OBF for Distributed Solar

Energy generated from ground-mounted or rooftop solar panels can power homes, businesses, public and community buildings, and manufacturing facilities. Installing solar panels can help families and businesses cut their energy bills and save money while reducing carbon emissions. Equitable on-bill financing programs can help unlock energy savings through solar energy by overcoming barriers such as credit, capital access, and renter status.

Distributed solar involves small solar arrays that directly supply the building it is attached to with electricity. When coupled with battery storage devices, these grid-connected systems have the potential to power buildings during outages, increasing grid and community resilience. Distributed solar can be part of an equitable clean energy transition by delivering direct community benefits while helping states and utilities meet their 100 percent renewable energy goals.

Solar adoption has greatly increased because PV costs are coming down rapidly by more than 60 percent in the last decade. While solar panels are becoming more cost-effective, it still entails a large investment for many families. Financing over time to align the costs with the energy savings accrued can help. There are multiple financing options, including solar power purchasing agreements (Solar PPAs), solar loans, solar leasing, and on-bill financing programs.  These all can be combined with existing utility rebates, incentives, solar tax credits, and net metering to lower total costs to the customer. On-bill financing programs offer a unique value-add by giving utilities direct control over a financing option for their service territory, with the added convenience of bill-integrated payments and the ability to expand program eligibility so that nearly anyone can participate.

Benefits of Distributed Solar Energy

• Reduces high energy burdens, particularly for rural and low-wealth households
• A locally-generated power option
• Promotes equity by increasing solar energy ownership
• Lowers energy bills by reducing energy demand
• Reduces carbon emissions and promotes a healthy environment
• Decreases reliance and demand on fossil energy addressing climate change
• Increases ability to go off-grid (when paired with battery storage)
• Provides economic benefits to communities via well-paying jobs
• Reduces transmission congestion, which provides savings for utilities

Addressing Unequal Access to Solar Energy

While installing solar energy can reduce energy bills, due to barriers to access capital, upfront costs, and lack of credit-worthiness, solar adoption has been unequal across income and racial lines. While holding for household income and homeownership, majority Black and Hispanic census tracts have respectively, on average, 69 percent and 30 percent, fewer solar rooftop installations relative to no majority census tracts. In contrast, majority-white census tracts showed 21 percent greater solar adoption when compared to a no majority census tract.

On-bill financing programs help promote equity and access by increasing adoption and ownership of solar energy for nearly all, including for communities of color and rural communities. Through on-bill financing programs, families and businesses can afford to install solar panels with no upfront costs and spread repayments over time.

EESI has helped develop and launch several on-bill financing programs for solar energy:

• Hawaii Green Energy Money $aver (GEM$) On-bill program, GEM$ unlocks financing for solar projects for low-and medium-income residential (homeowners and renters) and commercial (nonprofits, multi-family projects and small business). The Hawaii Green Infrastructure Authority designed the GEM$ program and capitalizes it through the issuance of a Green Energy Market Securitization bond. Launched in 2019, GEM$ has financed over $8 million in on-site solar installations.
• Mountain Parks Electric’s “Electrify Everything” on-bill tariff helps members of this Colorado co-op install solar panels and energy efficiency retrofits. The co-op secured $10 million in USDA Rural Energy Savings Program (RESP) loans to capitalize the program. The program opened in 2020, and it is quickly ramping up and installing clean energy upgrades.
• Fort Collins Utilities’ Epic Loan program, is an on-bill financing option for energy efficiency and solar PV. Since its inception in 2013, on-bill financing programs operated by Fort Collins Utilities have issued over 400 loans, totaling more than $4 million in energy efficiency and solar investments.