On-Bill Financing

What is On-Bill Financing?

On-bill financing allows customers to make energy efficiency improvements without the sticker shock of paying for the new equipment all at once. Instead, the utility finances the purchase and then, recoups the cost over time through a charge on the customer’s monthly utility bill. If the program is designed properly, the monthly loan payment is equal to or less than the energy cost savings, and so the property owner shouldn’t see their monthly bills increase.

On-bill financing can be set-up in two different ways: through loans or tariffs. A loan is assigned directly to the property owner, who is obligated to pay it back even if he or she moves. By contrast, the tariff approach links the charge to the meter, meaning that whoever lives in the home or owns the business is responsible for repayment. If the original customer moves, the new occupant takes over payments.

The tariff approach allows for a longer payment term and therefore, lowers monthly costs. Renters may also be able to participate in tariff-based financing because they only pay for the measures, while they benefit from them.

While on-bill financing is convenient for customers, it sometimes complicates billing for the utility and may require cost-prohibitive upgrades to the billing system. Resources in this section share both successful attempts and those that didn’t make it to market.