Step 2: Define Finance Program Objectives
The Benefits of Buy-In
BetterBuildings for Michigan developed a network of 20 partners and stakeholders, including municipalities, utilities, energy professionals, financial institutions, trade associations, universities, and community action groups. This diverse group contributed first-hand knowledge and expertise and helped generate excitement for a new program.
With the help of stakeholders, the program conducted research that found that observed losses (i.e., write-offs of unpaid loans) on energy efficiency-related loans from around the country were 1% to 4%. With this knowledge, BetterBuildings for Michigan was able to use public funding to negotiate a 20:1 leverage ratio with its private financial partners. While you may not be able to match these terms, working with stakeholders may help you negotiate favorable loan terms.
BetterBuildings for Michigan was also able to motivate its partners to provide free marketing and outreach and measurement and verification services by showing them how this program would serve their own goals. As BetterBuildings for Michigan discovered, key stakeholders in the community can provide valuable insight into how a program can effectively use public funds to address the needs of the community.
A clear definition of objectives will form the basis of your financing program's design, help communicate the value of your efforts to key audiences, and help you make smart decisions about the strategies and tactics you select to implement your program.
If after assessing the market you find that there is a large potential customer base for financing energy efficiency upgrade projects, your next task is to define your finance program objectives. These should be clearly defined, measurable, and achievable by a realistic date.
Identify Program Objectives
Program objectives might include:
- Reducing energy consumption by a target amount to achieve a local goal
- Increasing the participation of small businesses by a certain percentage in a defined time period
- Creating a certain number of energy efficiency-related jobs
- Expanding the number of energy efficiency financing options and financial institutions that offer them.
You may also want to consider a set of secondary objectives. These could include:
- Building brand awareness for energy upgrade programs
- Transforming programs in the marketplace so that public funds are no longer needed to get consumers to choose energy efficient equipment and practices over standard ones.
Reach Out to Stakeholders
Reach out to potential partners and stakeholders to help define your program objectives. Stakeholders can include municipal governments, utilities, energy professionals, financial institutions, trade associations, universities, community action groups, and other governmental organizations.
Limit Your Program Scope. Although broad stakeholder participation in the development of program objectives is recommended, you should keep the scope of the financing program focused on a discrete objective. Stakeholders might have a wide range of ideas and interests, but it is best to focus the objectives of the financing program on the specific and quantifiable needs of your community.
For more information on this topic, see Chapter 6 of DOE's Clean Energy Finance Guide for Residential and Commercial Building—Partners & Stakeholders: Roles and Potential Impact.