California Program Would Help Homeowners Increase Energy Efficiency, Buy Solar Panels at No Upfront Cost

Posted by Brad Copithorne on January 17, 2012
California Program Would Help Homeowners Increase Energy Efficiency, Buy Solar Panels at No Upfront Cost
Brad Copithorne.

Last week, the California Public Utility Commission (CPUC) released a proposal by Environmental Defense Fund (EDF) that, if adopted, would create the nation’s first statewide on-bill repayment (OBR) program for energy efficiency and renewable energy upgrades to be financed entirely by third parties.

EDF applauds the CPUC for its vision in taking this first step forward. A well-designed OBR program presents the opportunity to take energy efficiency to scale—in the billions of dollars—on all types of buildings without using taxpayer or ratepayer funds.

OBR is an innovative, cost-effective approach that will lead to a robust marketplace for energy efficiency lending, save energy users money, put people to work and avoid greenhouse gas pollution.

Here’s how it would work: banks and other investors would be allowed to provide loans to building owners and renters to fund energy efficiency upgrades and renewable electricity generation projects. The program can work for single-family, multi-family and commercial buildings and include a wide variety of financing techniques including loans, Energy Service Agreements, leases and Power Purchase Agreements.

Here are some of the key program features:

  • Residential projects will have to promise savings in excess of the loan repayments so participating customers see a net decline in utility bills.
  • Investments will be funded by third-parties such as banks and other financial institutions. Since loans are repaid through utility bills, low interest rates and attractive terms are expected to be available from a variety of lending institutions, from local credit unions for residential upgrades to million-dollar bank loans for commercial building overhauls.
  • Utilities will benefit from fees paid by lenders for billing services and improved results from existing energy efficiency programs.

EDF has been building a coalition of environmental groups, financial institutions, contractors, and project developers to support and/or participate in on-bill repayment programs. The feedback so far has been encouraging for many reasons.

We believe this program could spur investments in the range of $3 billion per year, creating more than 20,000 jobs.  Having the program in place for only five years would decrease annual CO2 emissions by about 7 million metric tons, the equivalent of taking more than 4 million cars off the road.

The CPUC is accepting initial comments on the proposal through January 25 and will be holding public workshops in San Francisco from February 8-10. Homeowners and building owners are encouraged to attend to learn about the program and provide feedback. A final decision is expected in April. If all goes as planned, California’s OBR program will commence in early 2013.

To learn about the state’s final decision in April, please read and subscribe to EDF’s California Dream 2.0 blog.


Brad Copithorne is an Energy and Financial Policy specialist for the Environmental Defense Fund.

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