Simple. Easy. Smart: Building a Better Energy Efficiency Finance Program

It’s the environmental equivalent of the chicken and egg conundrum.  Which comes first?  The energy efficiency retrofit (the plump chicken full of opportunity) or the capital (the very large egg) with which to fund it?  The answer is “it doesn’t matter.”  Because in the world of energy efficiency finance, there is plenty of both – the key is how to integrate them together. Perhaps we have been asking ourselves the wrong question.  Perhaps the question should no longer be “which comes first,” but rather “how do we combine the two to build a better chicken coop?”

Last week, a group of over 250 energy efficiency experts gathered in Atlanta, GA for the Southeast Energy Efficiency Alliance’s 2014 “Conference on Innovation.”  During the three days of inspiring and thought-provoking sessions, the attendees networked with one another and empathized over common challenges. We laughed, we lamented, and we strategized over how to move energy efficiency forward. In the end, we all walked away with a collaborative feeling of hope and a couple of key themes to take back and build into our energy efficiency programs.

It is not (and has never been), “If you build it, they will come.” It is not enough to create an energy efficiency finance program and hope that building owners will use it. The financing piece of the puzzle must be fully integrated into the entire energy efficiency deal flow from program manager to contractor to building owner. How you pay for it matters, but even more important is that the process is smooth, simple and streamlined.

It’s all about the payment. Building owners, especially residential homeowners, are focused on their monthly bills. Will there be enough money at the end of the month to pay for everything?  A loan program that is focused on the interest rate (even if it is zero percent) will not resonate with many building owners because it simply does not translate easily into a monthly payment.  Instead, program managers and contractors need to focus on the monthly payment and offer flexible loan terms and repayment plans that match payment to estimated monthly energy savings from avoided energy use.

Trust is not just another five-letter word. Trust has become one of the most lauded tenets in the energy efficiency space.  Not only trust between the building owner and contractor for the work being done, but also trust between the contractor and the financing partner. Outreach and training of contractors can help to build this trust, and an improved understanding of different financing options will ultimately build confidence in the overall energy efficiency program.

Keep it simple, please. In this crazy world of complexity, a streamlined energy efficiency financing program that is simple to understand and easy for a building owner or contractor to implement will be far more effective than a cumbersome, confusing and complex process.  Think about it.  How many of us like to fill out pages of forms for a mortgage or home equity application when a simple swipe of the credit card will do?  Financing programs don’t need to be complicated, they need to be smart.

Show me the DATA. Data is king and actual results cannot be disputed. As energy efficiency finance programs expand throughout the country, a common framework for collecting, compiling and analyzing data will be a key to successfully reporting results and building even greater participation from building owners, contractors and financing partners.

The Environmental Finance Center and the Southeast Energy Efficiency Alliance are committed to keeping these five important tenets in mind as we move forward to build a vibrant and impactful network of energy efficiency stakeholders in the Southeast.  As we work to build these themes into our Southeast Energy Efficiency Finance Network, we will focus on tools, resources and networking opportunities that foster a simple, easy and smart way to implement energy efficiency improvements.

We invite you to join us today.  We welcome your thoughts, ideas and most of all, your active participation as we work together to build a better chicken coop full of chickens AND eggs.  http://southeastfinancenetwork.com/contact/