Incentives include local and state grants or loans, rebates from utilities or foundations, property tax assessment and abatement, net metering and building energy codes in force. The site also tracks financial incentives for energy efficiency improvements and the purchase of energy efficient products and systems.
Fireman’s Fund Insurance Company is now offering a green insurance option to homeowners in 26 states. The coverage allows policyholders who own green homes and those who own conventional homes to rebuild to the latest environmental safety and efficiency standards after a loss. It became available in California as of August 1, 2008.
Policyholders whose homes are already green will be offered a 5% discount on the coverage, applied to the premium. Under the coverage, policyholders whose homes are damaged can make repairs with green alternatives. When a home is destroyed, they can rebuild to LEED for Homes standards.
Lexington Insurance Company, a division of AIG, launched a similar green policy for homeowners last year. It is not available in California, but can be purchased through brokers.
Energy Improvement and Energy Efficient Mortgages
The housing bill passed by Congress and signed by President Bush in July 2008 includes provisions that give homeowners opportunities to improve energy performance of homes being refinanced with an Energy Improvement Mortgage. That type of sustainable mortgage loan also helps to lower monthly energy bills.
The EPA estimates that an average of 6.8% more families would be able to qualify for an energy efficient mortgage. Another study published in the Appraisal Journal stated that the market value of a home increases $20 for every $1 decrease in the annual energy costs.
These types of mortgages benefit a homeowner in three ways.
- The estimated energy savings are added to the borrower’s income in the financing process which allows the home buyer to qualify for a larger mortgage amount.
- The costs of energy improvements can be included in the total mortgage amount. All of the energy improvements can qualify and normally up to 15% of the value of the home can be financed over the life of the mortgage which makes more money available to the home buyer for move-in costs.
- The value of the home is adjusted by the value of the energy improvements.
For an energy efficient mortgage lender to provide financing, the energy savings must be greater than the cost of the improvements over their useful life. Since metal roofing’s useful life is much longer than most residential roof products, the energy cost savings are beneficial for cool metal roofing.
Several lending institutions have adopted special underwriting guidelines for financing energy efficiency mortgages. They include Fannie Mae, Freddie Mac, FHA, the Veterans Administration, Citi, Bank of America, Chase, Priority Mortgage Company, and PHH Mortgage Services.
A provision to improve and promote energy efficient mortgages was included in the recently enacted 2008 housing legislation. The bipartisan language was put forward by Senators Jeff Bingaman and Pete Domenici, chair and ranking member of the Senate Energy Committee.
Commenting on the legislation, Senator Bingaman stated, “With high energy prices expected to continue, a streamlined energy efficient mortgage process would make energy efficient new homes and energy retrofits much more attractive to builders and consumers. Promoting energy efficient homes will reduce the amount of energy we consume in our homes while also helping mitigate the effects of global warming.”