Plans for low-cost loan guarantee scheme for retrofits face more delays

Eamon Ryan’s department still ‘finalising’ scheme despite announcement last February

The Government’s plans for a low cost loan guarantee scheme to encourage homeowners to undertake home energy upgrades have been pushed out to next year as part of Budget 2023.

In his speech in the Dáil, Minister for Public Expenditure Michael McGrath said that funding “to support the introduction of a new low cost loan scheme for residential retrofit” would be set aside in the budget.

It was announced on Tuesday that “just over €500 million” has been made available to the Department of the Environment to go towards “energy transformation, including the national retrofitting and home energy upgrade programmes”.

Some €337 million of the total — the vast bulk of which will be funded by carbon-tax receipts — will support the Sustainable Energy Authority of Ireland energy upgrade scheme.


However, the Department of the Environment said the amounts ring-fenced for the loan scheme, to be administered by banks and credit unions, are yet to be determined. A spokeswoman also said “the detailed scheme parameters such as the loan terms and the size of loans to be made available are currently being finalised”.

She said it is expected that the loans will be available “early next year”, despite previous indications from the Government that the scheme would be in place in the summer of 2022. In the meantime, the European Central Bank has increased interest rates in response to soaring inflation and household borrowing costs are expected to rise as policymakers continue to tighten monetary policy.

As part of its Climate Action Plan, the Government unveiled its ambitious National Retrofitting Scheme last February, aimed at delivering 75,000 home upgrades a year from 2026-2030 to achieve its overall target of 500,000 by 2030.

The €8 billion scheme will allow homeowners to avail of Government grants of between 45 and 51 per cent of a project cost.

A key component of the plan was a proposal for a low cost loan guarantee scheme, allowing households to fund the non-grant part of their project costs at reduced rates of interest, between 3 and 3.5 per cent.

The Government said at the time that the scheme would be partly funded by the exchequer and partly by the European Investment Bank under Ireland’s National Recovery and Resilience Plan.

In February, the Government said the scheme would be in place by the summer of 2022 with Minister for the Environment Eamon Ryan telling a press conference that people could also apply for financing from existing lenders, or consider funding their retrofit projects themselves.

A spokeswoman for the Minister’s department said on Wednesday the Government is still “engaging with the Strategic Banking Corporation of Ireland and the European Investment Bank in relation to the development of a residential retrofit loan guarantee scheme”.

Once operational, the department anticipates that a lending portfolio of €500 million will be available.

Ian Curran

Ian Curran

Ian Curran is a Business reporter with The Irish Times