Investments in Rural Clean Energy Are Putting People to Work

More than 1,000 households in rural South Carolina pay less for energy each year thanks to Help My House, an on-bill financing program administered by KW Savings and the Electric Cooperatives of South Carolina, Inc. These savings—hundreds of dollars per year per home—add up over time, and make other necessities easier to afford. The program, which started as a pilot offered by several rural electric cooperatives in 2011, inspired Congress—led by U.S. Rep. Jim Clyburn (D-S.C.)—to authorize and fund zero-cost loans to expand on-bill financing across the country.

The resulting Rural Energy Savings Program (RESP) is administered by the U.S. Department of Agriculture (USDA) and offers no-interest loans to rural electric cooperatives and other eligible borrowers to capitalize on-bill financing programs. In the decade since RESP was established by the 2014 Farm Bill, as word spread about the appeal of zero-interest loans, 43 rural electric cooperatives like those in South Carolina, green banks, and others have secured more than $500 million for on-bill financing programs. Hundreds of households and small businesses from Hawai’i to Massachusetts participate each year. And for each program, the bottom line is straightforward: installing cost-effective energy efficiency, beneficial electrification, and clean energy measures saves people money.

It is relatively easy to say with confidence that RESP-capitalized on-bill financing programs result in lower energy costs for participants because there are “before” and “after” bills to prove it. For example, when evaluators conducted an analysis of Help My House participants in 2013, they found that annual household utility bill savings averaged about 35% (about $1,100). More recently, when evaluators revisited Help My House, they determined that these benefits have persisted for a decade and still delivered average annual savings of 23%. Anecdotally, participants also report real quality-of-life benefits, such as “I would not be in the home if I did not get the Help My House loan.”

Now, for the first time, we can also estimate the overall economic benefits attributable to RESP in another straightforward bottom line: this program creates jobs in rural areas. According to a new economic analysis conducted by John A. “Skip” Laitner, noted economist and founder of Economic and Human Dimensions Research Associates, RESP has created almost 700 net jobs in rural areas through 2023 and is on track to sustain about 15,000 by 2040.

Laitner created a model using national economic impact data based on key inputs, including annual appropriations for RESP, annual loan amounts, typical loan drawdowns by rural utilities, and typical repayment terms. A more detailed explanation of the analysis and summary of assumptions is provided in a companion article at www.eesi.org/respanalysisdetails. Laitner is an active member of the EESI Advisory Board, and the analysis was conducted in close collaboration with the authors of this article.

Almost half of all RESP awards to date were approved in 2023. Demand for RESP is higher than ever before, and the application pipeline could support $100 million or more per year in the near term. Most economic benefits from RESP loans are just beginning to materialize because it takes time for USDA to disburse funds to borrowers and then for those borrowers to offer on-bill financing to households and businesses. But it is already clear that RESP is creating jobs—about 265 net direct, indirect, and induced jobs in 2023. RESP-capitalized on-bill financing programs are expected to generate another 340 jobs in 2024 and 555 in 2025.

"These returns may seem small in one sense," explained Laitner. "Yet, if we expand the idea to encourage much greater investments in energy efficiency, and if those larger investments reduce electricity costs by 10% throughout the entire United States, that could support more like 330,000 net new jobs for the American economy."

As with the energy savings, the job creation is corroborated by the real-life experiences of on-bill financing program administrators in South Carolina and beyond. “We have long known the Rural Energy Savings Program pays dividends by reducing energy consumption, shrinking power bills, and improving the quality of life of the homeowners who take part,” said Mike Couick, CEO of the Electric Cooperatives of South Carolina, which piloted Help My House with RESP support more than a decade ago. “What we have learned recently about RESP’s economic benefits only adds to the urgency for greater federal support for the program.”

As RESP has led to more on-bill financing programs, the benefits are spreading to other parts of the country. “USDA’s RESP loan program provides our members with an actual solution to combat skyrocketing energy pricing,” said Foster Hildreth, general manager of Orcas Power and Light Cooperative (OPALCO), a Washington state rural electric cooperative that has received $47 million in RESP loans. “Our member-owners can now keep future energy bills lower by upgrading their homes with energy-efficient projects like ductless heat pumps, windows, insulation and even solar, without having to obtain a second mortgage.”

The clean energy sector employs millions of people in the United States, including hundreds of thousands in capital-intensive renewable energy deployment. RESP delivers benefits at a smaller, more local scale. Several hundred jobs may not sound like a lot, but these employment opportunities are concentrated in just a few dozen rural areas that have access to RESP-capitalized on-bill financing programs. Furthermore, the homeowners and renters who typically rely on on-bill financing programs have limited incomes and inadequate access to low-cost loans. RESP effectively helps rural electric cooperatives address high energy burdens with affordable financing for cost-effective investments in energy efficiency, beneficial electrification, and clean energy that would otherwise not be possible. Without RESP, energy bills would remain too high for too many people, and these jobs likely would not exist.

Looking ahead, the job creation benefits of RESP will increase—adding hundreds more each year—after the big spike in RESP applications in 2023 and the large number of applications in the pipeline driven by increasing demand for zero-interest loans from rural electric cooperatives and other eligible borrowers. The most critical determinant of success going forward is how much RESP activity USDA can support, which is a function of annual appropriations from Congress. RESP loans are leveraged, so each dollar of federal funding facilitates zero-interest loans worth about 10 times more. For example, in FY 2024, USDA only has funding of $5 million to leverage about $50 million in RESP loans—or less than half the total demand in pending applications. Even a modest increase in appropriations would have an outsized, positive impact on rural homeowners and renters, as well as on the skilled workers who install energy efficiency, beneficial electrification, and clean energy measures.

In addition to the monetary benefits realized by participating homeowners and renters, measures financed by on-bill financing programs also make houses more comfortable, healthier to live in, and more resilient to weather impacts. From a utility perspective, these programs reduce peak demand, which helps alleviate stress and strain on the electric grid. This new analysis of the economic contributions of RESP to rural economies adds another dimension to our understanding of how on-bill financing programs create more opportunities for good things to happen. It all started in South Carolina, and this new analysis shows that the path charted by Help My House is putting people to work by delivering meaningful energy savings.

Authors: Daniel Bresette and Miguel Yañez-Barnuevo

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