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Want to install solar panels on your home, but don't think you can afford the upfront costs?
EDF is working on an innovative solution with several states, notably California, to help homeowners go green and save money on their energy bills.
What it is: In 2012, California decided to create an on-bill repayment program for commercial properties, in partnership with EDF. The program is expected to launch in the summer of 2013. We're now pushing for legislation to extend the program to all customers in the state, including homeowners.
“We’re hoping to find the sweet spot in California – a program that’s easy for customers and utilities, while unlocking private capital to fight global warming,” says Brad Copithorne, EDF Financial Policy Director.
How on-bill repayment works
Essentially, homeowners can finance energy efficiency upgrades and renewables for their homes, and pay off the debt over a long period, perhaps 15 years, through their utility bills. If the homeowner moves, the bill would “stay with the meter” – that is, the next owner or tenant would continue to pay off the loan.
Banks and other lenders like the California plan because the risk of default is low. Homeowners generally pay their utility bills, even if they’re having trouble making ends meet.
EDF recommends that in order for projects to quality for OBR, the expected utility bill must be lower than before, including the loan payments, so the homeowner is actually saving money while reducing greenhouse gas emissions.
Compelling climate benefits
The benefits of this program will go far beyond saving money on utility bills. Commercial buildings and residences account for about 40% of the nation’s energy use, and much of that energy comes from fossil fuels like coal and natural gas.
Under the Global Warming Solutions Act (AB 32), California must make homes 40% more energy efficient by 2020.
But the biggest obstacle to installing solar panels or making a house more energy efficient, for most homeowners, is financing. It typically costs $7,200 per home to get a 25% reduction in energy usage.
On-bill repayment will help homeowners clear this major hurdle. At scale, EDF estimates that OBR could help to avoid 7 million metric tons per year of global warming pollution in California. At the national level, that number reaches 200 million metric tons over the course of a decade, or about 50,000 cars off the road (based on year 2010 models).
A new engine for job creation, too
Energy retrofits to homes and commercial properties also create jobs.
Between 2010 and 2012, existing energy efficiency programs in California created between 15,000 and 18,000 jobs, according to one estimate. EDF estimates that an on-bill repayment program for homeowners will create 150,000 job-years in the state. (A job-year is a full-time job that lasts for one year.)
On the national level, EDF estimates that expanding low-cost energy efficiency financing, through programs like on-bill repayment, could boost employment job-years by 1 million over the next decade.
Prototype on-bill repayment programs are already up and running in New York and Oregon, while EDF is working to establish on-bill repayment programs in Texas, Ohio, and North Carolina.
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