Financing Energy Improvements on Utility Bills

SEE Action

Author:  Garcia, Bryan | Henderson, Philip | Copithorne, Brad | Fazeli, Sandy | Krasja, Peter | Pitkin, Jeff | Stringer, Jason

Organization:  CEFIA | Natural Resources Defense Council |Environmental Defense Fund | National Association of State Energy Officials | AFC First Financial Corporation | NYSERDA | Wisconsin Energy Conservation Corporation

Report Date: 2014



This report summarizes existing on-bill programs and program design to help policymakers and program leaders better understand the impact and potential of these programs. As of January 2014, 25 states, the United Kingdom, and Canada are operating or preparing to launch on-bill programs.

Key Take-Aways: 

  • States and utility regulators are required to meet energy efficiency savings goals but often have a difficult time securing funds for these programs.  
  • On-bill financing programs assist with financing energy efficiency upgrades like solar and demand response technology and allow consumers to repay loans via their utility bills.
  • On-bill programs leverage public, private, shareholder, and utility-bill payer funds to finance loans necessary to cover the upfront energy investment.
  • On-bill financing proponents argue that these programs are successful because customers can see savings on energy bills while repaying their loans. Some leading programs guaranteed investors against losses, enhancing the credit worthiness of the program. 
  • Researches found that on-bill program participants usually had a low default rate in part due to consequences for nonpayment. The reported low default rates could then be used to attract lower cost capital due to lower perceived risk.
  • While a variety of underwriting approaches were found to be effective in identifying creditworthy applicants, programs designed to check for utility bill repayment history only had a much higher approval rate than traditional underwriting criteria.
  • On-bill programs should be included as one of the options policymakers can use to encourage energy efficiency, expand access to capital, and help to make energy efficiency upgrades more affordable.

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