On-Bill Financing Programs: Overview and Key Considerations for Program Design

On-bill financing programs are a promising way for utilities to help customers invest in energy efficiency improvements, such as adding insulation, installing new lighting, or upgrading to a high-efficiency air conditioner. These improvements can reduce utility bills, improve the value of the property, create new jobs, and deliver efficiency to the utility, which works to lower energy bills for everyone and reduce pollution. Because efficiency delivers so much value, many cities, states, and utilities are seeking innovative ways to help customers invest to improve the efficiency of houses and buildings.

The potential of on-bill programs to enable efficiency investments has persuaded many utilities, regulators, and other stakeholders to explore whether to implement new on-bill programs, expand existing programs with more funding, and recruit financial institutions and other investors to potentially fund on-bill loans.

The purpose of this issue brief is to explain why on-bill programs are promising and to describe key benefits and challenges utilities and other program administrators should consider when exploring an on-bill program. By taking stock of these considerations on-bill programs may be tailored to the customers most likely to use them to invest in efficiency and operated in a way likely to provide cost-effective efficiency for the utility and its customers.