On-Bill Financing for Energy Efficiency Improvements: A Review of Current Program Challenges, Opportunities, and Best Practices

Research Report E118


Casey J. Bell, Steven Nadel, Sara Hayes


High upfront costs continue to be a significant barrier to achieving potential monetary and energy savings from energy efficiency investments across the building sector.  Over the past several decades, a number of innovative energy efficiency financing program designs have emerged with the intent of reducing the upfront costs for energy efficiency improvements and assisting owners in the residential and commercial building sectors in achieving greater energy savings.  On-bill financing is a financial collection mechanism that is in many ways uniquely positioned to reduce first-cost barriers in several buildings markets, some of which have traditionally been underserved by energy efficiency finance.

The purpose of this report is to take a closer look at experience with on-bill financing programs and to analyze key elements for successful programs as well as factors that may impede the achievement of optimal results.  It also addresses current barriers to adoption of on-bill financing from utility, consumer, and financial industry perspectives, as well as ways to address these barriers, and identifies emerging trends in program implementation.