Duke Energy wants to make new heating and air systems affordable. Are you eligible?
Duke Energy will introduce a program this spring to help people whose homes use large amounts of energy replace outdated heating and air systems, add insulation and take other energy efficiency measures.
Called Improve and Save, the program will give customers an incentive to upgrade their houses. Whatever is left over after that incentive will be paid off on the property’s monthly electricity bill over the next 10 years, with any future owners or renters assuming the payment.
“What it does is remove the upfront financial impact that customers have to pay to upgrade their home to be more energy efficient. You’re talking about jobs that are around $10,000 to $15,000 of investments,” Casey Fields, Duke’s lead strategy and collaboration manager, told The News & Observer.
Any home can participate in the program, but when it starts this spring Duke plans to proactively reach out to homes that are using significantly more energy than their neighbors. Those are buildings where there might be poor insulation or outdated heating and cooling systems. They’re also places where Duke can save the most energy and homeowners can save the most money.
Benefits of reducing energy use
Energy efficiency slashes energy bills by helping buildings more effectively heat up in the winter and cool down in the summer, with better insulation helping the temperature remain where the owner wants it.
The Duke program is designed so that if energy use stays consistent, customers will save on their monthly bill even after paying for the upgrades.
“The monthly charge is supposed to be lower than the energy savings. The customer is cash flow positive the whole time. Even though they are technically paying for the upgrade, they’re using less energy,” Daniel Pate, the N.C. Sustainable Energy Association’s director of data and research and coordinator of a collaborative that explored the program, told The N&O.
That helps Duke, too. If homes that are currently using outsized amounts of energy are able to heat and cool more efficiently, the utility won’t need to generate as much electricity when demand is highest.
How Duke’s program will work
Improve and Save is slated to start around the end of the first quarter. When it does, Duke will offer upgrades including:
Air sealing
Duct repair and sealing
Heat pump water heaters
HVAC systems
Insulation.
When a customer expresses interest in the Improve and Save program, Duke will look at their previous year of energy usage. The company will also audit the home to figure out what’s causing it to use energy, whether that’s coming from an outdated heating and cooling system, an aging water heater, a drafty attic or somewhere else.
“The audit will reveal what the main drivers of their usage are,” Fields said.
From there, Duke will look at how much a home’s energy usage differs from its neighbors to craft a custom financial incentive that will lower the total cost of the project. Upgrades that save more energy will receive higher incentives.
Duke could ask the customers to pay for a portion of the repairs if the monthly payments for the upgrades are higher than the expected bill savings after the incentive is applied. Still, Fields said, that amount would be significantly lower than if the customer tried to pay for the project upfront.
Once the finances are figured out, a contractor will perform the upgrades and the customer will start making monthly payments. Duke is requiring that upgrades have warranties and maintenance plans, costs that are added in at the outset.
“We know this is a big investment, it’s a big cost coming to the company, but also the maintenance is there to help us make sure this is in existence for the life of the measure,” Fields said.
Fields added that while the program is meant to lower electric bills, it does not necessarily guarantee that outcome.
Take a situation where several family members move in after an upgrade is made based on the prior year’s energy use. There’s a good chance the energy bill is going to rise to an amount higher than before just because the number of people using energy in the home has increased.
At the same time, the home’s power bill would likely be lower than it would have been without the upgrade.
Energy burden in NC
Duke officials expect that about 3,000 homes will benefit from the program in its first five years. That includes $12.4 million in incentives for Duke Energy Carolinas customers and $7 million for Duke Energy Progress customers, money that will be collected from ratepayers.
Helping save energy at home is important in North Carolina, where low-income homes spend a high proportion of their paychecks on energy.
A 2022 study prepared for Duke Energy found that 1.25 million households across the utility’s service areas in the Carolinas have incomes lower than 50% of the median in their areas, while another 810,000 are defined as moderate income and earn between 50% and 80%. Of those low and moderate income customers, 69% heat their homes with electricity, 69% are renters and 65% identify as something other than white.
A report Duke prepared for the low-income collaborative found that customers who are behind on their bills use more energy than customers who are not, and that customers with lower incomes typically use more energy per square foot than their counterparts with higher incomes.
Fields said that while Duke doesn’t plan to explicitly target low and moderate income customers for the Improve and Save program, it expects that they will often have the largest potential for savings. He also noted that Duke will not require a credit check, where many HVAC companies might for similar upgrades.
Even if the program mainly focuses on moderate income customers, Pate said, “That’s still a gigantic market where you’re unlocking energy efficiency for a large group where that option is a lot more enticing for them than taking out a loan.”
Another NC example
While Duke’s program will start in 2024, Roanoke Electric Cooperative will mark 10 years of a similar offering to its customers.
The cooperative covers parts of Bertie, Gates, Halifax, Hertford and Northampton counties in North Carolina’s economically distressed northeastern corner.
“We’re doing what we feel to be the right thing for our member-owners. We’re living in a service area that experiences a lot of energy burden,” Marshall Cherry, Roanoke’s president and CEO, told The N&O.
Cherry said the program can help encourage landlords to make upgrades that lower their tenants’ electric bills.
“What makes it so successful is it’s location-based or meter-based, it’s not based on the individual who lives in the home,” Cherry said.
Cherry also said the cost-benefit analysis showing how much savings will be produced by the upgrade is key. In Roanoke’s case, customers typically experience $15 to $20 savings on their monthly bills even while paying off the improvements.
Efficiency and emissions reductions
Duke’s program has its roots in the company’s 2020 rate case settlement, where Duke agreed to work with advocates to explore energy efficiency and demand-side management programs.
Then, landmark 2021 energy legislation that required Duke Energy to reduce carbon dioxide from power generation also required the N.C. Utilities Commission to craft an on-bill repayment program that boosts energy efficiency in the state.
Energy efficiency is tied to emissions reductions because during the peak times when demand is highest due to hot and cold temperatures, Duke and other utilities are likely to turn to power plants fired by fossil fuels like coal and natural gas.
“We’ve got to grow the business of energy efficiency beyond what we’ve been doing year over year in the past. And so that just helps us with our system, it lowers the need to build new power plants in the future,” Fields said.
This story was produced with financial support from the Hartfield Foundation and Green South Foundation (formerly 1Earth Fund), in partnership with Journalism Funding Partners, as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work.
