Driving individual climate action with Eco Financing

New studies document the ability of Eco Financing to overcome longstanding financial barriers

At Enervee, we're committed to eliminating barriers and helping consumers make energy-efficient appliance purchases that cut energy bills and reduce greenhouse gas emissions. We initially focussed on making energy efficiency actionable to consumers by providing a zero to 100 Enervee Score on every product model [1], so people could choose the most efficient products to meet their needs. We recently obtained a patent for the methodology behind the score, and the Enervee Score has been proven to drive better buying decisions.

We next turned to presenting a whole new "choice architecture" to consumers to guide and nudge them towards more efficient purchases. Our online marketplace platform spans over 40 product categories and was designed from the ground up with behavioral science insights in mind to help people avoid common cognitive and psychological barriers and follow through on their intention to buy energy efficient products.

But what if you lack the resources or access to credit to pay for the efficient product?

Financial barriers have been a tough nut to crack, but I can now state with confidence that Enervee has found a way to do so, without relying on rebates (which don't work for those most in need) or free product give-aways (which do not scale) – with Eco Financing as a payment method.

A tale of two studies – Eco Financing works

Enervee has been operating Eco Financing consumer lending programs statewide in California and New York since April 2023. Below you will find takeaways from two comprehensive reports, as well as comparative data points from both studies to illustrate the effectiveness of Eco Financing in promoting energy efficiency among underserved populations:

• a recent independent evaluation of the GoGreen Home Energy Financing program [2], which provides credit enhancements for our Eco Financing loan portfolio in California, and
• the final report from a NY Marketplace pilot that we conducted [3] with support from the New York State Energy Research & Development Agency (NYSERDA).

The findings from these two reports are well aligned and highlight the success and impact of Eco Financing.

Supporting Underserved Communities
Both reports highlight the critical role of Eco Financing in supporting disadvantaged communities (DACs), lower-income households and other underserved consumer segments.

• NY Marketplace: 51% of financed purchases were made by people located in DACs, compared to 35% of all New Yorkers living in DACs.
• CA GoGreen Home micro-loans: 85% of micro-loans were given to "underserved borrowers", ensuring that a significant portion of funds and loans were issued to credit-challenged and lower income households.

Enabling Efficient Purchases
Eco Financing empowers consumers to make energy-efficient purchases, particularly those who might otherwise be unable to afford the upfront costs.

• NY Marketplace: 95% of respondents agreed that Eco Financing enabled their purchase of efficient products, with 86.7% strongly agreeing.
• CA GoGreen Home micro-loans: All micro-loan respondents said Eco Financing
  was at least “somewhat” influential on their decision to purchase efficient equipment, with 88% saying it was "very influential". In addition, 66% of micro-loan respondents indicated they would have been likely to do something cheaper absent financing and only 20% of these consumers would have purchased an appliance with the same or higher efficiency. 

Relative Influence of Rebates & Financing
In general, Eco Financing was found to be as or more important than rebates at levels typical of utility energy efficiency programs.

• NY Marketplace: When asked which program features were most important, 100% of respondents who used Eco Financing highlighted the importance of affordable monthly payments, whereas only 38.5% mentioned rebates as a crucial factor. Additionally, two-thirds of respondents indicated they would have likely made their purchase without a rebate, if financing was available.
• CA GoGreen Home micro-loans: Of those who used both a rebate and a loan, all of them indicated they needed the loan, but one indicated that they did not need the rebate, although these responses were based on a very small sample of only 5.

Eco Financing Benefits
According to the Federal Reserve [4], 32% of U.S. adults could not use current savings to cover an emergency expense of $500, 13% could not cover a $400 expense by any means right now and 18% said the largest expense they could cover with savings was under $100. When faced with an emergency appliance or equipment purchase, many households rely on high-interest credit cards or turn to the secondhand market, rent-to-own stores, or expensive payday lenders. Eco Financing effectively addresses financial barriers by offering affordable monthly payment options, making energy efficient appliances accessible to more people.

• NY Marketplace: The Eco Financing option proved popular, compared to alternatives available to cash-strapped Americans. Affordable payments, spreading payments out over 60 months and fixed monthly payments were the top Eco Financing consumer value propositions, called out by 71%, 54% and 50% of survey respondents, respectively. Other benefits cited by over 30% of borrowers were the lack of up-front fees or penalties for early repayment and the online application process.
• CA GoGreen Home micro-loans: The most common reasons consumers chose Eco Financing over alternatives was the easy online process (77%) and the low interest rate (58%). The ability to reduce consumer friction is critical for success, as pointed out by another recent study by Opinion Dynamics [5].

High Customer Satisfaction
Participants in both programs reported high levels of satisfaction with their financing experiences, highlighting the programs' user-friendly design and effectiveness.

• NY Marketplace: 84% of borrowers were "completely" or "very" satisfied with their Eco Financing experience.
• CA GoGreen Home micro-loans: 82% of micro-loan borrowers were "very" satisfied with the program overall (the highest rating), with 80% “very” likely to recommend the program to others (and another 17% "somewhat" likely to do so). 

Conclusion
Recent reports from New York and California demonstrate that Eco Financing is a powerful new tool to drive equitable decarbonization at scale. By making energy-efficient products affordable and accessible, these programs not only help reduce energy consumption and greenhouse gas emissions but also support underserved communities in achieving long-term financial and environmental benefits. As we continue to refine and expand our programs, these insights will guide us in creating even more impactful solutions for consumers everywhere.

For more detailed information, please refer to the full reports referenced below. 

Notes
[1]  Learn about the Enervee Score
[2]  GoGreen Home Energy Financing Program Impact Evaluation Report (2024) 
[3]  NY Marketplace Innovative Market Strategies Project – Final Report (2024)
[4]  Report on the Economic Well-Being of U.S. Households in 2022 (2023)
[5]  Energy Efficiency Residential Pulse Check Study (2023)