New Report Explores Financing as a Tool to Increase Energy Efficiency in Housing for Low- and Moderate-Income Households

August 11, 2017

Energy Efficiency Financing for Low- and Moderate-Income Households: Current State of the Market, Issues and Opportunities, a report by Berkeley Lab released today by the State and Local Energy Efficiency (SEE) Action Network, explores the challenges and potential solutions for ramping up adoption of energy efficiency by low- and moderate-income households. Many decision-makers across the country are exploring financing as a tool to help address some of these barriers and support multiple policy goals, such as equitable access to efficiency services, more affordable energy bills, meeting energy needs with least-cost resources, job creation, and improved public health.

In addition to upfront costs, low- and moderate-income households may hesitate to invest in efficiency for other reasons, including transaction costs and lack of confidence that projected energy savings will materialize.

The report offers state and local policymakers, state utility regulators, program administrators, consumer advocates, financial institutions, and other stakeholders an understanding of:

  • Considerations (such as consumer protections, demographic characteristics, and market barriers) that impact low- and moderate-income communities' use of energy efficiency financing
  • Lessons learned from energy efficiency financing programs serving these households
  • Financing products these programs use and their relative advantages and disadvantages in addressing barriers to financing and to energy efficiency uptake for these households
    • Traditional products commonly used to pay for many goods and services, such as secured and unsecured loans
    • Specialized products specifically designed to address barriers to adoption of energy efficiency, such as on-bill products, which allow efficiency investments to be repaid on the utility bill; Property Assessed Clean Energy (PACE) financing, which secures an investment through a special assessment on the property; and savings-backed arrangements - energy savings performance contracts and energy savings agreements in which providers take on some performance risk 

Among the key findings of the report: 

  • Characteristics of low- and moderate-income households - such as ownership patterns, housing stock, and housing vintage - have implications for using financing to increase energy efficiency. For example, lower income households tend to rent at greater rates than higher income households. Renters are challenging to reach with energy efficiency programs and financing for home improvements.
  • Use of grant-based incentives for these households should be maximized to minimize the need for financing.
  • A significant portion of participants in efficiency financing programs across the country are low- and moderate-income households.
  • Consumer protections - for example, protection against fraud and abuse, ensuring borrowers' ability to pay, and protocols to help struggling borrowers - are vitally important when using financing with low- and moderate-income households.
  • Traditional and specialized products have relative pros and cons in terms of addressing barriers to efficiency adoption by these households.
  • Collaboration and coordination with a wide array of stakeholders, from administrators of utility low-income efficiency programs to housing agencies to local churches, is valuable for reaching low- and moderate-income households and, potentially, for funding to support efficiency projects. 

The U.S. Department of Energy's Office of Weatherization and Intergovernmental Programs and Building Technologies Office funded the research.

The report can be downloaded at



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