Cutting energy costs can be expensive. Michigan’s green bank can help.

Keeping the lights on in Michigan isn’t cheap. Neither is heating a home.

Michiganders on average pay more per kilowatt-hour of electricity than anyone else in the Midwest, and only 13 U.S. states have higher prices, according to the U.S. Energy Information Administration.

One surefire way to lower bills: Use less energy by making homes or businesses more energy efficient or installing renewable systems. Doing so also decreases carbon footprints, addressing climate change.

But adding insulation or installing geothermal or solar systems aren’t cheap either. Home solar panels installation alone can cost more than $10,000, according to various estimates.

That’s a problem Michigan Saves is trying to address. Created in 2009 with a $6.5 million grant from the Michigan Public Service Commission, the nonprofit wants to ease hurdles for those wanting to use less energy. Acting as a “green bank,” the Michigan Saves connects property owners, lenders and utilities to finance clean energy projects.

Michigan Saves has set up $175 million worth of residential and commercial projects — more than 13,700 loans across most Michigan counties. It’s aiming for $1 billion in financing by 2023.

Bridge Magazine recently talked with Mary Templeton, the nonprofit’s CEO.

The following is a condensed version of the interview, lightly edited for clarity.

Bridge: How does Michigan Saves work?

Templeton: The funding we received from the Public Service Commission allows us to back lenders in case of default. That allows our lenders to offer better rates and longer terms — and offer access to more individuals who wouldn't otherwise qualify for loans. It made the lenders trust and serve this market in a way that they had not served it before.

Bridge: Why wouldn’t it be attractive otherwise?

Templeton: If you're going to do a really high efficient furnace, or some installation or some air sealing in your home — or even a solar panel on your home, sometimes it takes many years to pay that back. With the longer term, people can come closer seeing their investment pay for itself right away.

Bridge: Does this program apply only to homeowners? What about options for rental properties?

Templeton: This program is available for homeowners, business owners, nonprofit entities or municipal facilities. Pretty much anybody who has a building. On the residential side, our lenders are opening up to landlords so renters can have access to these types of energy efficiency programs as well.

Bridge: Is Michigan Saves involved in programs such as on-bill financing that attach loan payments to utility bills?

Templeton: The City of Holland recently implemented an on-bill financing program. We helped them set it up and manage their contractor network. Legislation in 2014 enabled municipal utilities like Holland to offer such programs, and legislation in 2016 allowed regulated utilities to set up similar programs. We’ve been educating all utilities around the state about what can be done. We’ve got an ambitious goal to set up a statewide on-bill program where various utilities that opt-in could offer such financing to anyone they serve.

Bridge: Beyond green banking, it sounds like your organization functions as a broader hub for energy efficiency efforts.

Templeton: We’re continuously focused on barriers. We’re getting feedback from some of our nonprofit partners and municipalities and utilities about who is struggling to finance these projects and why. We continue to look for ways to add new partners to our lending portfolio.

Bridge: What are some examples of those barriers?

Templeton: We’ve had trouble financing affordable housing properties. Many are owned by HUD [the U.S. Department of Housing and Urban Development], and HUD doesn't like adding liens to their property. So we found a lender who does not require a lien and can offer very long-term  loans — like 20 years — for affordable housing. We’re excited about launching that program soon. We’ve also seen a gap for certain nonprofits, churches … they are wanting to add solar but can’t take advantage of federal investment tax credits. One lender works with equity investors who can take advantage of the tax credits while reducing the cost for the property owner.

Bridge: I see some Michigan Saves loan programs aren’t open to folks below a certain credit score. Amid discussions about how over-reliance on credit scores can perpetuate racial injustice, have you considered ways to vet customers?

Templeton: This is very much on our radar. We still have a long way to go. The people that are underserved, many times, have higher utility bills, especially as a percentage of their income. We’re committed to figuring something out there. One option that has worked really well: That on-bill program. Holland looks at 12 months of bill payment history. Customers qualify as long as they haven’t been late on payments. We don’t look at their income or credit scores. Additionally, the on-bill program offers financing for up to 15 years, making the payments more affordable.

Bridge: Gov. Gretchen Whitmer says she wants to prioritize fighting man-made climate change by shrinking the state’s carbon footprint. Do you see energy efficiency efforts like yours a piece of that puzzle that doesn’t get enough attention?

Templeton: I don’t know if I’d call it underrepresented. Of course, we’d like to get more visibility. There is always a discussion about how when Michiganders have greater control of their whole state benefits. There’s always a discussion about how the cheapest energy you invest in is the energy you don’t use. It can be adopted by anyone regardless of their feelings about climate change.

Bridge: Sure, it makes sense that the benefits of using less energy stretch far beyond climate implications.

Templeton: Don’t forget the various health benefits. You look at people who might have mold, asbestos or even a gas leak. When someone comes in to do an energy audit, they’re going to identify those problems — and make living more comfortable and safer. That huge aspect could get a lot more attention.