When evaluating factors most likely to lead to an energy efficiency program’s success, Energy Efficiency Conservation Block Grant (EECBG) grantee program designers often consider many variables, including target interest rates, proposed amounts for candidate loans, the size of the intended marketing effort, etc. While these are certainly important, the relationships between financial institutions (FIs) and political entities are at least as important. This post describes some of these issues and suggests how to enhance program outcomes by focusing on alternative qualities.
Preexisting Relationships
An EECBG energy efficiency financing program is more likely to succeed if the partners have already worked together on other financing initiatives. In Lowell, Massachusetts, for example, the city used grant funds to capitalize a third-party commercial loan loss reserve fund, administered by the Lowell Development & Financial Corporation. Following capitalization, ten FIs subsequently agreed to contribute to the loan pool and participate in the program. This outcome was easier for program managers to achieve because the group of banks had already worked together in many contexts, most notably on financing initiatives in Lowell’s historic downtown district. For grantees in areas where similar collaborations have not transpired, it’s possible to model basic elements of the described approach. For example, grantees can:
- Focus on FIs they have already worked with in different contexts, and
- Identify where two or three FIs have successfully worked together and propose building upon these relationships.
Group Opportunities
Grantees can leverage their EECBG dollars by selling a “greater than the sum of its parts” message to prospective FIs. This will be more effective if the audience is made up of more than one FI at a time. When only one FI hears the message, it is easy to find reasons to not participate. To this end, grantees should consider convening groups of FI representatives to hear and consider the collaborative opportunity EECBG funds represent. Technical Assistance resources are available to help grantees structure these meetings.
Trust
Establishing trust between grantees and the candidate FIs is critical. Several mechanisms can help build trust during program development and administration, especially when grantees provide:
- Transparent communications and intent
- Numbers showing the value of participating in the proposed program
- Resources to help answer questions on Requests for Proposal (RFP) structure or other details
- Case studies from other areas where similar programs have been successful
Technical Assistance is available for grantees who are developing and implementing programs. Please provide a comment to this post with your questions, and feel free to share any lessons learned from programs that partnered with financial institutions.
Content for this blog post courtesy of Samuel Merrill of the New England Environmental Finance Center, a member of the Center for Climate Strategies financial technical assistance team