Rural Energy Savings Program

Rural Energy Savings Program


The Rural Energy Savings Program is an innovative idea developed by electric cooperatives in South Carolina to address the special challenges and opportunities facing rural communities to save energy, cut household utility bills, and reduce greenhouse gas emissions. The program supports stable, high-skilled jobs and keeps more dollars in the local economy. Through the program, residential energy efficiency improvements are financed with low-cost loans that are repaid through co-op members’ electric bills (a process known as “on-bill financing”). The "Help My House" pilot for this program produced very encouraging results. Participants' energy bills were cut by 34 percent, saving an average of $288 per home per year after loan payments.

Download Fact Sheet: "Help My House" Loan Pilot Program: Program Design and Results

Download Full Report: "Help My House" Final Summary Report


The Problem: Rising Energy Demand and High Energy Costs

The Drummond-Henking family celebrates
their energy retrofit as part of the
"Help My House" trial project in South Carolina.
Image courtesy ECSC.
The idea originated in South Carolina, where electric cooperatives are faced with the prospect of building new power plants due to a rapidly growing population and high peak energy use in both winter and summer. In anticipation of possible regulatory limits on greenhouse gas emissions, the co-ops first explored nuclear and natural gas options, both of which would come with a multi-billion dollar price tag. South Carolina co-ops subsequently took a hard look at potential investments in energy efficiency. They launched a pilot project called “Help My House” to demonstrate the energy and cost savings that could be achieved.

Rural communities in South Carolina have a relatively high percentage of older, less efficient homes and low-income residents, which for some households means spending more than 70 percent of their income on energy during peak heating and cooling months. In addition to having poor insulation and weatherization, many rural homes still use electric resistance heating, which is notoriously inefficient and costly. These homes represent some of the simplest and most cost-effective opportunities to save energy in the state.

Rural residents, especially low-income residents, do not have ready access to financing that would allow them to individually capture large energy and cost savings and increase the comfort of their homes. Many households would not qualify for conventional loans, and renters have had virtually no options other than to approach their landlords.


The Solution: On-Bill Financing for Energy Efficiency Improvements

Energy efficiency retrofits create
local jobs that cannot be exported.
Image courtesy ECSC.
The co-ops, using an emerging idea known as on-bill financing, devised a program to provide low-cost financing that would be attached to the electric service account—not the tenant or the property owner. The loan would be repaid gradually (within 10 years or less) through charges on each participant’s monthly electric bill: one third of the energy savings for each home would go to lower the monthly electric bill, while two thirds would go to repay the loan. If the home is sold or renters move, the loan is simply transferred to the next resident.

Another important feature of the program is that the most cost-effective energy-saving measures can be selected from a large pool of homes. Rather than waiting for households to self-select for participation, electric cooperatives can actively identify homes to receive energy audits. Based on the energy audit, co-op staff facilitate the selection and supervision of qualified contractors to perform efficiency improvements, and ensure that the desired results are achieved before paying the contractor.

The South Carolina program aims to ultimately retrofit more than 200,000 homes and save co-op members an estimated $280 million a year. The program will also help South Carolina reduce projected greenhouse gas emissions by 6.7 million metric tons over 10 years and avoid or delay $4 billion in new capital costs.


Pilot Results

See what Teri and John Norsworthy thought of the programThe results of the "Help My House" pilot were extremely positive. Billing data on the 125 South Carolina homes participating in the pilot indicates a 34 percent reduction in energy use (1.35 million kWh) in the year after the energy efficiency improvements were completed, an average savings of $288 per home after loan payments.

The low-interest 10-year loans (which averaged just under $7,700) are on track for a simple payback of 6.6 years, nearly identical to projections made at the time the loans were made. The average participating home is expected to save a net of more than $8,500 over 15 years. The pilot applied a comprehensive "whole house" approach, in which all of the energy efficiency measures were evaluated as part of the same system. Participating homes received a combination of air sealing, duct repair, HVAC upgrades, and insulation improvements. More than 95 percent of participants reported that they were more satisfied with their co-op after participating in the pilot.

Download Fact Sheet: "Help My House" Loan Pilot Program: Program Design and Results

Download Full Report: "Help My House" Final Summary Report

The Environmental and Energy Study Institute (EESI) assisted with the design and implementation of the pilot project, working in cooperation with The Electric Cooperatives of South Carolina (ECSC), the state association of electric cooperatives, and Central Electric Power Cooperative, the state’s generation and transmission co-op. EESI's role in the project was generously supported with a grant from the Doris Duke Charitable Foundation.


Replicating the Program

The program is an important innovation that could be applied by electric cooperatives and utilities in other states. Many other states are likely to face the same challenges and opportunities as South Carolina. The "Help My House" pilot program was developed and implemented in South Carolina to be used as a model to scale up, to replicate in other states, and as a potential national program.

EESI will help leverage the lessons learned from the pilot project in replicating the program in other states and help guide the development of a national program. The Rural Energy Savings Program Act (H.R.4785), federal legislation sponsored by Rep. James Clyburn (D-SC), passed the U.S. House of Representatives during the 111th Congress with broad bipartisan support. The Senate passed comparable legislation in the 112th Congress as part of its version of the farm bill. The Senate again voted to authorize the Rural Energy Savings Program as part of the farm bill in June 2013. This legislation would authorize a national program within USDA, which would provide loans and assistance to co-ops around the country to start or scale up on-bill financing programs.


Multimedia

Rep. James Clyburn (D-SC) speaks at the launch of the Rural Energy Savings Program in September 2010:


In February 2012, Rep. Clyburn and Nancy Sutley, chair of the White House Council on Environmental Quality, visited the home of Jordan Johnson, a participant in the pilot program. EESI Executive Director Carol Werner and the rest of the pilot leadership team were also present. This video features the group as they highlight the process, benefits and successes of the project: