On-bill financing (OBF) refers to a type of loan that can be used to invest in improving the energy efficiency of a building. The loan is paid back over time through an additional charge on the building’s utility bill. This mechanism encourages building occupants and owners to invest in energy efficiency measures, which can decrease energy consumption and utility bills.
Installing energy efficient measures often comes with a high upfront cost that many people, businesses, and institutions cannot afford. OBF programs can mitigate this problem because the administering utility or a third party covers the upfront cost of the energy efficient installations, which the participating utility ratepayer then repays through an additional charge on their utility bill. Since the ratepayer will be using less energy, and therefore paying less for energy, after the installation, there should be little or no net increase in the monthly bill.
On-bill financing programs vary by state and by provider, and each program has its own terms and process. Programs may be available to residential, commercial, industrial, and/or institutional customers depending on the state and utility policies. In those states with legislation that requires utilities to offer OBF, generally it is only obligatory for investor-owned utilities (IOUs). Administration of OBF programs also varies; programs may be administered by the utility itself, a nonprofit organization, or a government entity. Some OBF programs feature a discounted or zero interest rate. Generally, non-repayment of the loan will lead to a shutoff in utility service, which deters defaults and makes OBF more attractive for the loan provider. Initial investment funds for energy efficient installations can come from utility ratepayers, government grants, or other funding sources. To date, much of the funding for OBF has come from funds directed by the American Recovery and Reinvestment Act of 2009  (ARRA).
Most participants in OBF begin the program with an audit of the building to determine if energy efficient upgrades would be cost-effective. Some programs require all upgrades to be “bill-neutral.” Bill-neutrality occurs when the savings accrued by the decreased energy use will be equal to or greater than the monthly repayment amount. Unless specifically noted, the programs described in the map are not required to be bill-neutral.
On-bill financing programs may also have the characteristic of being “tied to the meter,” meaning that responsibility of repayment lies with the current resident of the building, rather than forever with the resident who instigated the financing. This allows for flexibility for residents who wish to move or sell their home. Unless specifically noted, the programs described in the map are not tied to the meter.
The states are organized into the following policy categories:
1. State-Required On-Bill Financing: These states have passed laws or public utilities commission orders that require utilities statewide (usually only large or investor-owned utilities) to provide an OBF program. Program specifications, such as loan terms, program size, and customer eligibility vary from state to state.
2. State-Supported On-Bill Financing: These states have passed laws or public utilities commission orders that authorize and/or support the implementation of OBF state-wide, but do not require any utilities to offer OBF programs. These include policies that remove legal barriers to offering OBF or establishing funds for OBF programs.
3. Preliminary On-Bill Financing Policy: These states’ public utilities commissions have ordered the establishment of pilot OBF programs or commissioned research or working groups to analyze the feasibility of OBF programs.
4. On-Bill Financing Offered by Individual Utilities: Utilities in some states have voluntarily created OBF programs without direction from local or state government. In some states, utilities can earn money from reducing overall demand. Energy efficiency can also be a way to reduce peak loads and thus generation costs.
To learn more about On-Bill Financing programs, please see the C2ES On-Bill Financing Brief .
ACEEE: On-Bill Financing for Energy Efficiency Improvements 
NRDC: On-Bill Financing Overview and Key Considerations for Program Design 
C2ES Climate TechBook: Building Envelope