HOW TO SCALE HOME ENERGY FINANCING PRODUCTS

This briefing by the Rocky Mountain Institute (RMI) analyzes the landscape of home energy financing in the United States, identifying barriers to scaling both traditional and nontraditional lending products. It argues that the ease of origination and the timing of home improvements are more significant drivers of consumer choice than interest rates or loan terms.

• Home energy improvements are identified as the primary unmet demand for homeowners in the U.S., driven by three main barriers: the complexity of determining necessary improvements, a shortage of qualified professionals for integrated services, and difficulties in securing financing for deep improvements.
• Consumer selection of financing products is not primarily driven by interest rates or terms. Instead, the choice is better predicted by the timing of the project, the consumer's awareness of available products, and the ease of the origination process.
• The timing of home improvements significantly influences the type of financing used. While 53% of homebuyers start projects within three months of purchase, these are typically cosmetic (e.g., kitchens). Major energy efficiency improvements are more frequently triggered by the failure of critical equipment, such as air conditioning or heating units.
• A large portion of Americans currently use low-efficiency financing methods for home improvements; 58% use savings, 18% use credit cards, and 17% use home equity lines of credit. This suggests a significant market opportunity for financing models that improve consumer financial health while meeting energy goals.
• Nontraditional financing products, such as on-bill and residential PACE, face scaling barriers due to a lack of standardization and the need for state-level legislative or regulatory enablement. This results in high transaction costs and difficulty in accessing well-capitalized secondary markets.
• Traditional lending products suffer from low adoption rates due to a lack of dedicated sales forces, complex manual underwriting, and low consumer awareness. The Fannie Mae HomeStyle Energy Loan is cited as an improvement because it is compatible with automated systems like Desktop Underwriter.

APA

Campbell, M. (2017). HOW TO SCALE HOME ENERGY FINANCING PRODUCTS. RMI. https://rmi.org/app/uploads/2017/03/Insight-brief_HomeEnergyFinancingV3.pdf

Chicago

Campbell, Martha. HOW TO SCALE HOME ENERGY FINANCING PRODUCTS. RMI, 2017. https://rmi.org/app/uploads/2017/03/Insight-brief_HomeEnergyFinancingV3.pdf.

Wikipedia

{{cite report |last1=Campbell |first1=Martha |title=HOW TO SCALE HOME ENERGY FINANCING PRODUCTS |publisher=RMI |date=March 2017 |url=https://rmi.org/app/uploads/2017/03/Insight-brief_HomeEnergyFinancingV3.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{campbell2017how, author = {Campbell, Martha}, title = {{HOW TO SCALE HOME ENERGY FINANCING PRODUCTS}}, institution = {RMI}, year = {2017}, month = mar, url = {https://rmi.org/app/uploads/2017/03/Insight-brief_HomeEnergyFinancingV3.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }