Paying for energy-efficiency improvements through utility bills
A recent study by the American Council for an Energy-Efficient Economy - “On-Bill Financing for Energy Efficiency Improvements: A Review of Current Program Challenges, Opportunities, and Best Practices” - finds that on-bill financing, which allows customers to pay for energy-efficiency investments though utility bills, is becoming more widely available across the country and extending opportunities to historically underserved markets such as rental, multifamily buildings and small businesses. There is also potential for credit-constrained customers to gain access to financing through modified underwriting that takes bill payment history into account.
Energy-efficiency loan programs such as on-bill financing are a low-risk investment, the ACEEE report says; default rates for on-bill programs are frequently less than 2%. There is evidence to suggest that customers tend to prioritize the payment of utility bills, which contributes to low default rates.
This comes at a time when utility companies are increasing their energy-efficiency program budgets. A recent study by the Consortium for Energy Efficiency - “State of the Efficiency Program Industry: Budgets, Expenditures and Impacts” - shows that total gas and electric budgets in North America reached $9.1 billion last year, an increase of 21% from 2010. Across sectors, customers saved a total of $13.3 billion off their bills, topping 2010. Since 2007, U.S. and Canadian electric and gas efficiency program budgets have grown from $3.7 billion, despite a weak economy.
The report states that since 2007, electric budgets have increased 144% and electric savings have increased 80%. Gas budgets increased 160%, while gas savings soared 453%.