Inclusive Financing Summary & Resources

Inclusive financing programs are a real win-win-win that electric co-ops could do to better serve their members with cost-effective upgrades to members' homes paid for on their bill with no loan or upfront cost, millions in local economic development, increased customer satisfaction, and lowered peak electricity use.  Rural electric cooperatives in Kansas, Kentucky, North Carolina, Tennessee, and Arkansas have implemented tariffed on-bill energy efficiency upgrade programs with great success investing tens of millions of dollars in energy efficiency and upgrading hundreds of homes, apartments, and businesses.  Starting in 2019, electric co-ops are also using inclusive financing to increase access to solar energy:  "...through Ouachita Electric’s HELP PAYS Program, members can finance up to 80% of the annual kilowatt hour savings generated by the solar system" from OECC's solar webpage.

Inclusive financing is a type of on-bill financing (OBF). OBF is a way to finance energy efficiency (and renewable energy) upgrades through a monthly charge on your energy bill. This reduces or eliminates the need for an upfront payment and high credit scores often needed for energy efficiency loan programs. Learn more from an overview by Appalachian Voices. Additional resources and case studies on OBF are available from the Environmental and Energy Study Institute (EESI).  And Clean Energy Works has a wealth of knowledge on PAYS.

As of August 2019, there is a great overview of On-Bill Tariffed programs produced as an Issue Brief by the Department of Energy's Clean Energy for Low-Income Communities Accelerator (CELICA). And in late 2019 this article was authored by Clean Energy Works and published as part of the Behavior, Energy and Climate Change Conference including summary data from many PAYS programs. You can also find more information and links about on-bill tariffed financing below.

What characteristics would an ideal OBF program have? (via Appalachian Voices)

In general, the characteristics of an ideal on-bill financing program for home energy efficiency would include:

  • a low interest rate, typically in the range of 0-5%
  • sufficient financing to cover a comprehensive set of improvements and appliance upgrades, preferably up to $10,000 or more
  • a repayment period of 10 to 15 years
  • certified savings from efficiency improvements, with the savings equaling or exceeding the amount repaid by the customer on an annual basis
  • repayment of the efficiency investment on the customer’s monthly utility bill
  • the use of a customer’s bill payment history in lieu of a credit check when determining borrower eligibility

Pay As You Save: Inclusive On-Bill Financing or Debt-Free On-Bill Financing

Programs set up with a Pay As You Save voluntary tariff are connected to the electric meter (instead of being financed through a consumer loan) and paid back through on-bill financing. These inclusive financing programs are more accessible and generate a higher number of and larger investments in energy efficiency than loan programs.

More In-Depth Information/Resources for Utilities

Examples of PAYS® Programs at Electric Co-ops

See links to additional resources below including short videos & a webinar series on inclusive financing. 

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