EESI’s On-Bill Financing Project: A History of Making Energy More Affordable for Rural Households

Many rural households face significant energy affordability challenges. Due to inefficient housing stock, households in rural areas face higher energy burdens than their urban counterparts—on average, they spend 40% more of their incomes on electricity and gas bills. Extreme heat and severe weather like winter storms, hurricanes, wildfires, and flooding disproportionally impact rural communities across the country and are exacerbated by climate change. Energy efficiency measures could help reduce energy use and save rural households money, but remote areas also pose workforce challenges such as the difficulty of training and maintaining robust contractor networks to handle hundreds of energy-efficient installations.

There are more than 900 rural electric cooperatives, serving 42 million people, and 2,000 public power utilities in the United States, all operating on a not-for-profit basis. Combined, they deliver power to 26% of U.S. households. Co-ops also serve 92% of all persistent-poverty counties.

The challenges are daunting, but rural electric cooperatives (co-ops) and public power utilities can help their communities. Rural communities across the United States are mostly served by co-ops, member-owned nonprofit organizations created in 1935 to help electrify rural households and farms (for-profit utilities were reluctant to invest in sparsely populated rural areas).

Rural electric co-ops are integral to their communities and do their best to deliver member services to help households manage their energy consumption. Yet these utilities often face financial and human-capacity constraints that impair their ability to develop and administer energy efficiency programs. And even when an energy efficiency program is available, it can be difficult for families to afford the upfront cost of improvements that deliver savings after installation.

THE APPEAL OF ON-BILL FINANCING

In general, on-bill financing programs feature no upfront costs, no credit score requirements, a tariff tied to the meter for repayment, a consolidated monthly bill, utility bill payment history for screening, and a positive cash flow experience for participants—all aimed at improving energy affordability and increasing access to capital for energy-saving projects. On-bill financing programs develop and train energy efficiency contractors to install better heating and cooling systems and insulation in homes and businesses. Using a utility “tariff” as a repayment mechanism is central to the OBF programs that EESI has championed to expand access to energy-efficiency and clean-energy upgrades for underserved communities. A utility “tariff” is an opt-in obligation placed on the participating customer's meter to recover the costs of clean energy projects installed at the premises, and it appears as a line item on the monthly utility bill. The tariff goes by many other names, such as “energy conservation charge,” “on-bill obligation,” or “service fee.”

On-bill financing (OBF) programs are an example of how a rural electric co-op can deliver energy efficiency as a member service while helping households manage the cost to participate. OBF programs offer low-cost financing for energy efficiency measures, beneficial electrification projects, and clean energy upgrades. Installing these upgrades leads to lower energy costs, improved comfort and resilience, better indoor air quality, and reduced greenhouse gas emissions. The key benefit of OBF programs is the opportunity to repay the financing over time via a utility bill line item. And during repayment and for years after, the participating household saves money even after the financing charge. Once the upgrades are paid off, the monthly savings increase even more.

 

2010–2014: Genesis Phase

In 2010, the Environmental and Energy Study Institute (EESI) launched its OBF Project and provided extensive technical assistance to help rural electric co-ops and other utilities and stakeholders develop and launch programs that reduce energy costs for households and small businesses. Most EESI-supported OBF programs have funded cost-effective energy efficiency retrofits, appliance and equipment replacements, and weatherization. Several others have expanded into financing electric vehicle supply equipment, solar photovoltaic panels, and battery storage systems.

It all started with Help My House, which the Electric Cooperatives of South Carolina (ECSC) began as a pilot in 2011. EESI met ECSC through our federal policy work to advance climate solutions in rural America. One of our early contributions to Help My House was the creative suggestion that the rural electric co-ops apply for $750,000 from the U.S. Department of Agriculture's (USDA's) Rural Economic Development Loan and Grant Program. With these funds, four ECSC members piloted Help My House and delivered average net annual savings of $288, after repayment charges, to 125 participating households. EESI documented these results in a report based on weather-normalized data, demonstrating 34% lower utility bills from cost-effective energy-efficiency measures. Following this success, Help My House evolved into a full-scale program in 2013.

 

2014–2019: Start and Growth of the Rural Energy Savings Program

The success of the Help My House pilot revealed a need for more federal support for other rural electric co-ops that wanted to offer OBF programs to their members. Working closely with Rep. Jim Clyburn (D-S.C.), EESI was instrumental to the original authorization for the Rural Energy Savings Program in the 2014 Farm Bill. USDA began accepting RESP applications in 2016. Eventually, RESP would become a primary source of capital to establish OBF programs for dozens of eligible borrowers.

The USDA Rural Utilities Service administers RESP, which provides zero-interest loans to rural electric co-ops, municipal utilities, state agencies, and financing institutions that serve areas with populations under 50,000. Eligible borrowers apply for RESP loans and use the proceeds to capitalize OBF programs. As financing is extended to households and businesses and repaid over up to 10 years, the borrower also repays USDA. To date, no borrower has defaulted on a RESP loan.

