inclusive-financing-programs-for-solar-and-electrification

This research paper examines on-bill financing programs as a tool to increase energy equity and clean energy adoption in rural, low-income, and under-resourced communities. It highlights how these programs remove barriers to entry by eliminating upfront costs and replacing traditional credit checks with utility bill payment history. Through case studies of the Hawaii GEM$ and OPALCO Switch It Up! programs, the paper demonstrates how tying financing to the utility meter rather than the individual allows renters and low-income homeowners to access solar PV and beneficial electrification projects while achieving net monthly energy savings.

• On-bill financing programs increase energy equity by removing financial barriers for low- and moderate-income (LMI) households, specifically by requiring no upfront payments and utilizing alternative underwriting. Instead of traditional credit scores or income verification, eligibility is based on a history of on-time utility bill payments, typically for the prior twelve months.
• A critical design feature for promoting equity and solving the 'split incentive' issue for renters is tying the financing obligation to the utility meter rather than the individual. This allows the repayment charge to transfer to subsequent owners or renters, making clean energy upgrades viable for the 44 million renting households in the U.S.
• The Rural Energy Savings Program (RESP), a no-interest loan program from the USDA's Rural Utilities Service, provides essential capital for rural utilities to launch on-bill financing. To date, the USDA has loaned over $80 million to 22 rural utilities across 14 states to support these initiatives.
• The Orcas Power and Light Cooperative (OPALCO) 'Switch It Up!' program in Washington focuses on beneficial electrification, such as replacing propane-fueled equipment with electric heat pumps and installing EV charging stations. Capitalized by a $20.8 million RESP loan, the program aims to finance 100 projects annually for 10 years, with a low interest rate of 2%.
• The Hawaii Green Energy Money Savers (GEM$) program, funded by the state's green bank, provides financing for solar PV and energy efficiency for LMI customers of Hawaiian Electric Companies (HECO). The program requires participants to demonstrate a minimum 10 percent net monthly energy savings to ensure a positive cash-flow experience.
• To mitigate risk and protect participants, innovative on-bill programs implement loan loss reserves (LLR). In the GEM$ and OPALCO programs, these reserves are triggered after three consecutive billing cycles (90 days) of non-payment, allowing the utility to write off the investment while the participant retains the equipment.

APA

Yañez-Barnuevo, M. (2021). inclusive-financing-programs-for-solar-and-electrification. Environmental and Energy Study Institute. https://www.eesi.org/papers/view/inclusive-financing-programs-for-solar-and-electrification

Chicago

Yañez-Barnuevo, Miguel. inclusive-financing-programs-for-solar-and-electrification. Environmental and Energy Study Institute, 2021. https://www.eesi.org/papers/view/inclusive-financing-programs-for-solar-and-electrification.

Wikipedia

{{cite report |last1=Yañez-Barnuevo |first1=Miguel |title=inclusive-financing-programs-for-solar-and-electrification |publisher=Environmental and Energy Study Institute |date=12 February 2021 |url=https://www.eesi.org/papers/view/inclusive-financing-programs-for-solar-and-electrification |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{yaezbarnuevo2021inclusivefinancingprogramsforsolarandelectrification, author = {Yañez-Barnuevo, Miguel}, title = {{inclusive-financing-programs-for-solar-and-electrification}}, institution = {Environmental and Energy Study Institute}, year = {2021}, month = feb, url = {https://www.eesi.org/papers/view/inclusive-financing-programs-for-solar-and-electrification}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }