On-bill financing

On-bill financing and on-bill repayment programs provide two options for property owners to pay for investments in clean energy upgrades through their utility. While electric utilities and natural gas companies typically run on-bill programs, there is an opportunity for state and local governments to capitalize on new on-bill loan funds and/or provide credit enhancement47for existing on-bill funds. Depending on the programs available in a given jurisdiction, some government entities may also be able to take advantage of on-bill programs to finance projects for their own facilities.

On-bill financingallows the utility to incur the cost of the clean energy upgrade, which is then repaid on the utility bill. On-bill repaymentoptions require the customer to repay the investment through a charge on their monthly utility bill as well, but with this option, the upfront capital is provided by a third party, not the utility. Additionally, on-bill repayment allows for a streamlined process as utilities already have a billing relationship with their customers, as well as access to information about their energy usage patterns and payment history. In some on-bill repayment programs, the loan is transferable to the next owner of the home or building.33

Advantages and disadvantages of on-bill financing



  • Savings are paired directly with repayment on the same bill
  • Can be structured to meet the needs of different markets
  • Provides a secure revenue stream because failure to pay can be tied to disconnection
  • Can use past bill repayment as a proxy for credit
  • Utilities are often reluctant to take on role of financing entity; potential exposure to consumer lending laws and alterations to billing systems are required
  • Can be complicated to set up
  • If transferability is not allowed, businesses or homeowners must pay off entire loan upon sale of property, which could result in not all of the energy savings being realized

As the successful example of on-bill financing the implementation of the UK Green Deal is often cited when loan facility that can last for 25 years and can be repaid on via a charge on an energy bill. It is a standardization of measures and loan contracts, which several UK local authorities set up in collaboration with private delivery partners.34

On-bill financing scheme