Credit Unions Could Deploy Billions in Clean Energy Financing, Saving Consumers Thousands of Dollars Each Year
Even as consumer sentiment begins to improve in 2024, thanks to a rosier outlook on both inflation and the economy, many household budgets continue to be stretched thin.
For families of modest means, the financial stress caused by higher prices and higher interest rates has made it harder to afford life’s necessities. Finding new ways to save can have a big impact on these families, many of whom are already credit union members.
According to Rewiring America’s Household Savings Report, each household in the U.S. could save between $1,050 to $2,585 per year on its energy bills by switching to electric cars, and upgrading heaters, stoves and other equipment. This estimate applies to every zip code in the U.S. While those of modest means would likely benefit most, as a higher proportion of their income goes to cover such costs, all consumers could reap rewards.
Serving the underserved is the primary reason credit unions were established. Now, the industry has a new opportunity to provide financing for clean energy projects that will save households money and boost job creation, while combating climate change and diversifying their balance sheets with a new asset class.
With a whopping 42% of all energy-related carbon emissions coming from households and cars, the opportunity to positively impact individual’s wallets, underserved communities, and overall quality of life nationally and globally is huge.
It All Starts with Education
Just like cooperatives focus on providing general financial education to benefit their members and communities, education on the benefits of solar panels, heat pumps, energy efficient homes, and electric vehicles is needed. Most consumers are not at all familiar with this space and they need our help – today and down the road. The next generation of credit union members is quickly realizing that they have to start saving money and can’t afford to splurge as many struggle to cover their basic expenses.
For Gen Z and the newer Generation Alpha (those born between 2010 2024), climate change is an ever-present and increasingly pressing issue that needs to be addressed. Forward-thinking credit unions looking to connect with these younger generations must incorporate clean energy financing into their plans.
An Unprecedented Opportunity
By becoming a nationwide leader in green lending, our industry has an unprecedented opportunity to better serve existing members and expand our reach to help new members. Ecority, a nonprofit that has built a national coalition of credit unions, state credit union leagues and state-chartered green banks, is projecting that U.S. credit unions could finance 5.3 million projects for a total of $107 billion in just six years by leveraging the industry’s existing branch network and digital channels along with potential grant funding.
With representation that includes thousands of community lenders in every U.S. state and territory, Ecority’s $14.87 billion grant applications to the National Clean Investment Fund and Clean Communities Investment Accelerator Fund of the Greenhouse Gas Reduction Fund are currently pending. Decisions on grant funding are expected by March 31, 2024.
Ecority’s coalition is poised to catalyze the U.S. credit union sector to rapidly deploy clean energy projects at an unprecedented scale nationwide, with a focus on low-income and disadvantaged communities.
A Collaborative Approach
Through industry collaboration, credit unions have an opportunity to become national leaders in green lending and include borrowers who may not otherwise qualify. Ecority plans to use potential grant funding to create a loan guaranty fund, provide technical assistance and provide capitalization grants enabling credit unions to autonomously lend for more eligible projects at lower rates.
Both consumers and credit unions will need help becoming familiar with financing clean energy projects. Cooperation among cooperatives and an infrastructure partner like Ecority can help the industry capitalize on this timely opportunity.
Interested credit unions may express their interest in participating and potentially becoming subrecipients of grant funds by visiting ecority.org/register.
About Author: Chuck Purvis, Interim CEO, Ecority