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On-Bill Financing: The Easiest and Most Cost-Efficient Way For a Home Owner to Make Energy Efficient Installations

On-Bill Financing: The Easiest and Most Cost-Efficient Way For a Home Owner to Make Energy Efficient Installations

Energy efficient installations within the home can accomplish great financial and energy savings for home owners and the economy. Energy saving efforts are however faced with several barriers, key among them being the high upfront costs of retrofitting a home or building. This makes energy savings a possibility only for a few people.

It has been a complex problem trying to address the financial hurdles involved in financing energy efficiency. Governments, banks, and other lending institutions have designed a lot of financing programs in the past decade; all aimed at making energy efficiency renovations more affordable.

This has indeed been helpful for most home owners. Financing of upfront costs out of pocket would create a big dent in a home-owners savings. With properly structured energy efficiency funding, the cost is spread out over a longer period of time, thus lessening the impact on individual funds.

On bill financing gaining wider acceptance

One of the best sources of energy efficiency funding is on bill financing. This financing product leveraged on existing electricity and gas utility bills, through which customers can repay funding for energy efficiency renovations.

The reasoning behind this program is pretty simple. Home owners will always have a relationship with utility bill companies as they need these utilities to run their homes. From this premise, utility companies assist home owners to make energy efficient improvements in their homes at no upfront costs. The total cost is then billed in instalments in the monthly utility bills.

There is very low risk exposure to the utility company, as the funding only impacts the bills by a small percentage. As such, customers do not default on their credit obligations. Some renovations can achieve enough energy savings to cover the total monthly bill payments. Sometimes, customers even get utility bills that are lower than what they were paying before the investment.

energy efficient insulation

Though on bill funding programs started in the early 1990’s in the US, their popularity has only surged in the recent years as a lot of publicity has been created around energy conservation practices. At least 23 states now offer or are in the course of approving on bill funding programs.

Benefits of on-bill funding programs

No set up costs .The initial cost of making energy efficient renovations is eliminated or drastically reduced. Most home owners have every intention of running energy efficient homes, but most get stuck due to the huge funding costs.

Customers can realize immediate cash savings .The energy savings made can equal or surpass the repayment amount, and this creates immediate financial gains for home


Everyone wins. The program is a safe alternative for all involved, due to the ongoing nature of the relationship between utility bill companies and consumers

Financing can be offered in addition to other rebates the customers might be enjoying, thereby reducing the amount of financing given

As the financing is tied to the property, it makes it transferable to other tenants or if the property is sold, to other owners.

Your credit report is not so relevant to get the funding. Your history of bill payments is what matters.

The chances of defaulting are very slim as you cannot live without your utilities, therefore you will always repay.

About the author

Stephana Coon is a debt relief expert with 7 years’ experience working with debtors. Reducing expenses is one of the things she advises all her clients to do. Read more of her views on her blog to learn more.

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