On-Bill Financing Programs to Support Low-Carbon Energy Technologies: An Agent-Oriented Assessment

Research output: Contribution to journalArticle

Abstract

On‐bill financing (OBF) schemes have been welcomed as innovative mechanisms for encouraging the adoption of low‐carbon energy technologies. Yet while the potential effects of these schemes have received growing attention, less is known about their actual performance. Departing from New Institutional Economics and insights from Behavioral Economics, this theory‐driven assessment examines the How$mart® program in Kansas (United States) and the Green Deal in the United Kingdom. The study identifies the mechanisms designed to trigger behavioral change and technology adoption. We focus on market agents, and related market failures and behavioral anomalies that often prevent energy efficiency improvements. The paper adds to our theoretical and empirical understanding of public and utility‐driven OBF programs applied to the residential sector. Our findings suggest that simple, carefully designed on‐bill programs, where the financing of efficient technologies takes the form of a service rather than a loan, are more effective for the diffusion of low‐carbon energy technology and the reduction of transaction costs. At the same time, on bill‐financing schemes challenge the core business of utilities, and given the complexities and dynamics of energy efficiency markets and energy use, other policy interventions are needed.

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Authors
Organisations
External organisations
  • German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety
Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Social Sciences

Keywords

  • Behavioral change, Climate mitigation, Comparative governance, Energy use, On-bill financing schemes, Policy innovation
Original languageEnglish
Pages (from-to)502-534
JournalReview of Policy Research
Volume35
Issue number4
Publication statusPublished - 2018 Aug 3
Publication categoryResearch
Peer-reviewedYes

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