Pay As You Save system of inclusive utility investment for building efficiency upgrades: Reported and evaluated field experience in the United States

Panel: 7. Policies and programmes for better buildings

This is a peer-reviewed paper.

Authors:
Jill Ferguson, Stanford, USA
Stephen Bickel, Clean Energy Works, USA
Harlan Lachman, Energy Efficiency Institute, Inc., USA
Paul A. Cillo, Energy Efficiency Institute, Inc., USA
Holmes Hummel, Clean Energy Works, USA

Abstract

From 2002-2021, 23 U.S. utilities in 10 states gained experience offering building efficiency and electrification upgrades through investment programs that are uniquely inclusive, primarily because they are accessible to occupants no matter their renter status, income, or credit score. All of these utilities have used the Pay As You Save® (PAYS®) system, which is a set of consumer protections and design parameters that have become the basis of the Inclusive Utility Investment approach. With Inclusive Utility Investment, any utility with an approved tariff can pay for site-specific upgrades and recover the full cost at each site over time through a charge on the bill that is less than the estimated savings. In short, Inclusive Utility Investment makes it financially possible and attractive for utilities to capitalize building efficiency upgrades that generate savings on the same scale as conventional power plants with similar assurances for cost recovery on a site-specific basis. Through 2021, the U.S. utilities with experience have cumulatively deployed more than $50 million for building efficiency and electrification upgrades to nearly 6,000 locations, and more than $170 million is committed for similar deployment over the next three years. This paper summarizes field data on Inclusive Utility Investment programs using the PAYS system as reported by each of these sponsoring U.S. utilities through the year 2021. These utilities have capitalized upgrades to rental and owner-occupied housing in both single family and multi-family categories as well as commercial and municipal buildings. Of the utilities that have reported the fraction of customers accepting the utility’s upgrade offer after receiving a savings assessment, each reported that over two thirds of customers accepted the offer. That metric is six times greater than participation rates in traditional debt-based upgrade programs. Across these utilities, the average cost recovery rate exceeds 99.9 %. Of the utilities that have completed evaluations of their investments in building efficiency upgrades, the net present value to the utility ranges from $1,000 to $3,000 per upgraded location. In other words, even after taking into account all program costs, the Inclusive Utility Investment programs using the PAYS system are generating net economic benefits for the utility and its owners in addition to generating benefits for participants. Altogether, the field data presents a striking picture of a utility investment solution that can reach underserved markets even in areas of persistent poverty. It also provides examples for more states, utilities, regulators, policymakers, and communities internationally that want to expand participation in the clean energy economy, a requirement for rapid reduction of greenhouse gas emissions from the buildings sector.