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Keep Credit Unions in the Clean Energy Economy

Wednesday, Dec 15 2021

Sean Gallagher

Against long odds, Congress is on the brink of an historic moment that will align the interests of the banking industry, the solar industry and the community of activists that have been pushing for investments in clean energy. But, in a plot twist worthy of the worst D.C. political drama, an obscure rulemaking process at a federal agency that most people have never heard of threatens to deny millions of homeowners the opportunity to finance sustainable home improvement projects for their own homes.

It is critical that the National Credit Union Administration (NCUA) act by December 31 to extend a temporary rule that allows Federally Insured Credit Unions (FICUs) to buy 25-year clean energy loans. Failure to extend this rule would hurt the financial health of the banks the NCUA was established to protect, deny credit union members the financial opportunities they have come to expect, and stifle an industry that is an important engine of economic growth.

This change started in April 2020 when the NCUA adopted an emergency rule that was intended to help FICUs manage their operations and assist credit union members in the face of the economic uncertainty created by the COVID-19 pandemic. Prior to that, FICUs could not originate or purchase unsecured loans of more than 15 years.

For some home improvement projects, a 15-year loan makes sense. But for homeowners looking to generate a net savings over time by installing solar panels on their homes, it doesn’t. These systems are designed to last 25-30 years and have warranties to match. Homeowners also see the greatest savings on 25-year loans, which is why they make up 40 percent of all solar loans in the market today.

The rule has enabled tens of thousands of homeowners to invest in their homes — which is often a family’s primary asset — in a way that increases resale value and reduces utilities' costs. And depending on where they live, solar customers can even sell unused energy back to their utility, bringing even more value to solar customers.

For most homeowners, the main hurdle preventing them from making the switch to solar is the upfront costs. But historically low interest rates combined with state and federal tax incentives have made these projects more attainable than ever. If the NCUA extends the rule, even more homeowners could use their federal credit union to secure the financing required to make this investment.

In addition to the economic benefits for homeowners, this would help accelerate the economic recovery. The solar industry is already creating good paying American jobs that cannot be exported — employing more than 230,000 solar workers nationwide spanning manufacturing, installation, distribution and other related industries.

According to the National Solar Jobs Census 2020, these jobs — which boost local economies in the communities our credit unions serve — pay more than similar occupations in other energy industries and the economy as a whole.

At the same time, allowing homeowners to switch to renewable energy would greatly benefit the environment. Studies show that 42% of energy-related greenhouse gas emissions in America comes from decisions made in the household. Allowing FICUs to help finance clean energy solutions for homeowners can address that problem.

Clean energy in America is just starting to take off, and now is not the time to pump the brakes. Rescinding this rule would deny thousands of homeowners their opportunity to benefit from the clean energy economy.

Later this month the NCUA will decide on the fate of this important rule. The NCUA must do the right thing and make this a permanent rule.

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