New York’s Bipartisan “Power NY Act” is a Model for Energy Efficiency Financing

Last week the New York State Senate passed the nation’s first energy efficiency law that will make it easy and affordable for middle and low income residents to retrofit their homes and truly scale efficiency. The act has the potential to become a model for the rest of the country to finance energy efficiency retrofits and reduce energy consumption and CO2 emissions.

The law is particularly important because in New York the majority of residents, namely moderate and middle-income homeowners, cannot afford to pay the large upfront costs of retrofitting their homes. As a result, they can’t benefit from government rebate programs or from the savings of reduced energy use. New York has some of the highest electricity prices in the country, meaning that citizens are suffering from overly burdensome energy bills, and thus sinking money into electricity instead of back into the economy were it would be two to three times more effective.

The Power NY Act (S.5844), sponsored by Republican Senator George Maziarz (R-C, Newfane) addresses this gap in retrofit financing. It establishes a public-private partnership to provide low-cost loans for New Yorkers who cannot afford efficiency retrofits on their homes. New York State Energy Research and Development Authority (NYSERDA) will pool money from private investors and lend homeowners small low-cost loans up to $13,000 for residences and $26,000 for businesses. Homeowners repay the loans over time as a line item on their utility bill. Hence the name for this mechanism: on-bill financing, or on-bill recovery.

This financing structure is particularly smart because home-owners rarely default on energy bills. Looping the loan repayment into the energy bill means that the loans will be a reasonably safe investment.


With some of the country’s oldest and leakiest houses, the lack of retrofits is taking a major economic and environmental toll on the state. New York’s buildings account for 60% of the state’s carbon emissions, much higher than the national average of 40%. Efficiency retrofits can make a major impact on the state’s carbon emissions and pollution levels.

The Center for American Progress has tracked New York’s progress on Energy Efficiency. The 2010 report “Efficiency Works,” found that New York is in sixth place among the top ten leading states in energy efficiency markets. The report noted that the state “gets high marks” for its Energy Efficiency Portfolio Standard and target for reducing electricity usage 15% by 2015, along with its policies of “unbundling, decoupling, and good shareholder incentives.” Moreover, the report found that

The state of New York is a great example of officials at the state level and municipal level taking an aggressive, multifaceted approach to energy efficiency. Their regulatory requirements, coupled with financing options for New Yorkers, lay the foundation for creating new jobs and reducing energy consumption, which is particularly critical in the United States’ largest city.

However, the report also found that despite its good efforts, in 2010 New York was “taking a little longer to get a few policies in place and partner with utilities to reduce energy consumption.” The Power NY Act is about to accelerate efficiency policy implementation and launch New York into the lead of the energy efficiency race.

New York is not alone in improving energy efficiency financing and policies, as the nation and the rest of the world focuses more on energy efficiency. In February, President Obama announced his Better Building Initiative (BBI), which aims to reduce commercial building energy consumption across the country 20% by 2020. Working with the Clinton Global Initiative, CAP has been very involved in the BBI, particularly the Better Building Challenge, which is rallying CEOs, University Presidents, state and local government leaders, among others, to commit their organization to become leaders in energy efficiency, sharing best practices with the country.


The Power NY Act will be a major tool for the state to reach the President’s BBI efficiency goals. Furthermore, the on-bill financing model should serve as a model for the rest of the country. As this bill helps New York homeowners overcome upfront cost barriers and install energy efficiency retrofits, thus saving residents money and creating jobs, other states should take note and follow.

— Bracken Hendricks and Lisbeth Kaufman, Center for American Progress

Below are the earlier comments from the Facebook commenting system:

Dan Staley

This is a good first step in the long process of making our buildings efficient.

June 28 at 10:24amAlan Saly

Hopefully co-ops and condos will also be able to take advantage of this program.

June 28 at 6:00pmCamilla Saly

You should tell Ethan from Aurora. That’s what he does for a living — but he probably already knows about it!

July 1 at 11:46am

Sally Bingham

Hopefully congregations can take advantage of this. sounds like a good thing.

June 28 at 6:39pmPat Brown

I presume that “efficiency retrofit” means addressing basic problems such as poor insulation and leaky windows rather than installing alternative energy systems, since the former is much more return per dollar than the latter.

June 29 at 6:58amPaige Brown · San Francisco, California

It is — and creates a financing mechanism for folks who can’t put up the bucks up front. I’m deciding whether to replace windows, have my walls insulated, or replace my heater…..

June 29 at 12:48pm

Pat Brown

If the windows are quite leaky I would do them first..

June 29 at 8:21pmPhillip J. Wallace

This legislation is certainly a move in the right direction.

July 11 at 11:10amErlend Kimmich

on bill financing makes sense.

July 24 at 6:44pm