Households across the country can benefit from switching to energy-efficient home appliances — including reducing their energy bills, improving air quality, and ensuring a more comfortable heating/cooling supply. However, the high upfront costs can block households that would benefit the most from the switch to efficient electric machines.
Our literature review explores a viable solution to that problem: Inclusive utility investments, a promising alternative financial solution for residents who may not be otherwise able to go electric at home. Inclusive utility investment programs are unique in that they do not create a personal debt. Instead, a utility uses its own funding and/or third-party funding to pay up front for a qualified resident’s energy upgrades. Then, the utility recovers these upfront costs through a site-specific, fixed charge that appears on a customer’s monthly utility bill.
We document a number of other benefits we found from the use of inclusive utility investments, including:
Immediate savings — Monthly service charges are capped at roughly 80 percent of estimated annual savings and the cost recovery period is capped at roughly 80 percent of the expected lifetime of the equipment, ensuring that residents see savings right away.
Renter access — Unlike home efficiency upgrade programs that are primarily geared to homeowners, inclusive utility investment programs also work for renters, because the costs are repaid through monthly utility bills tied to an address, rather than an individual.
Flexible eligibility — The programs are open to more households, because customers can qualify based on their bill payment history rather than credit score or debt-to-income ratio.
