B5.9 On-bill financing
Provide additional utility incentives (such as on-bill financing) to support energy efficiency and renewable energy investments (such as rooftop solar or insulation) in buildings.
On-bill financing allows a utility to facilitate a customer’s repayment of a loan from a third party for a renewable energy or energy conservation project by adding the payments to the utility bills. On-bill financing also addresses the split incentive barrier between landlords and tenants by tying the costs of energy efficiency improvements to the meter instead of the customer. A key goal of any on-bill financing program is to maintain bill neutrality, where the bill savings from the energy project are greater than or equal to the loan payment – the energy savings fund the energy improvement. Many utilities across the country have on-bill financing programs for both residential and commercial customers.
In Washington State, Craft3 partners with NW Natural, Energy Trust of Oregon (See below), Pacific Power and Seattle City Light to finance energy upgrades. Loans range from $2,500 to as much as $30,000, and some projects are eligible for 100 percent financing. At least the NW Natural loans are repaid through the home’s utility bill. Avista and the UTC have agreed that the utility will work with its Energy Efficiency Advisory Group in developing a plan for an on-bill repayment or financing program for the utility’s residential and small business customers by the end of September 2021.
In 2019, Representative Doglio introduced HB 1642, which would have required utilities with over 25,000 customers to offer these loans to their customers. The WaClimateLeg.info website has the details about the bill, which made it out of committee in a weakened form but didn’t reach the House floor before cutoff. PSE, in the only public testimony opposing the bill, argued that it would require an extensive and expensive upgrade to utility billing systems (though the bill allowed them to recover the costs in their rates), and that they needed more time to evaluate whether the resulting energy savings would actually be “cost-effective and prudent” under I-937’s standard, so that they could count as part of their efficiency requirements under the bill’s provision for that.
Energy Trust of Oregon offers two on-bill repayment products: Savings Within Reach, for homeowners making a range of energy efficiency improvements, and Oregon On-Bill Repayment for heating and cooling improvements.
The Environmental and Energy Studies Institute’s On-Bill Financing Project tracks on-bill financing programs across the country. To date, there are over 110 utilities that operate on-bill financing programs. EESI also created a Primer for implementing an on-bill financing program.
Hawaii GEM$ Program: Launched in 2019, the Hawaii Green Energy Infrastructure Authority (HGEIA) utilizes bond financing and a utility bill fee to finance residential and commercial energy efficiency improvements. Repayment is via on-bill financing that is tied to the meter. Beginning in September 2019, financing is reserved for low- and moderate-income households making improvements such as solar, solar hot water, and heat pump water heaters, non-profits, multifamily, small business, or commercial tenants.
The National Resources Defense Council did a detailed brief five years ago about the issues in designing these programs. The Institute for Local Self Reliance did a study as well, and maintains a website with links to many resources.