On-Bill Financing: Cost-Free Energy Efficiency Improvements

15

MARCH, 2016

Although there is a strong business case for using energy-efficient technology, a significant barrier to its adoption is the initial cost of new appliances, HVAC systems, furnaces, insulation, lighting or weatherization. On-bill financing allows customers to overcome cost barriers by providing financing for these upgrades, which are then paid over time via charges on their utility bill.

On-bill financing programs may require “bill-neutrality,” meaning energy-efficiency efficiency savings on monthly bills must be greater or equal to a customer’s loan payments. This approach provides customers with efficiency upgrades at no added cost, since the expected energy savings from efficiency improvements are greater than the on-bill finance costs. Default rates have been found to be lower than with other loans, making them lower risk for lenders—customers may be more likely to make payments as they appear as part of their gas or electricity bill. Policymakers have encouraged on-bill financing programs in a number of states by authorizing the use of public benefits funds for these programs, creating pilot programs or requiring utilities to adopt an on-bill financing program.”

Read more of what NCSL has to say about this at: http://www.ncsl.org/research/energy/on-bill-financing-cost-free-energy-efficiency-improvements.aspx

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