Case Study: Making Alberta homes more energy efficient

Summary

Municipalities across the country have launched programs to help homeowners finance energy-efficiency and renewable energy upgrades. In Alberta, Alberta Municipalities (ABmunis) has used a collaborative approach to centralize administration of these programs so communities can streamline processes by working together. Uptake has been high and ABmunis is now aiming to have programs in more than 20 municipalities by the end of 2024.

Background

Improving home energy efficiency and transitioning to renewable energy are key steps in moving Canada toward net-zero. But upfront costs and concerns over recovering the cost of investment when a property is sold can be significant barriers for homeowners seeking to make the necessary retrofits.

GMF's Community Efficiency Financing (CEF) program provides municipalities with funding and tools to implement locally relevant financing to help residents upgrade their homes through several different models, including Property Assessed Clean Energy (PACE) programs.

With PACE, property owners can access flexible, long-term financing through their municipality, covering up to 100 percent of project costs. Financing is repaid through an added charge to the participant’s property tax bill. If the property is sold, the new owner can assume repayment of the financing, while enjoying the benefits of the upgrades installed.

The challenge

While many resources such as CEF are available to Canadian municipalities for the net-zero transition, communities often have a tough time accessing and administering them due to resource and capacity constraints.

To help overcome this, the Government of Alberta passed An Act to Enable Clean Energy Improvements in 2018. It allows municipalities to implement local PACE programs, known as the Clean Energy Improvement Program (CEIP). CEIP has a unique delivery model, whereby a designated central administrator—ABmunis—administers the program on behalf of all participating municipalities. This approach enables municipalities of all sizes to participate as ABmunis takes on the bulk of the administrative work.

ABmunis has a deep relationship with municipalities all over Alberta and a history of helping them cooperate on mutually beneficial initiatives. As a result, it made sense for them to become the provincial administrator for CEIP.

Approach

ABmunis and participating municipalities share the responsibilities involved in planning, delivering, and administering local programs. For example, ABmunis supports municipalities through the application process for GMF funding, which is value-added support for smaller municipalities with limited staff. ABmunis also provides technical support through building business cases, sourcing capital, reviewing bylaws, and developing program materials. Once a local program launches, ABmunis leads program implementation, including technical application review, customer service and contractor management, while municipalities manage the recording of the approved financing amount on the property tax account and processing the repayments over time.

Once a program is in place and capital is secured, homeowners can apply for financing. When an application is approved, the homeowner signs a financing agreement with their municipality and moves forward with the project. ABmunis verifies completion and pays contractors directly using municipal funds, and homeowners repay the financing over time through a charge incorporated into their property tax bill.

Eligible types of projects include:

• doors, windows, insulation, and air sealing
• heating, ventilation, and air conditioning
• lighting controls and fixtures
• renewable energy
• water heating

In addition to administering the program, ABmunis builds relationships between municipalities. By cooperating on CEIP, participating municipalities convene, connect, share resources, and learn from one another.

Results

To date, CEF has supported CEIP programs in 11 Alberta communities, ranging in size from Devon (population 6,454) to Calgary (population 1.3 million). More are working to pass applicable bylaws. (ABmunis has a list of municipalities that have active programs or are in the program development stage). Demand is high, and programs often fill up ahead of schedule.

Some program achievements as of October 10, 2023, include:

• 27 municipal PACE/CEIP bylaws passed in Alberta.
• 12 residential and 1 commercial PACE programs in the market, 5 of which are in their second year.
• 541 active projects.
• 65 completed projects with a total GHG savings of 240 tCO2e/yr and annual renewable energy generation of 328,611 kWh/yr.
• Approximately $25M in financing committed (for active and completed projects).

Benefits

In addition to supporting the transition to net-zero, CEIP offers additional benefits for homeowners. Energy efficiency and renewable energy upgrades make homes more comfortable, enhance property values and reduce utility bills. For example, replacing furnaces with heat pumps means many households will gain access to cooling, making homes more resilient as the climate changes.

CEIP’s centralized delivery model has led to more municipalities collaborating, which has saved a lot of time and resources even for bigger cities. This approach has enabled a lot of cooperation and efficiency, as municipalities can leverage existing assets such as application infrastructure and templates. 

Lessons learned

Regional collaboration between a central administrator and multiple municipalities is an effective and efficient way to run PACE programs and scale uptake. One success factor for the approach used in Alberta has been ensuring that roles and responsibilities for all parties are clear at the outset, which includes consulting all municipal departments involved in delivery, including finance and tax teams. This can be done by establishing an internal working group.

There has been tremendous uptake for CEIP in participating communities, which has created some challenges for ABmunis and the municipalities in terms of managing demand. For example, when the initial wave of programs launched, the allocation of funds for the first year were in some cases committed within 24 hours. Newer programs have addressed this challenge by increasing the amount of financing available, having multiple intake dates throughout the year, and maintaining a waiting list of interested homeowners.

Next steps

Demand for CEIP remains strong as the number of interested municipalities continues to grow. ABmunis aims to have more than 20 residential programs in the market by the end of 2024.

While the growth in PACE across Canada has been focused on residential properties, helping commercial property owners retrofit their buildings is also top of mind. In 2022, the City of Edmonton and ABmunis partnered to launch Canada’s only active commercial PACE program, and ABmunis intends to have five commercial PACE programs in the market by the end of 2025.

As a result of the unique delivery model and impressive results over the past two years, ABmunis was recognized with a 2024 Canada’s Clean50 Tomap Project Award for the Clean Energy Improvement Program.