The Southeast Energy Efficiency Fund
Introducing the Southeast Energy Efficiency Fund (SEEF)
Established by SEEA in 2014, the Southeast Energy Efficiency Fund (SEEF) is a regionally accessible pool of incentivizing funds that SEEA has made available to diverse institutions across the Southeast. The purpose of the SEEF funds is to assist these institutions to add on to, or expand, their residential retrofit financing options for communities and customers who need them the most.
SEEF investments provide increased access to capital for energy upgrades which result in more efficient, affordable, and healthy homes and businesses, and support the growth and maturation of energy efficiency finance markets across SEEA’s 11 state region. Currently, SEEF funds are supporting five projects in four states. They include loan loss reserves, interest rate buy-downs, direct loans and revolving loans.
SEEA will continue to work with foundations, state agencies and other partners to grow the SEEF and expand the market for energy efficiency financing.
SEEA’s goals for this work are:
- To bring more traditional lenders into the energy performance loan market;
- To support utilities to expand customer services into energy performance financing;
- To build a regional data set to demonstrate the security and low risk nature of energy performance loans;
- To identify best practices in energy performance loan programs;
- To mobilize the lending industry to embrace energy performance lending as a mainstream asset class.
Strategic Applications of the Southeast Energy Efficiency Fund
SEEA’s role in the energy efficiency finance market is to serve as a financial catalyst, investing in partnerships specifically designed to reach underserved populations through innovative mechanisms. Since beginning work in this area, SEEA has established relationships with a variety of implementing agencies throughout the southeast. SEEA prides itself on establishing partnerships with locally based and trusted intermediaries that know the local market and are well positioned to serve its needs. This role of supporting high potential but unproven mechanisms is one of the factors that distinguishes SEEA from many other organizations that have been reluctant to invest in anything but low risk, large scale programs. SEEA works to fill this market gap with strategic applications of credit enhancements and capital investments.
- Credit Enhancements
SEEA is culturally committed to supporting the Southeast’s low income communities. These communities have long struggled to meet increasing utility rates and service fees. This problem is exacerbated by the fact that many of these consumers cannot access the capital needed to make energy saving upgrades that would ease their economic burden. To help expand financial access to these communities, SEEA provides credit enhancements in the form of interest rate buy downs and loan loss reserves that often make the difference in whether or not a bank or credit union makes an energy efficiency loan product available. Additionally, SEEA’s investments significantly expand the pool of qualified borrowers with low risk to investment capital as the energy saving investments pay for themselves in reduced utility costs resulting in default rates that average below 2%.
- Capital Investments
SEEA’s investment fund also supports the creation or expansion of new products and loan programs. These investments provide needed startup capital to state agency sponsored and private sector programs that look to address a specific market need or niche, such as providing a multifamily retrofit financing program or establishing a commercial and/or residential product that can be accessed statewide. SEEA works with our strategic advisors to identify and vet these investment opportunities before providing support in the form of revolving loans, direct grants or a combination of the two.
The graphic below details the current application of the Southeast Energy Efficiency Fund.
Current Programs Supported by the Southeast Energy Efficiency Fund
- Abundant Power finances high-impact energy efficiency upgrades to underperforming existing small-to-medium-sized businesses and nonprofits in the City of Charlotte through the use of an Energy Management Services Agreement (EMSA). The EMSA generates significant utility savings, provides rapid reductions in energy consumption and accelerates job growth. The investment by SEEA is used for actual project costs including energy assessments, energy service delivery, installation of controls and ongoing energy management for up to 10 projects, depending on the size of the project.
- Jax Metro Credit Union in partnership with Jacksonville Electric Authority (JEA) utilizes funding support from SEEA to administer the Home Energy Loan Program for its’ members in the Jacksonville community. Members are pre-qualified for a 1-year Green Line of Credit to be used for making approved energy upgrades. Rates are as low as 6% for loans up to $20,000 (with energy audit). To-date over 250 loans have been made totaling approximately $1.8 million dollars.
- Mountain Association for Community Economic Development’s (MACED) How$martKY initiative is a residential energy efficiency, tariffed on-bill financing program that operates in conjunction the East Kentucky Power Cooperative (EKPC) generation and member cooperatives throughout Kentucky. SEEA’s capital investment to MACED will support the expansion and growth of the How$martKY program. This investment will initially help MACED finance roughly 27 home energy retrofits through the on-bill financing model.
- SunState Federal Credit Union administers a program that promotes loans exclusively for the funding of energy efficient home improvements. SEEA funding is supporting a loan loss reserve that allows SunState to lower credit requirements and extend the terms so that member’s energy dollar savings closely resemble the cost of the upgrade loan payment. SunState has committed a minimum of $5 million dollars to this program which is modeled after Jax Metro Credit Union’s successful loan program.
- Renew Financial collaborated with Pennsylvania Treasury, the National Association of State Energy Officials, Energy Policy Consortium and Citi to launch WHEEL (the Warehouse for Energy Efficiency Loans)in 2014. WHEEL is a multi-state financing partnership that enables participating states to access capital markets financing for their residential loan programs. These ReHome Loan Programs give contractors the opportunity to provide homeowners with affordable unsecured loans for energy efficiency, renewable energy and water efficiency. Using capital provided by SEEA, the Florida and Virginia WHEEL programs will be able to offer a single, standard low rate to homeowners who meet standardized underwriting criteria.