Smart financing: How National Grid encourages energy efficiency upgrades

Fri, 2014-04-18 06:00 -- Jesse Berst

When smart cities encourage residents to adopt new technologies – say energy efficiency upgrades – there may be resistance.  Residents may not have the upfront money to pay for them. They may be reluctant to adopt something unfamiliar to them. They may not believe the savings promised.

But as the Council's recently released Smart Cities Financing Guide points out, in such cases there are programs available that can help accelerate adoption. Among them is on-bill financing (OBF), which is sometimes referred to as utility-enabled financing and repayment.

OBF allows the local utility to decide the best upgrade package that can be reasonably financed. The utility then oversees the upgrades and customers are assessed a fixed monthly charge on their utility bills to pay for the upgrade.

UK-based National Grid, which delivers electricity and gas in Britain and the Northeastern U.S. and is a Council Global Partner, offers an OBF program that helps its customers finance big-ticket energy conservation upgrades and overcome financial barriers.

National Grid pays 40% to 70% of the project cost and the customer pays the rest over a period of one to 24 months, with the amount appearing as a line item on the customer’s utility bill. The interest rate is 0%, and for small business customers, National Grid discounts the amount by 15% if the business repays the loan in one month.

OBF is just one of 28 financial tools highlighted in the Smart Cities Financing Guide, which was produced in partnership with the Center for Urban Innovation at Arizona State University, which has an international reputation for insight into municipal governments and finance.

New finance tools have emerged in recent years, so the Guide is a great resource for city leaders looking for creative ways to pay for smart technologies. If you haven't downloaded your copy, you can get it here (a free, one-time registration is required).  

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Jesse Berst is the founding Chairman of the Smart Cities Council. Click to learn about the benefits you receive when you join the Council for free.