Financing Energy Renovations

I attended the Sustainable Business Group’s first meeting of the term yesterday. That was interesting.

Having been raised in Portland, I’m inclined to support green, organic, and sustainable practices because I associate them with the preservation and continuation of the natural elements that make my hometown so great: vast and ancient forests, full of unbridled wilderness. Even our logging trails are quickly reclaimed by the hungering forests. As a city boy, I’m also well aware of the premium people are willing to pay for ideologically satisfying goods — that is, goods they can “believe in”. The Wall Street Journal ran a good experiment about this regarding goods perceived as ethical or unethical. I’ve noticed, in my personal observations, that my peers are generally willing to pay a 20% premium for ethical goods, but they’re only willing to pay that premium if they feel they have that money at all. Poor college students will more likely buy the 24-pack of science-forged hot dogs than they’ll buy the 8-pack of supergreat green-dogs that costs the same, simply because they need to eat more than they need to support the welfare of livestock.

I asked our presenter about this premium, and she replied, more or less, that it wasn’t her field. “I don’t see what results our consultations generate.” That concerned me. Shouldn’t you want to follow up with your customers, to see how your advice panned out? Even if your advice goes poorly, you should want to learn from that failure and amend future consultations, rather than continue to hand out bad advice. Right?

After the meeting, I talked with two folks from the club: the president, whose name I swear is “Hawk-on”, and another, whose name I think is “Mali”, but I’m probably wrong about that. I’m so bad with names. Anyway, we discussed green tech like tide and solar energy. At some point, Hawk-on said he wanted to start a business that specialized in adding solar panels and energy storage capacity to people’s homes, among other energy-efficiency measures. Reducing utility costs in this way generally pays for itself over time, but the up-front costs are normally prohibitive for homeowners. If the investment is generally a good idea, but few homeowners have that kind of cash available at any given moment, then, golly, this sounds like a problem credit can solve, if ever I heard one.

What if there were a company called, say, Sage Marmoset Renovators, that went to homeowners and said “HEY. I will reduce your utility bills FOR FREE using solar panels, car batteries, wall insulation, and a fantastic loan from the bank. To pay for our end of things, we’ll take a portion of the difference between what you’re paying now and what you’re paying after the renovations, so that you’re still saving money, but we still get paid.” Thanks to the bank, SaMarRen’s costs are already paid for by the time they begin construction, so the homeowner pays nothing up front, while the money he/she pays off their new utility bills go toward the bank to pay off the loan. For incentive purposes, it might be wise to tweak precisely who gets paid when, but the above plan is the basic idea.

The key to this arrangement is finding a bank willing to pay for this kind of operation. In a financial climate like this, that’s not likely to happen. But it doesn’t mean the model isn’t a good idea.

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