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On-bill financing refers to a loan made to a utility customer— such as a homeowner or a commercial building owner—the proceeds of which would pay for energy efficiency improvements. Regular monthly loan payments are collected by the utility on the utility bill until the loan is repaid.


On-bill finance programs may be administered by the electric utility directly or by an outside administrator (such as a state energy office, community development finance institution, or another, similar entity) in conjunction with the utility. A program may be limited to particular types of customers, such as commercial building owners, commercial tenants, or residential homeowners. 


On-bill programs are tied to utility service. Structuring loan payments to ensure bill neutrality over the life of the loan as a requirement of the program allows the loan to properly account for the borrower's utility savings over time. 


  • Costs associated with servicing loans- finding qualified customers, determining eligibility and ability to pay, managing loan program documents, and delivering funds can be a labor-intensive process.
  • Costs associated with managing and/or prequalifying contractors and solutions providers under the program. If contractor criteria and expectations are not carefully considered and clearly communicated at the outset, it may result in increased overall administrative and compliance costs under the program.
  • Compliance costs associated with ensuring alignment with federal, state and local lending laws.
  • Customer shut-off policies and procedures must be examined as a part of any on-bill financing program design at the outset and periodically reevaluated over the lifetime of the program. 



For a utility, the purpose of operating or supporting an on-bill program is to enable more customers to implement energy efficiency measures and/or to diversify the kinds and types of energy efficiency solutions in a given market. As a starting point, utilities should asses the costs of obtaining efficiency through various energy efficiency program options prior to choosing a particular program design in order to allocate resources effectively. The cost of operating a program and the efficiency produced are key inputs into this calculus. Important variables will include:

  • Customer and property types targeted;
  • Amount of the utility and/or other entity contribution(s) to the program to reduce finance charges;
  • Value associated with the customer market segment targeted under the program. 

FInance charges associated with the loans are necessary to cover the expenses of administering the program -  the cost of loan origination, the cost of capital for the lender, and the cost of loan-related services such as energy audits to assess the energy savings associated with the loan. Programs must be designed with this in mind on the front-end, and monitored throughout the program cycle to ensure that finance charges are sufficient and reasonable. 

"Stay With the Meter" - utilities and program administrators should work with the real estate industry to ensure that loans are tied to the meter. Any uncertainty regarding priority of loans under the program must be resolved prior to implementation. Otherwise, utilities, program administrators, and customers could face unnecessary risks.

A viable program must properly and consistently take into account the borrower's ability to pay, both individually and from a program portfolio perspective, in order to ensure net bill neutrality across the life of the loan program.

Utilities should determine in advance how debt under the program will be attributed - will the program go on the utility balance sheet, or will it be attributed to another entity(ies)? This may impact overall cost-effectiveness of the program.


EMV Energy Solutions supports clients and network partners by providing direct technical assistance, aggregated products like workshops and webcasts, tools and resources needed to implement successful and sustainable clean energy programs. ​​


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