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New low-cost Home Energy Upgrade Loan Scheme launched by Minister Ryan, Minister McGrath and Minister Richmond

24 Apr 2024

Wednesday, 24 April 2024 - Minister for the Environment, Climate and Communications, Eamon Ryan TD; Minister for Finance, Michael McGrath TD; and Minister of State at the Department of Finance with special responsibility for financial services, credit unions and insurance, Neale Richmond TD, have today launched a new low-cost Home Energy Upgrade Loan Scheme. The €500 million Scheme is the first of its kind for both Ireland and the European Investment Bank (EIB) Group and will play a crucial role in helping homeowners to invest in energy efficiency, making their homes warmer, healthier and cheaper to run.

This Government of Ireland Scheme is delivered by the Strategic Banking Corporation of Ireland (SBCI) on behalf of the Department of the Environment, Climate and Communications, and supported by the Sustainable Energy Authority of Ireland (SEAI) and the EIB Group.

PTSB is the first financial institution to offer loans to homeowners under the Scheme, with rates from 3.55%. AIB, Bank of Ireland, Avant Money and seven credit unions from the Irish League of Credit Unions (Clonmel, Connect, First South, Listowel, Naomh Breandan, North Midlands and Progressive) are finalising the approval process and legal requirements to provide the Scheme and are expected to commence offering loans in the coming weeks.

With more lenders and increased competition in the market, it is expected that rates will be extremely competitive, offering consumers more choice and value. Rates will be significantly lower than those currently on the market because of the combination of an EIB Group loan guarantee and a Government-funded interest rate subsidy. The loans will help lower the financial barriers encountered by homeowners, making home energy upgrades more accessible and affordable.

At the moment, most green home improvement loan interest rates hover between 6% and 7%, with other personal loan rates ranging up to 14%. 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.

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. In order to avail of the low-cost loans, the upgrade projects musts be supported by an SEAI grant and be projected to achieve a minimum 20% improvement in the energy performance (BER) of the building.

Homeowners will apply for the loans through the participating finance providers. There will be no requirement for the loan to be secured against the property being upgraded (as is the case with a mortgage). 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.

Those most at risk of energy poverty can continue to avail of fully-funded energy upgrades under the Warmer Homes Scheme. The availability of low-cost loans will make it easier for those above the eligibility threshold to upgrade their homes.

Speaking at the launch, Minister Ryan said:

“This innovative Scheme shows how the Government, financial institutions and the retrofit sector are working together to deliver climate action that works for people and planet.

“We have designed the loans with the needs of homeowners in mind. Access will be simple and speedy with an emphasis on reducing the workload for homeowners accessing both loans and grants. We also anticipate that with greater competition on the market, loan rates will also become more competitive, giving people more choice and value.

“Over 48,000 home energy upgrades were supported through SEAI schemes last year — up a massive 76% on 2022 and exceeding the target by 30%. The new low-cost loans will help us to go even further in our retrofit delivery this year and in the years ahead.”

Minister Michael McGrath welcomed the scheme:

“I very much welcome this new and innovative loan scheme delivered by the Strategic Banking Corporation of Ireland, drawing together a significant number of financial institutions. It is particularly welcome that the European Investment Bank and European Investment Fund (EIB/EIF), both of whom have a mandate to make long-term finance available in support of EU policy goals, are backing the scheme - a first of its kind for the EIB/EIF.

“I am delighted that homeowners and small landlords will be able to avail of loans at very attractive rates to improve the energy efficiency of their homes. This has a double benefit in that it will both help households to reduce energy bills and also lower our CO2 emissions contributing significantly to meeting Ireland’s climate targets. The ability to combine a low-cost loan with SEAI grants adds to the attractiveness of the offering.

“I welcome PTSB’s participation as the first on-lender in the market, with more to follow in the coming weeks. I encourage anyone with an interest in availing of the scheme to contact PTSB and other participating finance providers and I believe this initiative will have a very significant positive effect in the years ahead.”

Minister Neale Richmond said:

“I am delighted to see PTSB launch the Home Energy Upgrade Loan Scheme to market today. This Scheme is a first of its kind and will make a real difference to homeowners across the country in supporting them to improve the energy efficiency of their property, which will in turn reduce their energy bills. I am particularly glad that credit unions will be joining the Scheme in the near future, which will allow more people to access these affordable loans in their own communities and I would encourage anyone who is interested in retrofitting their home to avail of this Scheme.”

Kevin McKeon, Head of the EIB Group representation in Ireland, said:

“The EIB Group is pleased to support this ground-breaking €500 million loan guarantee scheme in Ireland to empower homeowners to cut energy bills, improve energy efficiency, and drive climate action. The Home Energy Upgrade Loan Scheme provides financial support through banks and credit unions across the country and gives homeowners the tools they need to make a difference in the battle against climate change, putting power in the hands of individuals. This visionary initiative sets a precedent unblocking climate action in Ireland and paves the way for other European countries to follow Ireland’s lead in the fight against climate change.”

June Butler, CEO of SBCI, said:

“We welcome this launch of the Home Energy Upgrade Loan Scheme, which is designed to address a clear gap in the market for homeowners who want to upgrade the energy efficiency of their homes. This unsecured, 10-year low-cost loan is available at a significant discount to current personal loan rates. This loan will support homeowners who want to make meaningful energy upgrades in their homes by making the financing of this investment more affordable. It is designed to address market feedback that the absence of such a product is a barrier for some homeowners to carrying out deep energy retrofits in their homes.”

William Walsh, CEO of SEAI, said:

“SEAI is delighted to support the launch of SBCI’s Home Energy Upgrade Loan Scheme. The availability of low-interest finance will make it more accessible and affordable for homeowners to increase the comfort of their homes and reduce their energy bills. We know that the upfront costs of investing in home energy upgrades can be a deterrent for those wishing to improve the energy efficiency of their homes. This new loan scheme from SBCI will work in parallel with SEAI’s home energy grant programmes, making it easier for homeowners to begin their retrofit journey and move away from fossil fuels.”

Patrick Farrell, PTSB Retail Banking Director, said:

“PTSB is delighted to partner with SBCI to offer customers low-cost loans to upgrade the energy efficiency of their home. This partnership allows us to provide competitive funding to support customers and help increase the volume of home retrofitting across the country. Our recent consumer research shows that while 1 in 5 (20%) are prepared to retrofit their homes at their own expense, the intention more than trebles to 65% if assistance is made available, so we expect this to be a welcome support among consumers. In addition, this scheme plays an important role as part of PTSB’s sustainability strategy, and helps to meet the home retrofit targets under the Government’s Climate Action Plan.”

Further details on the eligibility criteria and other operational aspects of the Scheme are available on both the SBCI and SEAI websites.