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10.30.20 - Upgrading 130 Million U.S. Homes with PAYS®

Updated: Oct 31, 2020

Inspired by a question from fellow PAYS Pal, Nancy Brockway, we decided to cover the Biden Administration’s Weatherization Recovery Act plan and put it into context with the pace and scale of upgrades needed to track with the IPCC 1.5 scenario! The Biden Plan pledges to upgrade a total of 2M homes by 2024. That’s 500,000 upgrades/yr. Using WAP’s 2020 average upgrade amount of ~$7,600, the Biden plan would require $3.8 Billion a year. Let’s put this into context graphically:

How the U.S. Has Been Doing:

What the U.S. Needs to be Doing:

What that looks like annually:

We of course applaud the Biden-Harris Campaign’s elevation of Weatherization in the national party platform and policy discussion, the need to upgrade homes at scale, and the massive potential economic benefit. Their ambitions exceed that of any previous administration. At the 2020 average cost of Weatherization upgrades ($7,669 or $7,700 for simplicity), the Biden-Harris Campaign is pledging $15.4 billion. However, we need to think bigger.

If a future Biden-Harris administration allocated $15.4 billion (via the DOE Loan Program or a National Climate Bank) to pay for guarantees on capital sourced by utilities for PAYS investments, it would support $1.54 Trillion dollars - or 100 times larger than the impact of spending directly on the upgrades. The federal government can enable both funding and financing, and a combination can be particularly powerful.

Why $1.54 Trillion dollars? To be conservative, assume the PAYS charge-off rate over time at scale is 1% (10x higher than the current 0.1%), 1% losses on $1.54 Trillion would be $15.4 billion ($15.4B/0.01 = $1.54T).

With $1.54T at $7,700/home, we could upgrade 200 million homes! This means we could easily reach all 130 million homes in the U.S. and have funds left over to provide more comprehensive upgrades that include renewable energy and storage.

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