California Institute for Energy and Environment (CIEE)

Energy efficiency has a vital role to play in addressing our daily resource needs and creating a vibrant future for our society. This paper focuses on the first-cost barriers to increased energy efficiency in residential homes. Loans and other financing options will be important to enable the efficiency improvements to meet many of the goals of the California Public Utilities Commission’s Energy Efficiency Strategic Plan. This study reviews existing, terminated, and proposed financing programs and reveals several limitations of these programs including: limited applicability of the programs to households most in need, low participation rates, difficulty assuring that savings will exceed payments, limited support for comprehensive energy retrofits, the inability of many programs to cover their costs, and issues particular to on-bill financing (OBF) programs. The author concludes with recommendations for improving the impact of financing programs in California.