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Energy Efficiency and Weatherization

Energy Burden and Efficiency in Alabama

đź’ˇWhat is Energy Burden?

The percentage of total household income spent on energy bills. A household with a high energy burden pays a disproportionate amount of their monthly budget on energy costs.
In 2024, 1 in 4 American households spent over 15% of their income on energy bills.

Data from the U.S. Department of Energy's LEAD Tool

Energy Burden in Alabama

Energy burden has resulted in over 1 in 3 Alabama households facing energy insecurity.
Energy insecurity means a household struggles to meet its basic energy needs – like heating, cooling, and electricity – because of high costs, low income, or inadequate housing. It often forces families to make trade-offs, such as cutting back on food or medicine, living in unsafe temperatures, or risking utility shutoffs.
In Alabama, due to high energy burden,

  • 27.2% of households reduced or skipped food or medicine to pay energy costs.
  • 14.6% had to endure unhealthy indoor temperatures.
  • 11.2% received a disconnection notice.
  • 7.0% were unable to use heating equipment; 8.7% couldn’t use air conditioning.
  • Only 3.5% received energy assistance.

Check out this resource for more information on energy insecurity in the Southeast.

What This Means—and Why It Matters

  • The fact that over 33% of households in Alabama faced some form of energy insecurity signifies a serious affordability issue – especially when compared to the national average of 27%.
  • High costs + low efficiency + minimal assistance form a perfect storm of energy burden, with lower-income families bearing the brunt.
  • These burdens have ripple effects: compromised living conditions, health risks, food insecurity, and greater vulnerability during extreme weather.

What is Energy Efficiency?

Technologies (including passive solar), products, and services that reduce the amount of energy required for buildings, processes, or tasks.

Energy Efficiency and Alabama’s Utilities

According to a survey published in August 2023 by the American Council for an Energy Efficient Economy (ACEEE), none of Alabama’s utilities ranked in even the top 20 for promoting energy efficiency. Alabama Power ranked 51st out of 53 utilities, scoring just 5 points out of a possible 100 on ACEEE’s energy efficiency scorecard.

  • Alabama Power earns a rate of return, like most regulated utilities, on its infrastructure. Consequently, building new infrastructure, like gas power plants, allows them to raise consumer rates and increase profits.
  • Encouraging energy efficiency, thus reduced consumption of their product, does not fit into Alabama Power’s business model.
  • Reducing demand also reduces the need for additional infrastructure, in turn limiting profits.

Only half of Alabama’s co-op utilities offer financing programs for energy efficiency and weatherization.

By limiting access to energy efficiency and affordable upgrades, utilities are keeping bills and energy burden high.

Nonprofit Resources to Reduce Energy Burden

If you know of additional weatherization assistance programs in your area, let us know at [email protected].

Weatherization is the process of making a home more energy-efficient. This includes upgrading insulation, sealing air leaks, and upgrading heating or cooling systems to reduce energy use.

Helping You Afford Energy Efficiency Upgrades in Your Home

Alabama Power Financing Options

Alabama Power customers have access to Smart Financing. This program combines the payment for efficiency and weatherization upgrades with your monthly power bill through a process called “on-bill financing”.

Cooperative Utility Financing Programs

Municipal Utilities Efficiency Programs – TVA Region

Folks in North Alabama who purchase power from a municipal utility within TVA territory may have access to energy efficiency incentives through TVA EnergyRight.

Prioritizing Energy Efficiency When Buying a New Home

Federal Housing Administration Energy Efficient Mortgage (EEM)

Available statewide in Alabama, the FHA EEM lets you include energy-efficient improvements in your FHA-insured mortgage when buying or refinancing. Key features:

  • You don’t need to separately qualify for the improvement funds.
  • The cost of upgrades (labor, materials, energy audit) can be rolled into the mortgage up to cost‑effectiveness limits (≤ 5 % of home value or other criteria).
  • Improvements must be deemed cost-effective by a qualified energy assessor.

Veterans Affairs Energy Efficient Mortgage (VA EEM)

Similar to FHA, veteran borrowers using a VA loan can add energy-efficient upgrades to their mortgage loan package.

Conventional (Fannie Mae & Freddie Mac) Green Mortgages

Fannie Mae HomeStyle® Energy and Freddie Mac GreenCHOICE® Mortgage allow financing of energy-saving improvements (solar, insulation, HVAC, etc.) up to roughly 15 % of loan value, potentially with more flexible debt-to-income ratios for qualifying buyers.

Alabama-Specific Home Efficiency Programs

The Alabama Housing Finance Authority (AHFA) offers mortgage programs that support energy efficiency and homeownership assistance:

  • Step Up Program: Down payment assistance (3–4 % up to ~$10,000) plus a 30‑year fixed mortgage.
  • Affordable Income Subsidy Grant: A second mortgage grant (3–5 % depending on income), often paired with EEMs or USDA loans.
  • Mortgage Credit Certificate (MCC): Tax credit of up to 50 % of mortgage interest paid annually (max $2,000).

AHFA’s Step Up Plus Program explicitly targets PACE loans, EEMs, and USDA Rural Development loans, making it easier to combine assistance with energy upgrades.

Related Resources 

https://energyalabama.org/fuel-costs-decided-behind-closed-doors-we-are-taking-the-fight-to-the-alabama-supreme-court/

https://energyalabama.org/alabama-legislator-introduces-sb340-utility-disconnection-bill/

https://energyalabama.org/trump-vance-administration-fires-entire-staff-that-helps-alabamians-pay-their-energy-bills/

https://energyalabama.org/breaking-down-tva-energy-efficiency-incentives/

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