Madeline Priest, Senior Manager, Market Engagement at Inclusive Prosperity Capital, spoke with MetroHartford Alliance Content Manager Nan Price about Connecticut Green Bank’s mission to help make Connecticut more energy efficient.
NAN PRICE: Let’s start with the basics. What is a green bank?
MADELINE PRIEST: A green bank uses limited public dollars to attract private capital investment in clean energy projects with the goal of making clean energy more affordable and accessible to consumers.
Connecticut Green Bank is the nation’s first statewide green bank. It’s partially funded by a small surcharge on Connecticut residents’ electric bills. We then use that capital to invite private investors to lend into the clean energy space. That’s energy efficiency such as insulation, windows, and HVAC. It’s also things like renewable energy and bigger projects like small hydro, fuel cells, and anaerobic digestion.
NAN: Why establish a green bank in Connecticut? What’s the expected outcome?
MADELINE: Connecticut Green Bank was created by the Connecticut General Assembly in July 2011 as a part of Public Act 11-80. We’re the implementers of the state’s energy policies around reducing greenhouse gas emissions and overall energy reliance connected to some of the highest electricity costs in the country. We can help residents and business owners make Connecticut a more affordable place to live, work, and thrive.
At the end of the day, it’s about helping residents by making sure they’re saving energy, they’re comfortable in their homes, and they’re happy to be living in the state of Connecticut.
NAN: How does green banking work?
MADELINE: A good example is our residential loan product, the Smart-E Loan, which we offer in partnership with a network of nine community banks, credit unions, and one community development financial institution. They all want to be lending to small businesses helping their local community members make investments in their home. They like a product that helps homeowners save energy and money, but they don’t really want to learn the ins and outs of those specific industries and determine what’s worth their investment. That’s where Connecticut Green Bank comes in.
We set the framework around what is energy efficient that is worth lending to, and then our partners do their traditional lending practices. We have about 500 eligible contractors to offer the financing to their customers. Every homeowner in every community in the state of Connecticut can participate.
NAN: How does Connecticut Green Bank contribute to small business growth in the state?
MADELINE: We’re providing contractors with access to financing that enables them to grow their small businesses. Most of the contractors we work with are small family-run businesses with fewer than 10 employees.
Financing a job can be challenging for contractors’ cash flows. The Smart-E Loan product was created to be very contractor-friendly. Contractors can get working capital as a part of the loan, so they’re paid one third of the loan upfront before the work even begins. They get the final two thirds upon proof of job completion. Our contractor customers love that, because they’re not breaking the bank to be offering local financing to their customers.
Our customers are also our lenders. We’ve created a product they can take to market to help them grow their lending practice in personal lending, which is a big deal for smaller credit unions and community banks.
NAN: How is the lending different than getting financing from another organization?
MADELINE: We have a loan loss reserve we provide to our lenders. So, if someone defaults on their loan, we provide them a small percentage of those losses after a certain percentage of losses on their overall portfolio of loans with us.
The theory here is, these are good investments and, because these are people who are saving energy and money, we aren’t seeing many defaults. So, our default rate is less than a 1.5%, which is pretty phenomenal, since with traditional credit unions it’s usually closer to 2.5% to 3%.
NAN: Mayor Luke Bronin issued an Energy Equity Challenge for Hartford residents and local property owners in November 2019. How is Connecticut Green Bank involved?
MADELINE: Connecticut Green Bank is a partner of the Energy Equity Challenge and encouraging homeowners to participate in our Solar for All program. The program is offered through the Connecticut Green Bank and PosiGen to provide an affordable way to go solar and install energy efficiency measures for all homeowners, regardless of their income or credit score.
NAN: How has COVID-19 affected your business and how are you meeting clients’ needs?
MADELINE: In this challenging time, the Green Bank is open for business. We’re doing our best to support the essential contractors, communities, customers, and capital providers we do business with and our teams are available to answer questions, provide information, manage transactions, and participate in remote meetings and calls.