Citi Leads Nationwide New Green Energy ABS Platform

A new public-private partnership between Citigroup, the Pennsylvania Treasury Department; Renewable Funding, the Energy Programs Consortium, National Association of State Energy Officials and the U.S. Department of Energy will tap the securitization market to provide more affordable home energy loan financing across the U.S.

The financing will be available via the Warehouse for Energy Efficiency Loans (WHEEL) platform, according to press release issued this week.

The WHEEL loans fund residential energy efficient retrofits similar to residential Property Assessed Clean Energy (PACE) loans. The loans are offered over three-, five- or 10-year, fixed rate up to $15,000, to borrowers with 640+ FICO scores. They are structured as unsecured loans at an interest rate of 7.99% for a single project, or 2.99% for “whole house” improvement projects.

A key difference between WHEEL and PACE is that no lien is filed on the home. That means the loans work around the Federal Housing Finance Agency objections to the senior lien that PACE financing creates. PACE loans are typically repaid via a special assessment on property taxes, or another locally collected tax or bill, such as a utility bill.  

WHEEL aims to make it easier for states to offer energy efficient financing to utilities, contractors and homeowners.  Approved local contractors will offer low-cost financing directly to consumers. The loans will be purchased by Renewable Funding using a $100 million warehouse facility provided by Citi and the State of Pennsylvania Treasury. These loans will be aggregated into diversified pools, securitized, and sold to institutional bond investors.

Renewable Funding has worked with over 200 clients across the U.S. to structure and administer residential and commercial financing programs, since 2008.

"WHEEL is designed to serve a $200 billion unmet need for financing in the home energy efficiency market," said Cisco DeVries, CEO of Renewable Funding.  "Now, we are making it easier for consumers and contractors to utilize affordable loans, supported by their state or utility, to make energy efficiency improvements. We are also making it easier for investors to find a path into this important and urgently needed market."

WHEEL builds on Pennsylvania's Keystone Home Energy Loan program. The state has supported low-rate loans for energy efficiency improvements since 2006. These loans, originated by AFC First Financial Corporation, an energy efficiency lender, provided the historical performance data necessary to launch the national WHEEL program.

"This exciting public-private partnership will create a new, large-scale source of capital to help homeowners finance energy efficiency improvements, and tap into the unmet demand from institutional investors wanting to invest in this important new market," Marshal Salant, head of Alternative Energy Finance at Citi, said in the press release.