New Inclusive Financing Program Puts Energy Efficiency and Beneficial Electrification within Reach for More Households in Rural Colorado

The Colorado Clean Energy Fund (CCEF), in partnership with the Tri-State Generation and Transmission Association, officially launched Electrify and Save, a new program to deliver low-cost financing to rural Colorado. Tri-State, a generation and transmission (G&T) electric cooperative, which provides power to 20 rural electric cooperatives in Colorado, secured a zero-interest loan for $75 million from the U.S. Department of Agriculture’s (USDA’s) Rural Energy Savings Program (RESP). The first two distribution cooperatives to offer Electrify and Save to their members are the San Luis Valley Rural Electric Cooperative in southern Colorado and Sangre de Cristo Electric Association in the south-central part of the state. Electrify and Save is designed to grow and expand to more Tri-State-served cooperatives in Colorado, New Mexico, Wyoming, and Nebraska. About a dozen Colorado and New Mexico cooperatives are expected to sign up in the next few months.

San Luis Valley CEO Eric Eriksen praised the effort. “The on-bill financing program is life-changing,” Eriksen said. “It removes barriers and empowers cooperative members to save with energy efficiency upgrades. These upgrades add value to their homes and put money in their pockets while improving the environment and our electrical system. It is the cooperative way—members helping members.”

Electrify and Save is an on-bill financing program that leverages a tariff—an opt-in obligation tied to a utility meter that is used to recover the costs of energy efficiency and beneficial electrification improvements over time. “Tariffed” on-bill financing programs allow utility customers to install clean energy upgrades at zero upfront cost. The customer repays the cost of the upgrades as a line-item on their monthly utility bill, which is made possible by the tariff. In the case of Electrify and Save, the on-bill financing is available to households and small businesses.

On-bill financing programs like Electrify and Save that use a tariff are especially advantageous for lower-income, rural households, who pay about 40% more of their income on energy compared to those in urban areas. To participate—and start saving money—members of participating cooperatives have to demonstrate a history of on-time utility bill payments rather than pass a traditional credit check. These programs are also generally better able to reach and deliver benefits to underserved customer segments like renters, who are often not able to participate in other utility programs. After the full cost of the upgrades is repaid, the tariff will be removed from the meter while the household or small business continues to pay lower utility bills. The combination of no-money-down financing, alternative eligibility screening, and long-term repayments results in an inclusive program design that effectively broadens access to all cooperative members regardless of their income, credit, or renter status.

Key Funding from USDA’s Rural Energy Savings Program

For participating members of cooperatives served by Tri-State, their lower monthly utility bills are made possible by the inclusive, tariff-based program design as well as the zero-interest $75 million RESP loan from the U.S. Department of Agriculture. RESP provides rural electric cooperatives and a range of other eligible borrowers with loans to launch and expand on-bill financing programs. Since its launch in 2016, RESP has loaned about $500 million to dozens of utilities, green banks, and others for programs to make clean energy more affordable in rural areas. The $75 million loan to Tri-State is the first made to a G&T electric cooperative and the largest ever for RESP, which made 10 awards for a record total of $200 million in fiscal year 2023.

The Electrify and Save application process begins when a cooperative member completes an eligibility screen based on inclusive criteria. A professional auditor then conducts an energy assessment to identify cost-effective energy efficiency and beneficial electrification measures that would deliver monthly savings as well as other benefits like improved comfort and indoor air quality. Projects can be designed to create positive net savings, resulting in lower monthly utility bills even after repayment charges and interest. Eligible measures include air sealing, insulation, duct sealing, lighting, programmable thermostats, electrical panel upgrades, electric vehicle supply equipment, air-source and ground-source heat pumps, heat pump water heaters, and battery storage that is not energized by fossil fuels.

After the project is complete, Tri-State uses RESP loan funds to pay the contractors who did the work. Then, each month for up to 10 years, the member repays the cost of the project via a utility-bill line item until it is entirely paid off. Participating cooperatives collect the repayments and pass them on to CCEF, which, in turn, sends them to Tri-State. Tri-State is then able to recycle the financing for new projects before finally repaying USDA for the RESP loan up to 20 years later.

Improving People’s Lives and Benefiting Members

“People want to make better energy choices and improve their lives,” said Eriksen. “As a nonprofit, member-owned rural electric cooperative, we provide information about energy upgrades, heat pumps, and their benefits. The on-bill financing program removes barriers to repaying the project by eliminating the upfront costs and including the repayment charge as a line item on the participant’s monthly utility bill. The member sees a lower energy bill and a more comfortable home.”

To ensure the installed measures perform correctly and deliver energy savings, CCEF facilitates the onboarding and training of contractors and energy auditors for the program. “CCEF recognizes the unique challenges of accessing both financing and a workforce that can install beneficial electrification upgrades in rural parts of the states,” said CCEF Senior Residential Manager Emily Richardson. “We believe that this unique financing mechanism, combined with our strong partnership with Tri-State [G&T], will ensure that the benefits of the energy transition are accessible to all.”

CCEF works closely with the participating cooperatives, local contractors, and community-based organizations like Energy Smart Colorado to market the program. Participating rural electric cooperatives in the program act as pass-through entities for repayments, ensure quality control, and offer support for their members. This innovative structure helps standardize program documents and marketing across the participating electric cooperatives while helping reduce program and staff burden. This will become increasingly critical as Electrify and Save expands to more cooperatives in Colorado and, especially, in surrounding states.

A key goal for Electrify and Save is to contribute to Colorado meeting its climate and clean energy goals by financing—and thereby encouraging the adoption of—cost-effective energy efficiency and beneficial electrification measures. More immediately, Electrify and Save will improve energy affordability for households and small businesses across many parts of rural Colorado. Addressing the high energy burden with inclusive on-bill financing will help rural communities in the transition to a decarbonized, clean energy economy.

This article was updated on May 17, 2024.

Author: Miguel Yañez-Barnuevo

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