Jim O'Callaghan
Question:129. Deputy Jim O'Callaghan asked the Minister for the Environment, Climate and Communications the estimated annual cost of introducing loans (details supplied). [40867/24]
View answerThursday, 10 October 2024
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Written answers
The Home Energy Upgrade Loan Scheme was launched on the 24 April 2024. It was developed by my Department in conjunction with the Department of Finance, the Strategic Banking Corporation of Ireland, the Sustainable Energy Authority of Ireland, the European Investment Bank and the European Investment Fund. The Government-backed €500 million Scheme is the first of its kind for both Ireland and the EIB Group and will play a crucial role in helping homeowners to invest in energy efficiency. Under the Scheme, homeowners can borrow from €5,000 to €75,000 at significantly lower interest rates over a ten-year period to make their homes warmer and cheaper to run. The loans can be used by homeowners who want to undertake a deep retrofit involving several energy upgrades at the same time, or to carry out one or two upgrades that will significantly improve the energy performance of the home.
Once approved, the loans can be drawn before works begin. This gives certainty to homeowners that they have the funds for the planned energy upgrades, as well as any up-front costs or milestone payments. This is often identified by homeowners as a key barrier to upgrading their homes. As an additional bonus, households could also qualify for a lower cost green mortgage in the future, after they use their low-cost loan to improve their BER (Building Energy Rating) rating up to the required level. PTSB, AIB and Bank of Ireland are now offering loans under the scheme, with rates starting from as low as 3% (pricing varies depending on the finance provider). In addition to the three pillar banks, it is expected that a number of credit unions from the Irish League of Credit Unions will join the scheme in the coming weeks, which will allow more people to access these affordable loans in their own communities. Additional finance providers are expected to commence offering loans later this year.
An objective of the Home Energy Upgrade Loan Scheme is to prime the commercial lending market to offer more attractive and competitively priced finance for deep home energy retrofits beyond 2026, by providing an evidence base of low-risk projects that meet repayments and thereby building confidence in the lending market. This will signal to the banking sector new sustainable business opportunities associated with retrofit and the transition to a low carbon economy. The cost of reducing the interest rate to 0% would be significant and may result in distortions to the Irish financial landscape.
Those most at risk of energy poverty can continue to avail of fully-funded energy upgrades under the Warmer Homes Scheme (WHS), which is available to owner-occupied homes built before 2006 where the household meets the Department of Social Protection (DSP)-payment related eligibility criteria. The WHS aims to improve the energy efficiency and warmth of these homes. Homeowners above the eligibility threshold for this Scheme can avail of the range of other SEAI supports as well as the Home Energy Upgrade Loan Scheme for energy efficiency upgrades.