Inclusive Utility Investment

What is inclusive utility investment?

With inclusive utility investment, your electric co-op could invest in energy efficiency upgrades at a home, farm, or business. The co-op recovers its investment through a fixed charge on the monthly electric bill of the participant. Inclusive utility investment allows utilities to invest in energy efficient upgrades the same as they would in poles and wires—as part of the essential services they deliver. It’s designed to help households lower energy bills, improve resilience, reduce pollution, and access modern energy technology—without high upfront costs, debt, or homeownership requirements. It can also bring the benefits of lower energy costs and good local jobs to the entire membership. 

How do inclusive utility investments benefit member-owners?

Rural Americans spend as much as 40% more on energy than their urban counterparts, and that hits rural households with less income the hardest. Your co-op can become a partner to help the homes and businesses they serve who still need energy-efficient upgrades to save money by saving energy. With increasingly extreme storms and wildfires, co-ops can also invest in battery storage and on-site solar to reduce outages that leave member-owners without energy during critical times while adding flexibility to the grid. The Rural Power Coalition recommends inclusive utility investments based on the Pay As You Save® (PAYS®) system as a solution that unlocks a real pathway to meet both needs: efficiency and resilience.

Even as rural electric cooperatives increasingly invest in clean energy, it will take time for those investments to come online. The least expensive energy is the energy that does not have to be generated. By investing in efficiency, rural electric co-ops can reduce grid strain and reduce their need to make costly grid upgrades while also saving their members money. Utility investment can also keep a steady flow of work for contractors installing the upgrades, supporting workforce development and the local economy. This approach keeps in line with the guiding principles of a cooperative: to bring the best outcomes for their member-owners.

Download our Printable Inclusive Utility Investment Brief

How do inclusive utility investments work? 

After a resident communicates interest in an inclusive utility investment program, the utility sends a technician to assess the energy savings potential of the upgrades to the building. By basing the investment on the savings created by the upgrade—a site-specific investment—the opportunity to access cost-effective energy upgrades becomes open to all customers.

Once the assessment is complete, the customer is offered a choice of upgrades based on their cost-effectiveness as investments. The utility covers the upfront cost of all selected upgrades (i.e., insulation, HVAC, air sealing, on-site solar, EV charger, etc.) and recovers that investment through a portion of the estimated energy savings at the participating site over time. This is done with a fixed monthly charge on the bill that is less than the estimated savings from the upgrade. When the investment is recovered, the monthly charge stops and ownership of the upgrade transfers to the site owner (homeowner, landlord, or business owner). Because the charge stays with the location, not the customer, renters can take advantage of the program for a more comfortable, affordable space with lower energy bills.

How is inclusive utility investment funded?

Utilities can use the sources of capital they use for all other grid investments to make inclusive utility investments. USDA’s Rural Utility Service (RUS) makes capital readily available to electric co-ops on excellent terms. RUS offers two programs that have been successfully used by utilities to make these investments: The Energy Efficiency & Conservation Loan Program (EECLP), with Treasury-rate capital, and the Rural Energy Savings Program (RESP), at 0% interest. Cooperative utilities have also accessed capital from specialized cooperative lenders (e.g., the National Rural Utilities Cooperative Finance Corporation (CFC)). 

Has this been done before? (Success stories)

Several utilities have successfully implemented inclusive utility investments, including:

  • HELP PAYS, Ouachita Electric Cooperative, Arkansas

    Ouachita Energy Cooperative invested almost $3 million in upgrades to local member homes in the first year, including both renters and homeowners. With weatherization and HVAC, they saw an 18% reduction in energy demand across all participating members (with some as high as 30-40%). In cases where they have also added solar, the savings have increased up to 70-80%. And for every residential project completed, the electric co-op is seeing a 1.5 to 2 KW reduction for peak demand on average, helping save all members money. Four years after beginning HELP PAYS and investing in solar at a commercial customer site, Ouachita implemented a 4.5% rate decrease for residential members. (source)

  • Upgrade To $ave, Roanoke Electric Cooperative, North Carolina

    Upgrade to $ave has enrolled more than 10% of the utility’s residential customer base, approximately half of which required repairs before a full upgrade was feasible. Over the lifetime of the upgrades, the estimated net present value to the utility of the upgrades installed to date is $3,047 per home and $1 million for the whole program. (source)

  • How$mart, Midwest Energy, Kansas

    Between 2008 and 2021, How$mart has allowed the utility to invest more than $14 million in 2,475 retrofits, reaching more than 8% of their total membership. The utility has recovered investment costs at a rate of 99.9%. (source)

Other inclusive utility investments:

Learn more about Inclusive Utility Investments with these resources:

Four short explainers on a specific inclusive utility investment program, PAYS, From RPC member organization Renew Missouri. You can find the other videos in this series on YouTube.