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Financing renewable energy in the home

A handful of renewable energy companies have sprung up in recent years, encouraged by high electricity costs and cheap financing available through a variety of programmes, including an obsolete World Bank-sponsored fund managed by Jamaica Public Service, and more recently, a National Housing Trust (NHT) loan programme offered for solar hot water heater and photovoltaic panel installations which began in 2006 and 2007, respectively.

The NHT told Sunday Finance that it increased the ceiling for its solar hot water heater loans from $100,000 to $250,000 in December 2008, after reviewing the performance of its initial offering. “The result was that $120,000 proved inadequate to purchase and retrofit a solar water heater. Depending on the size of the water tank, the prices ranged from $170,000-$250,000. It was on this basis that the loan limit was increased.”

Solar Panels

A photovoltaic array installed by Mandeville-based Isratech.

Demand for solar hot water heaters was described by NHT as “relatively constant”, but the lender noted a “significant increase from the FY 2007/2008 to 2008/2009”, during which NHT loans jumped from 230 to 401. In fiscal 2009, which started in April, there have been 164 loans disbursed by NHT year-to-date.

The solar hot water heater loans are offered direct to the consumer by NHT at three per cent interest for five-year terms, and can be bundled together with the mortgages offered by the group.

Contributors who have at least $250,000 in their contributions- accounts at the NHT can now use these funds as security for solar water heater loans, an NHT board decision that has widened the number of securities that can be used for these loans.

“Previously, contributors needed a duplicate certificate of title to secure their solar water heater loans. But some NHT contributors had found this inconvenient, and so the NHT started looking at ways to make the process easier for the customer.”

 

The photovoltaic panel loans, meanwhile, are categorised under the home improvement loan, repayable over 20 years with interest ranging from two to eight per cent depending on age, income and regular housing loan. An increase from 15 to 20-year repayment term for the solar panel loans, which are worth up to $1.2 million, was implemented this month. These loans are issued using home equity of the borrower as collateral.

One of the most well-established Jamaican companies in the renewable energy space is Mandeville-based Isratech, which was founded in 1991 after its owner, Shalom Hodar, generated interest in solar hot water heaters after installing a system in his home. Isratech sells the popular Chromagen solar hot water heater seen on many homes, hospitals and hotels across Jamaica, which range between US$1,200 delivered and installed for a 150-litre system, to US$3,000 for a 300-litre system. Hodar recalled a 20-30% increase in sales of his hot water systems when a World Bank had a programme in place with JPS before the utility was privatised, and said he had tried to get a private financing arrangement in place following the privatisation.

He said the proposal nearly went through, but when the Government withdrew its support by failing to guarantee the funding, the insurers backed out and the deal fell through. “When Mirant bought JPS, the programme stopped, and the fund disappeared,” said Hodar. JPS spokeswoman Winsome Callum said she did not know what happened to the fund following privatisation.

Appliance Traders (ATL), which was one of the pioneers in the solar hot water business before energy prices collapsed in the 1980s, is now on the verge of incorporating renewable energy products in its product offering once again. ATL CEO Zachary Harding said the company is always looking to be innovative and to find new products that cutomers need. “The time has come again for us to look at renewables,” said harding, noting that a container full of Prizm solar hot water systems specifically designed for this market is on its way to Jamaica. “A lot of our appliances are energy efficient appliances… we’re aware of the fact that energy consumption in the country is a problem and peoples’ bills are a problem – the demand for solar hot water heaters has spiked and as such we’re bringing in this new line, said Harding, noting that Steven Chang would be heading up ATL’s renewable energy systems initiatives as director of operations.

Other Jamaican companies in the renewable energy business include Savannah-la-Mar-based Jamsolar and Eco-Tec, based in Montego Bay.


Source:  Jamaica Observer



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