In an innovative move, the Town of Babylon has set up an extensive program to work with citizens to pay for energy efficiency upgrades for every home in the town. The basic premise of the program is that the town wants to help residents use less energy, so here’s what they plan to do. They’re going to loan up to $12,000 at the super low interest rate of 3% to pay directly for renovation costs. Under the program, residents get home energy audits that include recommended actions for renovations, including adding more insulation, changing out the HVAC system, etc. The town pays for the renovations and the homeowner then makes payments to the town based roughly on the reduction in payments caused by having a more efficient home. So it’s quite the innovative system.
Homes that go through the program are expected to reduce energy consumption by roughly 20-40%.
In addition, the city incurs no debt. Residents get access to capital for home improvements. The loans aren’t exorbitant. Residents get professional recommendations for necessary improvements. Residents then arbitrage the reduction in utilities and make payments on the outstanding loan and interest. And potentially every home in the town ends up using less energy.