Help My House was one of the first OBF programs to access RESP when it secured a $13 million loan (through KW Savings) to expand the pilot. Today, Help My House is offered by seven rural electric co-ops in South Carolina and has financed $12 million in energy efficiency upgrades across 1,200 projects.¹ EESI leveraged its experience with Help My House and RESP to help other eligible borrowers make use of this essential federal program.

EESI assembled significant technical assistance resources to make applying for RESP as easy as possible. EESI posted application templates and other sample program documents on our website along with detailed guides with advice for navigating the program. Especially in the early years, EESI was responsible for considerable outreach to raise awareness of RESP with rural electric co-ops and other eligible borrowers. We also developed channels with USDA to discuss feedback and brainstorm program improvements that the agency and Congress could consider to strengthen the program and help more and more households benefit from affordable energy efficiency measures.

Interest in RESP spread to other parts of the country. One early RESP beneficiary was the Hawaii Green Energy Money Saver (GEM$) OBF program. The Hawaiʻi Green Infrastructure Authority (HGIA), which functions as the state’s green bank, had $150 million in bond funds and needed to develop a financing mechanism to expand access to residential solar for low- and moderate-income households. EESI connected with HGIA at a conference and quickly became a key partner, offering extensive program templates, advice (especially about alternative underwriting criteria to allow more households to participate), and moral support to launch an ambitious OBF program.

The urgency behind GEM$ was significant. Electricity costs in Hawaii are the highest in the country at $0.40 per kilowatt-hour—double the national average. Hawaii also relies heavily on fossil fuels: 61% of the state's electricity is generated by burning oil, compared to 22% from solar. Rebalancing the energy mix in favor of more cost-effective renewable energy was an economic and environmental imperative. GEM$ was also a pioneer in using utility bill payment history rather than credit scores to screen households (including renters) interested in participating, improving program accessibility and advancing clean energy equity.

With support from EESI, HGIA applied for and secured $20 million from RESP soon after green banks were added to the list of eligible borrowers in 2020. GEM$ has since financed more than 1,100 clean energy projects totaling upwards of $109 million.¹ GEM$ is the most successful RESP-funded OBF program to have received EESI technical assistance.

At the same time, EESI was active on Capitol Hill, working with champions and appropriators to provide annual funding for RESP. RESP is good value for taxpayers. Each dollar approved by Congress pays for a credit subsidy and is leveraged by up to 10 times by USDA. EESI is the leader of a coalition of advocates who ensure that policymakers learn about RESP success stories from South Carolina, Hawaii, and other states and understand the potential for rural electric co-ops to deliver savings, comfort, and other benefits to households by offering OBF programs.

 

2019–2022: OBF Expansion into Beneficial Electrification

Of the 121 million households in the United States, over 50% were using propane, fuel oil, or inefficient electric baseboards for heating as of 2021. Switching to better electric heating methods, including electric air-source heat pumps and water heaters, reduces costs and greenhouse gas emissions. Starting around 2019, EESI began to notice that rural electric co-ops accounted for a significant share of attendees at conferences organized by the nonprofit Beneficial Electrification League. This led to the realization that new educational resources could help meet the specific information needs of utility program managers who wanted to develop accessible energy efficiency programs but lacked buy-in from executives and boards of directors to offer new member services like OBF that would make electrification measures more affordable.

EESI began work on the Beneficial Electrification Toolkit, which was eventually launched as a comprehensive resource in 2022. The Toolkit was envisioned as a free, dynamic, “one-stop-shop” online resource to turn general interest in electrification into successful programs. EESI designed the Toolkit as a guidebook, starting with the basics, providing advice and technical resources, and eventually leading rural electric co-ops to USDA to apply for RESP funds to capitalize their OBF programs.

The timing of the Toolkit's development aligned with expressions of interests from several utilities. EESI began working closely with Orcas Power and Light Cooperative (OPALCO), a rural electric co-op in Washington state, that was developing Switch It Up!, an OBF program for heat pumps and other beneficial electrification measures. For two years, EESI fielded questions about OBF program design, offered ideas for engaging local contractors, and ultimately contributed to the launch of a very successful program. In particular, OPALCO benefited from access to our extensive utility network. OPALCO used program templates and “energy conservation charge” documents from Help My House to develop tariff and application documents that met its needs, ensuring that upgrades would be repaid through an “energy fee” that appears as a utility bill line item.

EESI also helped OPALCO apply for and secure more than $40 million from RESP. Switch It Up! has expanded to include energy-efficiency measures, fiber-optic cabling, battery storage systems, and residential and community solar. To date, Switch It Up! has financed improvements worth more than $31 million across 1,110 projects, making it the second-largest EESI-supported OBF program.¹

 

2022–2025: OBF Project Matures and Launches into the Future

By 2024, the EESI OBF Project had matured significantly, with programs like GEM$ and Switch It Up! expanding to provide millions of dollars in low-cost financing for cost-effective clean energy upgrades. EESI was actively helping rural utilities of all types and sizes apply for and secure zero-interest RESP loans to capitalize full-scale OBF programs. Increasingly, EESI was working closely with green banks seeking to become OBF program administrators. They wanted to bring all the pieces together—from contractors to marketers—to help participants realize significant savings from lower utility bills.

