Investment in energy efficiency saves money, enhances productivity and competitiveness, and is highly cost effective. Yet energy efficiency is underutilized by the small business sector. One of the main barriers is access to capital. A recent National Small Business Association (NSBA) survey found that 52 percent of small commercial businesses see cash flow as the primary barrier to investing in energy efficiency. Even if the investment saves money over time, cash flow is a major barrier to taking action. While Pennsylvania’s energy savings law, Act 129, provides rebates to help offset part of the upfront cost of energy efficiency measures, many small businesses don’t have the funding to cover the rest.
Fortunately, help may be around the corner for small businesses in Pennsylvania. The Public Utility Commission (PUC) is currently investigating the feasibility of a pilot on-bill repayment (OBR) program for this sector. With on-bill repayment, third-party lenders cover the upfront cost of energy efficiency projects and customers pay back the loans through their utility bills. Typically, the loan is structured so the energy savings on a customer’s bill are greater than the monthly loan payment. On-bill repayment allows a customer to invest in energy efficiency without any upfront cost.
Over 22 states in the U.S. have utilities with some form of an on-bill program. These programs target a range of customers from residential and commercial to government and institutional. While all sectors could benefit from an OBR program in Pennsylvania, the small business sector seems to have the most need. These customers can’t participate in the KeystoneHELP program that offers low-interest loans to residential customers, and are too small to take advantage of energy savings performance contracting. An OBR program for the small business sector will create much-needed capital for these customers, helping them better participate in Act 129 programs, save money, and improve their business.