Home-Efficiency Financing with Sealed and NY Green Bank

NY Green Bank (NYGB), New York State’s $1-billion clean-energy fund, and a young new efficiency company named Sealed signed a $5-million loan-financing agreement as a way to broaden the market for home energy-efficiency upgrades.

In New York State, those upgrades face two key barriers to widespread adoption.

The first barrier is that a whole-home upgrade is a high out-of-pocket investment for a homeowner. Homeowners who make upgrades often have to pay cash outright or take out loans to spread the cost over time.

Second, while large-scale investors are increasingly familiar with residential energy-efficiency financing, they don’t use energy savings in their underwriting criteria. So the cost per project can be too low for significant resources to be dedicated to vetting each one. Plus, the methods of energy-efficiency upgrades have not been systematized enough for large investors to be comfortable providing pools of capital that would cover whole portfolios of households.

NYGB and Sealed entered the loan agreement to find a solution to these challenges.

To guide other green-bank-like entities that are familiar with the deployment of debt financing to help stand up large-scale generation projects, this case shows how a similar structure can be used for residential energy efficiency.