Pay As You Save® (PAYS®) harnesses a proven utility investment model to offer virtually all consumers cost-effective energy building upgrades

How does PAYS financing for energy efficiency building upgrades work?

Instead of loaning customers money, the utility invests in cost-effective energy efficiency upgrades at customer sites and then secures their investment by adding a fixed tariff charge to the metered location that is significantly less than the estimated savings. Using a tariff cost recovery mechanism instead of a loan means that Utilities don’t have to be banks. It also means that utility customers don’t have to take on debt, have good credit scores or even own their own homes to participate in PAYS. In most cases customers pay nothing upfront and even better:  the PAYS on bill financing model requires that the customers enjoy immediate and sustained cash flow even during the Utilities cost recovery period. This means that participants save money from day one! Since the tariff charge is tied to the metered location instead of to the customer, when customers move, the tariff for the PAYS charge simply transfers to future customers at that site. 

How can PAYS reach virtually all consumers?

Wherever the grid reaches today, utilities have achieved near universal access by recovering investments through an agreement with customers called a tariff.  Vendors for distributed energy solutions don’t enjoy tariff authority, which has led to the use of alternatives such as loans or leases.  PAYS clears the biggest barriers to financing because it does not depend on a consumer loan, long-term lease, or a lien on the value of the property.


Without PAYS, renters and low-income households have faced barriers to accessing investment capital for cost-effective energy upgrades, and similar financing challenges have stumped credit-strained companies and local governments.  With PAYS, are there any barriers that would still face a utility customer in good standing?  Yes, buildings that need major repairs or may soon cease to serve their primary purpose would need to first address those challenges.

How are PAYS financing programs for performing?

Compared to typical debt-based programs, experience shows that Pay As You Save has a bigger impact for four reasons:

1. First, the addressable market is double the size because nearly all customers are eligible.

2. When customers are offered upgrades with the Pay As You Save value proposition, they accept more than half of the time, which is 5 times the typical rate.

3. When customers do accept, the projects they undertake are much larger because the terms are more attractive.

4. The investment is more secure because utility collections have a charge-off rate that is approximately 10 times lower than consumer lending.

Electric cooperatives have led the way on using PAYS financing, and the results for efficiency have been huge: posting an average of 25% savings.  Utility regulators in Kansas, Kentucky and Arkansas, have already approved tariffs based on the PAYS system and other areas where PAYS based programs are up and running include Hawaii, North Carolina, New Hampshire, California and soon to be Tennessee (2ndquarter of 2019).  Some of the utility branded names for those programs are How$martTM and How$mart KY, Upgrade To Save, HELP PAYS and U-Save Advantage.  

Additional resources:

Click here for a convenient two-page overview.

For a chart comparing key features of PAYS as compared to PACE and HELP, click here.

Pay As You Save® (PAYS®)

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