In the quest to transform the use of electricity in the United States, efficiency measures face some of the same obstacles to widespread adoption as their green-energy cousin, renewable power. In particular, cost is the great inhibitor. In the same way that otherwise interested homeowners spurn solar panels because of the high installation costs, many homeowners also shy away from upgrades and retrofits that will save them power and money in the long run because they are too expensive to install.

Recognizing this challenge, the federal government has stepped up to make improvements more affordable to average homeowners. In November, Vice President Joe Biden and Shaun Donovan, Secretary of Housing and Urban Development (HUD), announced a new pilot program that will offer credit-worthy borrowers low-cost loans to make energy-saving changes to their homes.

The program was hatched by the Recovery Through Retrofit initiative, which was launched in May 2009 by the vice president’s Middle Class Task Force. The initiative’s goal was to create federal actions that expand green job opportunities and energy savings by encouraging greater home energy efficiency across the country. The loan program is the direct result of a collaborative effort between HUD and the Federal Housing Administration (FHA), which are participants in the multiagency effort.

The so-called PowerSaver loans will offer homeowners up to $25,000 to make energy-efficient improvements of their choice. The range of eligible improvements include the installation of insulation, duct sealing, doors and windows, HVAC systems, water heaters, solar panels, and geothermal systems.

The loans will be issued by private lenders that are selected to participate in the program, and they will be backed by FHA for up to 90 percent of the loan amount in the event of default. Lenders will retain the remaining risk on each loan. HUD has published a notice seeking the participation of a limited number of mortgage lenders in the two-year pilot program, which is slated to begin in early 2011.