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Lenders see business potential in energy lines for homes

Published:Sunday | April 1, 2012 | 12:00 AM

Avia Collinder, Business Writer

Communications and other Workers of Jamaica Co-operative Credit Union Limited (C&WJCCU) has joined other lenders offering low-price energy loans, at 9.5 per cent interest per annum, to tap into a market of disaffected Jamaica Public service customers looking to develop alternative power supplies.

Barrington Whyte, general manager of C&WJCCU, said Thursday that the energy loan complements a new mortgage offering, priced at 9.5 per cent with up to 95 per cent financing.

"C&WJ provides additional loans to our mortgagors for energy savings installations such as solar panels and water heaters as well as storm shutters, gate openers, etc, without the necessity to register these on the mortgage," he said.

The Capital & Credit Financial Group has launched two new 'green' loans similarly priced at 9.5 per cent to finance renewable energy and solar water heater systems; and renewable projects involving windmill, solar panels, turbines, among others.

up to $5 million

New and existing customers can access up to $5 million and have up to 10 years to repay. Businesses and homeowners can borrow up to $250,000 to purchase solar water heaters, also for as low as 9.5 per cent per annum, with a maximum of three years to repay.

The Development Bank of Jamaica (DBJ) is also offering a maximum J$2 million to householders, starting March 1, through its affiliated loan institutions.

"Investing in energy efficiency/conservation can realise immediate savings of between 25-30 per cent," Milverton Reynolds, DBJ managing director said, noting as well that market penetration for energy projects was relatively low in the residential segment.

The development bank within the last three years has approved energy loans of over J$319 million for companies only in sectors including manufacturing, agro-processing, restaurant/food service, tourist attraction, small hotel, retail store, contact centre and technology services, professional offices as well as energy equipment suppliers.

The DBJ notes that energy projects have all incorporated energy efficiency solutions with the renewable energy technologies implemented ranging from solar and photovoltaic systems to bio-digesters and wind turbines.

For companies, the DBJ provides loans at a rate of 8.0 per cent on borrowings of up to J$15 million under the DBJ-PetroCaribe Energy Fund. Loans in excess of J$15m can be accessed at 9.5 per cent.

The new loan for householders of a maximum J$2 million per borrower became effective March 1 with repayment periods of up to five years.

renewable energy

The loan funds must be used for renewable energy solutions such as solar water heaters, photovoltaic panels, bio digesters, and wind turbines on their homes.

"While it is clear that the use of solar water heaters and PV systems has increased and is a feature in some newer housing developments, market penetration remains relatively low," Reynolds said on Friday.

"Data on the overall expenditure is not readily available."

The Bank notes that with a 58 gallon solar water heater at a cost of J$135,000 versus an electric water heater, home owners could save up to 25 per cent off their electricity bill, with an effective payback of less than two years.

"A householder who wants to invest in photovoltaic panels can do the investment in modular form, that is, install a PV system to supply energy to high energy usage equipment - freezer, refrigerator, air conditioning unit, etc," the bank said. "This system can be designed to give savings to cover the cost of the investment."

The DBJ notes that estimates received indicate that the cost to fully equip a home or business with a PV system capable of providing 450 kWh per month is approximately J$2m. Where wind turbines are concerned, Reynolds says "the cost and feasibility of installing wind turbines will be dependent on the availability of constant wind among other factors."

DBJ suggests that borrowers request an energy audit to determine their requirements, saying they might not need to borrow as much as J$2 million.

The DBJ allows the cost of the energy audit to be financed as part of the overall loan amount.

Loan durations may vary 2-5 years which will impact the monthly payment amounts.

The forms of security required for the loan will be determined between the lending institution and the home owner.

The DBJ's associated lending institutions include partners include all commercial banks, credit unions, the National People's Cooperative Bank, National Export-Import (EXIM) Bank, Jamaica Money Market Brokers and Capital & Credit Merchant Bank.