While climate change is a global challenge, its effects are felt locally – often in our wallets. 

The question many people face is: How can I make clean energy upgrades (such as solar panels or heat pumps) to reduce reliance on fossil fuels? For homeowners, it can feel expensive; for renters, it’s even trickier since they usually don’t control property improvements but still pay the rising utility bills.

This is where a potential game-changer, Inclusive utility investment, comes in. It is designed to make clean energy upgrades accessible to everyone with no big upfront costs or loans required. Upgrading your home with efficient, clean energy technology can now save both money and the planet! Read more to learn how.

Understanding Inclusive Utility Investment: How It Works for You

Inclusive utility investments make clean energy upgrades easier and more affordable. The utility pays upfront for improvements like heat pumps, insulation, solar panels, and battery storage. You get the upgrades and enjoy modest savings on energy bills, while paying a small, fixed monthly service charge on your utility bill that is less than the estimated savings of the upgrades. This charge is tied to the meter, not you – so if you move, the next occupant takes over and enjoys the benefits of the upgrades.

Inclusive utility investments remove high upfront costs, address the split incentive issue for renters, and avoid personal debt. Let’s look at an example.

 You save more than you pay 

• Suppose the energy upgrades you get at your home (solar panels, for example) save you $60 per month on your utility bills and your monthly service charge is set at $48. You still save $12 every month while paying for the upgrades.
• An inclusive utility investment  program model such as Pay As You Save (PAYS) caps the monthly service charge at 80% of estimated savings. For example:  80% of $60 = $48 max charge, and your charge is $48, so it stays within the limit.
• Suppose your old monthly bill before upgrade was $150/month and the new bill is $150 − $60 (savings) + $48 (charge) = $138/month. The new bill is lower than the old bill. 
• Your Net Annual Cost Savings = Your annual savings ($60  × 12 =  $720) –  Your annual service charge ($48  × 12 = $576). It is $144/year. 
• Payments stop once the upgrade cost is fully recovered, usually capped at 80% of the useful life of the upgrades. For example, if a heat pump has a useful life of 20 years, payments would be made for 16 years.

Since the monthly charge is designed to be lower than your energy savings, your bill won’t increase. Instead, it decreases right away (bill neutrality) and continues to generate net savings year after year.

Consumer Protections

Sometimes savings don’t go exactly as planned, but inclusive utility investment has protections to keep you from paying more than you save.

• If savings dip: Say your expected savings were $50/month, but equipment issues reduce them. Your charge (normally $45) could drop to $35 until things are fixed. Charges can also pause if your home is vacant or under maintenance.
• If costs exceed savings: A small upfront payment can smooth things out. Under the PAYS logic, repayment charges can’t exceed 80% of the customer’s estimated monthly savings. So if a project costs $6,500 and produces $60 in monthly savings, the charge is capped at $48 (80% of $60). Over 10 years (120 months), that $48 payment recovers $5,760 in total. Since the project cost is $6,500, the difference of $740 remains uncovered by the capped repayments and is collected as an upfront payment. In other words, paying the remaining amount upfront ensures the project can proceed while customers continue to benefit from their monthly savings.

The Payback Problem for High-Cost Upgrades

While inclusive utility investment is a promising model, its application is not one-size-fits-all as it can still lead to very long payback periods for costly installations, despite consumer protections.

For example, a new heat pump water heater (HPWH) can cost ~ $7,000 to install, while typical monthly savings are estimated at only ~$10. Under the PAYS cap, the maximum monthly charge would be $8 ($10 × 80%). 

To fully recover a $7,000 installation at $8/month, it would take over 73 years ($7,000 / $8 = 875 months), far longer than the average HPWH lifespan of about 12 years. The PAYS model also stipulates that cost recovery ends after 80% of the device’s lifetime, which for an HPWH is roughly 115 months (9.6 years). In this timeframe, the program would only recover about $920 ($8/month × 115 months), leaving a copay of more than $6,000.

This highlights some limitations of the model. PAYS was originally designed for lower-cost devices with higher savings and works best when replacing inefficient technologies. Its future viability in California will likely depend on two key factors: a dramatic decrease in installation costs (through rebates or economies of scale) or an increase in operational savings for higher-cost devices.

What Customers Need to Know in California

California has been actively exploring and developing inclusive utility investment policies, with progress centered around a California Public Utilities Commission (CPUC) Financing Proceeding (R.20-08-022). However, if you’d like to see how these programs have already worked elsewhere, Massachusetts provides a useful example. Its ReInvest Ipswich pilot showed households saving 20% on utility bills while eliminating 84% of upfront costs. These lessons show how smaller pilots can guide larger utilities, and California is still in the process of shaping how inclusive utility investment programs will work. Here’s what that means for you as a customer:

• No action required yet
  The CPUC reviewed pilot program proposals from PG&E, SCE, SDG&E, and SoCalGas. A proposed decision issued on October 31 approved a clean energy financing pilot from SCE while denying the other pilots.

• Stay informed
  Once programs are approved, each utility will let customers know how to participate. The rules may vary – for example, some pilots may include renters while others focus more on homeowners.

• Expect consumer protections
  State leaders and advocacy groups are advocating for safeguards to ensure upgrades don’t increase your overall bills, maintain transparency, and provide access for renters and low-income households.

• Watch for utility announcements
  If you’re a customer of one of the major utilities, keep an eye out for updates later this year. That’s when you’ll know exactly how to apply once pilots launch. Typically, to join an inclusive utility investment program, participants must request an energy audit to determine eligible upgrades. Flexible criteria focus on utility payment history, not credit scores, allowing renters and low-income households to qualify. Approved participants sign an agreement for upgrades and a fixed monthly service charge. As far as utilities are concerned, they need regulatory or board approval to launch programs.

1 One such pilot is the TECH pilot, which is testing a new way to make home electrification more accessible in California. It is working with Silicon Valley Clean Energy on a pilot program with up to $3 million in support. TECH is partnering with PG&E and SCE to create financing options that can expand the program statewide.

Editor’s note: This post was updated in November 2025 to reflect new information provided by the California Public Utilities Commission.