Dáil Éireann Debate, Thursday - 25 January 2024
91. Deputy Jennifer Whitmore asked the Minister for the Environment, Climate and Communications for an update on the low-interest loans for retrofitting; when an interest rate will be determined; and if he will make a statement on the matter. [3656/24]
View answerWill the Minister provide an update on the provision of low-interest loans for retrofitting? It is quite a few years since they were first mooted. When will we see such loans offered and what will the interest rate be?
In order to assist with the achievement of our retrofitting targets, the programme for Government, the climate action plan and the national retrofit plan committed to the introduction of a new residential retrofit low-cost loan scheme. The home energy upgrade loan scheme was developed by my Department in conjunction with the Department of Finance, the Strategic Banking Corporation of Ireland, the SEAI, the European Investment Bank, EIB, and the European Investment Fund.
An agreement with the EIB Group underpinning the new home energy upgrade loan scheme was announced in October last year. An open call inviting lenders to participate in the scheme was launched on 31 October. The €500 million scheme is the first of its kind for both Ireland and the EIB. Homeowners will be able to borrow between €5,000 and €75,000 on an unsecured basis for a term of up to ten years. The interest rates will be significantly lower than those currently available on the market as a result of the combination of the EIB Group loan guarantee and a Government-funded interest rate subsidy. The home energy upgrade loans will help to reduce the financial challenges for many homeowners and will play a crucial role in helping them to invest in energy efficiency, thereby making their homes warmer and cheaper to run and helping to lower emissions. The scheme will also signal to the banking sector the availability of new, sustainable business opportunities associated with retrofit and the transition to a low-carbon economy.
It is anticipated that the loans will be available in this quarter through participating retail lenders. Each will have a slightly different rate but all the proposed rates I have seen from prospective lenders, which they will have to publish in the coming two months, are very significantly below market rates. Householders who might not have the upfront cash will be able to avail of the loans to improve their homes. I expect there to be significant demand for the loans when they are launched, such are the lower interest rates that will apply.
I am really disappointed that we do not seem to have the details of the loan scheme. The Minister launched the scheme two or three years ago. Every time I put in a question on it through the parliamentary system, I am told that information should be available in the following quarter. It seems the same response is being given again today. I acknowledge that progress has been made and there is agreement at EIB level. However, people need to know exactly when the loans will be available and what kinds of interest rates will apply. Is there a base interest rate the Minister can indicate? People need to plan. Retrofits are hugely expensive and the majority of householders cannot afford to do them unaided. Unfortunately, the grants that have been provided by the Government do not really help people who are outside the social welfare system. A homeowner who does not qualify for any of the social welfare schemes cannot get any supports or only very limited supports. It is really unfortunate that the Minister has not provided any further detail today. My understanding was that the loan scheme was meant to start in February. Is he now saying it will not start next month?
It is frustrating that it is taking longer than I would have liked. The main reason is that this is a first for the European Investment Bank and the European institutions. They have never before engaged in direct lending support to consumers. They have to get it right and make sure all their qualifying criteria and all the processing adheres to European law and so on. That is the reason it is happening later than I would have liked.
The scheme will begin this quarter. It is coming in the coming weeks. I cannot announce the rates in advance of the decisions in that regard by the banks. They have to put together their loan packages and arrangements. They will be doing that within a number of weeks and publishing and publicising them. People will see it is a very attractive proposition. There is significant help for householders through both the EIB support and direct Government support to keep interest rates down, which will make the economics of transitioning people's homes far more effective.
Yes, people need to know what the interest rate will be. As I said, that information is coming very shortly. The key detail they need to know is that they can get an unsecured loan of up to €75,000 for up to ten years. The savings they will make on the energy reductions will start to make real economic sense. That will be achieved by way of the low interest rate the Government has managed to create through this intervention we have made. The loans are coming. They will be announced this quarter, not in the next one. The banks have to lead the process out and put out their loan offers. I cannot pre-empt that but it is coming very shortly.
The Minister said this has not been done before. In fact, other countries have given zero-interest loans. Brussels, for example, gives zero-interest loans for retrofitting.
That would have actually been a much better solution because it means that retrofitting is going to be something that every household could look at - that there is not that upfront cost to them. That is just a different argument.
I have a quick question in relation to the loan scheme. Is the Minister looking to extend it beyond residential, to community electricity generation projects? My understanding is that with these projects, a 5 MW solar farm could cost between €5 million and €6 million, which is a considerable outlay for community groups to run. It would appear that financial barriers are one of the main reasons why these community solar farms are not up and running. Would the Minister consider expanding this scheme so that they could also avail of these low-interest loans?
What I am getting is a lot of people in other European countries and the UK looking at what is happening in Ireland and saying it is a model they need to follow. As I said to Deputy O'Rourke earlier, we are seeing unprecedented levels of retrofitting taking place. It is way ahead of target.
The Department is not ahead of its B2 energy rating targets.
We are significantly ahead of B2 targets. It is not just about retrofitting; the Deputy is right to focus on microgeneration where there has also been a phenomenal increase, both domestic and non-domestic, in the uptake of the grants. We are providing very significant grants to encourage people to avail of solar PV. Yes, we will go further on that and a range of different measures because the scale change we need to make is huge.
Another recent development, which I am sure the Deputy has been selling to her own constituency, is the new community supports we are providing for climate action at the community level. We accept that we have 600 to 700 sustainable energy communities but there has not been the follow-through into projects like solar and aggregated retrofitting solar and other renewable and low-carbon projects. "Yes" is the answer the question. We will be looking continuously to upgrade and improve, particularly in the area of community energy, to support turning those sustainable energy communities into delivery agencies for sustainable transport, sustainable energy, sustainable food and local environment improvements. The recent community grant applications provided through the climate action fund are somewhere in the region of €30 million and are intended to help communities make that leap.
