Implementing a Clean Energy Improvement Program in the Town of Devon

The Town of Devon, a suburb 40 kilometres south of Edmonton, is seeking to implement a Clean Energy Improvement Program (CEIP). This PACE (Property Assessed Clean Energy) program is supported by the province’s Bill 10: An Act to Enable Clean Energy Improvements (2018), which authorizes Alberta municipalities to utilize the municipal property tax system to finance energy efficiency and renewable energy improvements to residential and commercial properties. Where adopted, homeowners can repay the cost of their home’s energy projects over time through a CEIP charge added to their property tax bills.

To capitalize the program, the town has secured a $1,100,000 line of credit from Edmonton-based Servus Credit Union to fund residential projects over the first four years of program implementation. The town has also partnered with the Municipal Climate Change Action Centre (MCCAC), the program administrator for all CEIP initiatives in the province, to support program design, delivery and performance-monitoring. If successful, Devon will be one of the first municipalities in Alberta to implement CEIP.

Once launched, the program will be available to homeowners with eligible properties, including single-detached, semi-detached and row houses; duplexes; low-rise apartments; and condominium units. Participants can select from a variety of eligible improvements, including solar PV, solar water-heating; air-source heat pumps; high-efficiency furnaces, boilers and lighting fixtures; home insulation; air sealing; sun-shading devices; and smart controls. To promote participation, the town will offer rebates for equipment upgrades and home energy evaluations. Participants will also benefit from a dedicated CEIP webpage featuring program guidelines and educational materials, assistance from town and MCCAC staff, information sessions, and access to the MCCAC’s Trade Ally Network. Through the network’s online directory, participants can select from more than 600 pre-qualified contractors and energy advisors serving the residential market in Alberta, including more than 40 organizations serving Devon.

This program was spurred by the Town of Devon Green Strategy (2016), which set an ambitious goal to become the first net zero energy community in Alberta by 2050. The strategy also identified residential buildings as accountable for nearly half of the town’s greenhouse gas emissions and recommended the implementation of residential energy efficiency financing programs. To act on this priority, the town recently passed its own CEIP-enabling Clean Energy Improvement Tax Bylaw (2019).

Financing terms extended to homeowners:

• Loan amount: The maximum loan amount is $50,000 per property. The anticipated average loan will be $21,230.
• Loan terms and repayment: The maximum loan term is equal to the lesser of 25 years or the effective useful life (EUL) of the upgrades completed. For projects involving multiple upgrades with differing EULs, a weighted average based on the upgrade’s contribution to the project’s lifetime energy savings will be determined to establish a single EUL for the project. Participants may select a shorter term than the EUL, provided the annual payments towards their CEIP loans do not exceed their existing property tax payments. Participants can also pay their loan balance at any time without penalty.
• Interest rates: A fixed rate of approximately 4% fixed over the term of the CEIP loan will be offered.
• Underwriting criteria: Participants must provide evidence of property ownership, property insurance, good standing on their tax payments and mortgage-lender consent. The town will also review property tax payment history.
• Additional fees or charges to participants: An administration fee of up to 5% of total project costs may be charged and financed through the program. This fee may be reduced or waived if the town is granted GMF funding.
• Consumer protection measures: Participants must use a contractor and energy advisor registered with the Trade Ally Network; all contractors will be vetted and must sign agreements to the CEIP code of conduct and terms and conditions; MCCAC will conduct quality assurance site visits on a percentage of completed projects.
• Other: When negotiating the sale of the property, the CEIP can be paid off by the owner or transferred to the purchaser.

Capital project financing will flow from Servus Credit Union to the town to the MCCAC to the contractor. After each project and post-retrofit home energy evaluation is complete, the MCCAC will pay the contractor directly. Municipal rebates for equipment upgrades ($500 for the first 30 completed projects) will be deducted from the total CEIP charge, reducing the loan principal. Rebates for home energy evaluations ($600) will be paid to participants. Participants can also finance any remaining costs for the evaluations.

Environmental benefits:

The project is anticipated to reduce energy usage by 1,434 GJ per year and greenhouse gas emissions by 179 tCO2e per year.

Social and economic benefits:

• Approximately $900,000 in lifetime energy bill savings for program participants
• Participating households will save up to $870 on their combined energy and gas bills each year
• The creation of 16.5 job-years, though direct and indirect employment, and additional spending money in the economy
• MCCAC will onboard and provide CEIP training to Trade Ally Network contractors
• Improved housing affordability, as homeowners will spend less on energy and maintenance costs
• Increased home values through the adoption of high-efficiency and renewable-energy upgrades
• Increased home comfort, including better air quality, humidity control, reduced noise levels and fewer cold-air drafts
• Through participation in home energy evaluations, participants will learn how to reduce energy usage in their homes
• Marketing campaigns and informational events will increase community awareness of energy retrofits and conservation
• Information packages will educate participants and their mortgage lenders on the program and its benefits

Innovative aspect(s):

• Devon is a rural town that will be one of the first municipalities to adopt CEIP in Alberta.
• The town is using a line of credit to finance CEIP projects. This will be drawn down as projects are completed, reducing capital carrying costs for the municipality and minimizing costs that would otherwise be passed down to participants. With lenders offering record low interest rates following the COVID-19 economic crisis, other municipalities might consider a line of credit to minimize financial risks, reduce carrying costs and provide competitive financing for participants.
• The Trade Ally Network can serve as an example for program administrators seeking to build local and regional technical capacity.

Replicability:

As one of the first municipalities in Alberta to pass enabling bylaws and adopt CEIP, the town’s experience will serve as an invaluable learning resource for municipalities across the province. Devon will provide updates to the CEIP Municipal Advisory Council throughout program implementation. With the support of MCCAC, case studies of completed projects will be shared with other municipalities to help build business cases for CEIP development in other communities. Moreover, program documents (including bylaw templates, program application forms and program agreements) can be used to help kickstart future programs across Alberta. The MCCAC will also publish an annual report on active CEIP programs across Alberta, where outcomes of CEIP in Devon (and possibly the Town of Rocky Mountain House and the City of Edmonton) will be presented.