Durham Home Energy Savings Program (D-HESP)

The Regional Municipality of Durham is developing the Durham Home Energy Savings Program (D-HESP), a home retrofit financing program that will serve five lower-tier municipalities (Pickering, Ajax, Whitby, Oshawa and Clarington) in the region. The program, which is to be administered by the regional government, will offer homeowners an on-bill repayment option through a local utility (Oshawa Power & Utilities Corporation) or third-party lending from local credit unions (Pathwise Credit Union and Oshawa Community Credit Union) to finance home energy upgrades. Homeowners may also choose to self-finance their upgrades. Regardless of which option they choose, participating homeowners will have access to a series of supporting services, including a home energy coach, an interactive web-portal with personalized renovation roadmaps, and rebates on energy audits, heat pumps and electric vehicle charging stations.

D-HESP will target single-family homes built between 1970 and 2000 (representing 46% of single-family homes in the Durham region) because these are understood to have high energy-savings potential. Detached homes, attached homes, townhouses and mobile homes on a permanent foundation will all be considered eligible for upgrades. The program will support energy-efficiency upgrades such as high-efficiency HVAC equipment, thermal envelope upgrades, lighting upgrades and high-efficiency appliances. Additional eligible measures will include heat pump installation, renewable energy and energy storage systems, electric vehicle charging infrastructure, water conservation measures, and indoor air quality measures.

This program is linked to the region’s climate emergency that was declared in January 2020 and to the Durham Community Energy Plan and Post-COVID Recovery Framework and Action Plan. The program will work in tandem with Enbridge Gas’s Home Energy Conservation Program and the Independent Electricity System Operator’s Affordability Fund and Home Assistance Program.

Financing terms extended to homeowners:

• Loan amount: The lesser of 10% of the current value assessment of the property, or $75,000.
• Loan terms and repayment: The lesser of 15 years, or the estimated useful life of the measure(s). Payments will be made monthly through e-billing, automatic withdrawal, or by phone. Early repayments will be allowed at no penalty. Late payments will accrue a late charge of 5% on the loan payment. After the initial project has been approved and disbursed, homeowners may increase their loan amounts and extend their terms to add new measures over time.
• Interest rates: 3%–6.99%, depending on credit analysis and loan term.
• Underwriting criteria: Borrowers must have a minimum credit score of 600, a total debt-to-income ratio of less than 45%, and utility and property tax accounts that are in good standing.
• Additional fees or charges to participants: A $100 processing fee will be charged when the homeowner’s loan is approved.
• Consumer protection measures: Each disbursement to the contractor will be authorized by the homeowner with a verification check from the home energy coach that the contractor has reached the construction milestone. The final payment will not be disbursed until a post-audit verifies the installation of eligible measures.
• Other: The loan is non-transferable. Upon sale of home, the loan is to be repaid in full.

Finances will flow directly from the capital provider to the contractor based on a series of construction milestones. Rebate payments will flow to homeowners, who then apply the rebate to their loan repayments. The Green Municipal Fund will provide a loan guarantee as a backstop for homeowners who default on loan repayments.

Environmental benefits:

• Anticipated reductions of energy consumption by 18,837 GJ and greenhouse gas (GHG) emissions by 928 tCO2e over the course of the program through direct program financing
• Additional reductions of 30,211 GJ (energy consumption) and 1,500 tCO2e (GHG emissions) are anticipated from homeowners who self-finance retrofits while accessing other program services
• Homeowners will be coached to include water conservation and indoor air quality measures as part of a comprehensive home retrofit

Social and economic benefits:

• It is anticipated that several thousands of high-paying, skilled-trade jobs will be created over the lifetime of the program
• A collaboration with Durham College will create a direct employment pathway for recent graduates
• Air quality improvements will improve health outcomes for residents
• A comprehensive marketing campaign will aim to educate homeowners, contractors and vendors on energy efficiency, with a particular focus on installing hybrid/dual-fuel heat pump systems
• Cost savings from energy efficiency measures will protect homeowners from energy poverty

Innovative aspect(s):

• The program brings together five municipalities, two local electricity distribution companies, one gas utility, two private lenders and other community partners. These stakeholders will be able to provide an unprecedented number of financing options in the Canadian context
• Client support services, such as the home energy coach, geo-spatial energy mapping, interactive web-portal, and personalized renovation roadmap for homeowners, are notable program-design innovations

Replicability:

• D-HESP serves as a good case study for upper-tier municipalities across Canada looking to shift from municipal-led programs to programs that leverage private capital and public–private partnerships
• The multiple-financing model makes D-HESP a flexible case study that could be adapted to many contexts
• A “program in a box” toolkit will be developed to support municipalities that wish to adopt the program’s partnership model