Green banks became critical partners for OBF programs. Green banks are well positioned as intermediaries between RESP and other sources of low-cost capital and utilities. Partnering with green banks allows rural electric co-ops to offload financial services to financing experts. Utilities can then avoid unwanted risks, which can be further mitigated by loan-loss reserves and other credit enhancements set up by the green bank, and concentrate on delivering energy-saving measures to residential and small commercial customers.

In 2024, EESI assisted with the launches of two OBF programs administered by green banks. For the first, in Vermont, EESI worked with state energy officials to develop the Weatherization Assistance Repayment Program (WRAP). WRAP was the first-ever statewide OBF program, encompassing five utility service territories and reaching 84% of the state’s population. EESI helped connect stakeholders in Vermont with Switch It Up!, GEM$, and Help My House contacts who could share firsthand experiences about the challenges of launching big OBF programs. The complexity of WRAP called for one organization to take on a leadership role. EESI supported the Vermont Housing Finance Authority as it took on administrator responsibilities, effectively becoming the proverbial glue holding all the program elements together. EESI also assisted the Vermont Bond Bank with a successful application for a RESP loan worth $40 million in part to capitalize WRAP.

The second green bank OBF program, in Colorado, involved the Collective Clean Energy Fund (CCEF) partnering with the Tri-State Generation and Transmission Association to develop the Electrify and Save OBF program for energy efficiency and beneficial electrification. Electrify and Save is currently available to members of eight Colorado rural electric co-ops. But Electrify and Save has the potential to become a truly regional program offered by dozens of co-ops served by Tri–State in Nebraska, New Mexico, and Wyoming.

CCEF borrowed our expertise and experience with other OBF programs to secure necessary buy-in from Tri-State. EESI became a trusted resource, answering questions and providing templates for loan documents and tariffs over the course of dozens of calls and other interactions. Knowing how important contractors—the workforce of energy efficiency—would be to the success of Electrify and Save, EESI leveraged our knowledge about Help My House and other programs to suggest approaches to educate and incentivize energy auditors and installers.

With assistance from EESI, Tri-State secured a $75 million RESP loan, the largest ever approved by USDA. Tri-State was the first generation and transmission co-op to receive RESP funds (most rural electric co-ops do not generate electricity but purchase it from elsewhere). Tri-State will make the RESP capital available to rural electric co-ops, setting an important example for other regional utilities to follow to quickly reach scale and deliver maximum benefits. In less than two years, Electrify and Save has financed 103 projects totaling about $2 million in rural Colorado.¹

Also in 2024, EESI provided assistance to another groundbreaking OBF program. The state energy office of the U.S. Virgin Islands became the first such office to offer OBF when it launched the Solar+ Financing Pilot Program (SPF) for residential solar and battery storage. EESI connected the state energy office with contacts who had relevant experience developing GEM$ and Power+, a program offered by Holy Cross Energy in Colorado. These conversations helped inform SPF program design, funding, and contractor training. SPF, which is also the first OBF program in a U.S. territory, has financed solar and battery storage projects totaling more than $1 million.¹

 

Conclusion

EESI ended the OBF Project at the end of 2025 and no longer offers technical assistance. OBF programs across the country have grown from small demonstration pilots to regional programs reaching millions of rural households and small businesses. EESI was instrumental in this immense growth and helped position OBF to continue to expand into new utility service territories.

Over the course of 16 years, EESI helped launch 42 OBF programs by providing technical assistance to rural electric co-ops, green banks, and other organizations across 22 states and territories, including Colorado, Hawaii, South Carolina, the U.S. Virgin Islands, Vermont, and Washington state. The OBF Project has facilitated financing for more than 5,000 clean energy projects totaling more than $185 million. Energy-efficient homes with beneficial electrification measures deliver lower energy costs, improved comfort and resilience, better indoor air quality, and reduced greenhouse gas emissions. That's a win-win-win-win situation for OBF program participants, as well as the rural electric co-ops working to serve their members and communities.

EESI will continue to be the lead advocate for RESP, which is set to be reauthorized when Congress takes up the next Farm Bill. To date, RESP has awarded nearly $600 million in loans for clean energy upgrades. Rural households and small businesses in 28 states, mostly served by rural electric co-ops, have directly benefited from this federal investment. EESI has assisted 25 eligible borrowers apply for and secure over $320 million in RESP loans—more than half of the total—to capitalize OBF programs. RESP has also created hundreds of net direct, indirect, and induced jobs in rural areas, and RESP-capitalized OBF programs are expected to generate hundreds more.

 

Author: Miguel Yañez-Barnuevo

 

1. These numbers were obtained during conversations between the author, Miguel Yañez-Barnuevo, and the respective program managers.