Greener Homes Grants: making the most of new home energy retrofit programs

A home energy retrofit first involves an assessment by an accredited home energy efficiency auditor. They check things like the insulating capabilities of your windows, the places in your home where air leaks to the outdoors and the relative efficiency of your heating and cooling systems.

From there, you can opt to install energy-saving appliances such as a heat pump or heat exchanger, energy efficient lighting and other items. 

But how to pay for all of this? In the last several years, a raft of new federal programs has emerged to help homeowners shoulder the burden of new windows, fresh insulation and things like heat pumps.

• The largest program available today is the Canada Greener Homes Loan. It allows homeowners to borrow up to $40,000 interest free for a retrofit, repayable over 10 years. 

• There’s also the Canada Greener Homes Grant, which provides up to $5,000 towards the cost of a retrofit which you don’t ever need to repay.

• There’s also a separate program, known as CMHC Eco Plus, that allows homeowners to get a 25 per cent mortgage insurance premium reduction if they engage in a home energy retrofit. 

To qualify, the buyer must submit an application to CMHC no later than 24 months after the closing date of their mortgage. 

It may not seem like much, but for a buyer who put the minimum down payment on the average home for sale in Canada this summer (worth $668,754), the premium reduction amounts to $6,900 back in your pocket over the life of a mortgage. 

The Ontario Energy Board charts the price of residential hydro. It shows some recent temporary drops due to COVID-19 pandemic relief, but all lines are still trending up overall. 

A recent report compiled by the Royal Bank of Canada suggests hydro rates in most parts of Canada could increase by another 30 per cent. 

For even more energy savings, or the chance to make your home at least partially energy self-sufficient, there’s the option (available sunshine permitting) of installing a solar array on your roof. 

In northern climates where temperatures stay quite low, geothermal heating is an option.

Other options include installing a battery to charge in the wee hours of the night when time of use hydro rates are lowest, expending the stored energy to power your home during the day when rates are much higher.

But all of these options will likely run well above the $50,000 or so total on offer from the three federal programs.

That’s where financing, such as a green-tailored home equity line of credit (HELOC) may help.

A full energy retrofit with power storage, a solar array installation or both could run beyond $100,000 or even more. 

With a HELOC for a green energy retrofit, you can repay what you owe on your terms, at a rate that is typically lower than many other forms of credit.

In Sept. 2023, major banks are offering lines of credit with interest rates in the eight per cent range. 

But when considering whether to upgrade your home’s green factor, you need to also consider the long-term savings in the form of lower energy bills.

Recent studies peg the net energy cost savings of even a smaller, more basic (no solar panels, no batteries) home retrofit at anywhere between 30 and 78 per cent. 

Even at the low estimate of 30 per cent, this could mean about $41 per month in savings for the average Ontario residential consumer of electricity and natural gas.

• In a year, that amounts to $492.

• In a decade, the total savings reach $4,920.

Larger than average homes, or homes with particularly poor insulation could easily see much higher monthly savings.

TO RECAP:

• There are three major federal programs available to most homeowners seeking a green energy retrofit of their home.

• Energy prices are likely to continue to rise in coming decades

• Lines of credit can fill the gap between available government help and the cost of a full home energy retrofit involving solar or energy storage. 

• Look at the payback period of a home energy retrofit. The savings certainly add up over the years!