Green Options

In December, I wrote that energy efficiency is the business opportunity for 2009. However, we all know that businesses and consumers can’t buy many of the energy efficiency products and services without financing. So, where’s the money?

Government Help?

If you are a small business or want to sell energy efficiency products to a small business, you might think that a logical place to start is the US Small Business Association. However, I don’t think that the SBA has any special loan guaranty programs for renewable energy or energy efficiency purchases. Please comment below if you have had experience with any of the above financing programs or if you know of others!

Recently, the SBA did announce grants to specific small business development centers for energy efficiency programs. Although I don’t see any reference to financing, if you can qualify for a general SBA loan, energy efficiency improvements could be a good use of proceeds!

Another Federal government agency, the EPA, has a list of resources as part of its Energy Star for Small Business program. When I clicked on “California” I received this list, which includes some lenders.

If your business wants to sell energy efficiency products or services to homeowners, then you’ll be happy to see an increasing number of related loan products for homeowners. For a number of years there has been an Energy Efficient Mortgage program, but I’ve heard that is hasn’t been very popular with banks and homeowners. And now, In the northeast, there is a pilot program for a promising-sounding Energy Star Mortgage, which allows homeowners to finance energy efficiency retrofits with a tax-deductible interest payments.

Private Sector Financing Sources

Private banks are starting to innovate with “green loans”. One that was launched late last year is by Umpqua Bank and the Energy Trust for Oregon is the Greenstreet lending program is for installing solar energy systems or energy efficiency improvements. Businesses who are customers of Portland General Electric, Pacific Power, NW Natural or Cascade Natural Gas can apply for loans of $5,000 to $100,000 with a fixed 6.5% interest rate. There is also a program for homeowners.

KPMG’s International Survey of Corporate Responsibility Reporting came out over a month ago, but at 118 pages, it has taken me a while to go through it. If you’d like to check it out, download the report from the KPMG site.

But if you’d like a quick summary, here are some highlights that stood out to me:

First, some good news: The report says, “Corporate responsibility reporting has gone mainstream - nearly 80 percent of the largest 250 companies worldwide… issued reports.” However, the continuation of that sentence says, “…and an additional four percent integrated corporate responsibility information into their annual reports.”

I’d love to hear from an annual report writer or investor relations executive, because four percent sounds very low. Maybe there is a good reason for a stand-alone report, but it seems to me that sustainability and social responsibility should be integral to corporate operations in the Twenty-first Century.

(I get ahead of myself. The punchline of the KPMG report is that companies are not integrating sustainability and social responsibility plans sufficiently. Many companies may report their plans, but very few declare their strategies and results.)

As we end the year, I’m looking back at 2008 and am happy to see that some good things did happen this year. In addition to Federal subsidies for renewable energy purchases being renewed and even increased, cities governments also stepped up with programs to support cleaner energy adoption.

On September 30, 2008, City Solar Tour stopped in San Francisco, and Mayor Gavin Newsom used the opportunity to announce a program to subsidize conversion to solar power for commercial users in San Francisco.

Although commercial users throughout the City can apply, the City of San Francisco is reaching out to commercial users whose location makes solar power particularly financially viable. They used the sfsolarmap.org to identify 1600 companies in downtown San Francisco where it is sunny much of the year and sent letters letting them know about the availability of up to ten thousand dollars for solar subsidies and the availability of a free audit to evaluate the viability of solar power for their commercial building.

OK, that headline is a bold statement, but that was certainly my take-away from an event last night organized by the California Cleantech Open business plan competition.  The event was called a “Green Building Symposium“, and while there were booths manned by winners in this year’s competition who won for building materials and renewable energy solutions (including Bottlestone, S3 (smart shower system) and Red Solar), the topic of the speakers and a panel discussion was energy efficiency.

You can see and hear the presentations for yourself via an archived video. (Hint: You will need the RealPlayer. Click on “Part 1″ on that page under the title for the December 9th Green Buildings event, and you’ll want to fast-forward through the video of people filing into the room.)

The first keynote address was given by Gil Sperling, from the Federal Office of Energy Efficiency and Renewable Energy in the U.S. Department of Energy, who announced the signing of a memo of understanding with the California PUC to align programs in support of energy efficiency programs.

The second keynote address was given by Dian Gruenich, Commissioner, California Public Utility Commission (CPUC), who described a year-long process that resulted in a strategy plan, which you can download here (all 110 pages of it) or read an executive summary or fact sheet.  The plan’s goals include requiring all new residential construction in California to be zero net energy efficient by 2020 and for all new commercial construction to be zero net energy efficient by 2030. Read that, opportunities for green building materials, smart meters and efficient cooling systems, better windows and insulation, etc.

Obviously conserving electricity saves money, which in tough economic times is particularly important. However, small businesses and other organizations in the San Francisco Bay Area were just issued checks for turning out the lights and taking the stairs for one day last summer. And some of the checks were for thousands of dollars.

These small commercial energy users were part of a Demand Response program run by the nonprofit San Francisco Community Power. When state energy use is particularly high, such as when there has been an extended heat spell and air conditioners are running for many hours a day through broad areas of the state, the California Public Utilities Commission (PUC) calls on Demand Response program participants to reduce demand by turning off equipment and lights, not using elevators, etc.

Participants in this program included all types of small commercial users, from retailer stores (such as an REI store), to automobile dealers and a film production studio, to schools and government offices. They received checks ranging from $30 to $3000 all from one day of reduced electricity usage last August.

Many entrepreneurs are starting green businesses now, but a number got their start a few years ago and are already thinking about moving on.

Willem Maas started GreenHomeGuide.com back in 2004 and sold it this summer to the U.S. Green Building Council, developers of the LEED rating system.  I asked Willem to share his experience with Ecopreneurist readers, and the following is my interview with him.

Leah: How did you think about your ultimate exit when you were starting GreenHomeGuide? Did you think about how you would maximize your investment either by sale of the company, long-term operations, etc.?

Willem: I didn’t at all.  I took GreenHomeGuide on as a cause. There was a need out there. I had talked with a lot of people who wanted to remodel green but ran into hard questions, such as which paints are safe, how to find a green contractor, etc.  I didn’t spend a lot of time focused on how it would be a sustainable business.

I figured I’d give it a shot, get a Beta of the site up and running, and learn along the way.  I had just spent nearly a decade in enterprise software, so the home improvement market, web publishing, consumer marketing, etc were all new to me.  I tried but couldn’t forecast a P&L for the business because I didn’t know what the right basis for the forecast would be, so I just plunged ahead.  Today, with a 16-month old son and a daughter on the way, I take financial projections much more seriously.

Regarding an exit, I wouldn’t advise planning for an exit as you start a business.  Focus on creating a valuable business that you enjoy running.  If and when you’ve created sufficient value that someone wants to buy it, great.  Selling a business is non-trivial.  Randy Komisar, he’s a partner at Kleiner Perkins ironically, wrote a great book that touches on this called “The Monk and the Riddle.”

It’s time to vote for the Forbes.com “Boost Your Business” contest winner. One for recently formed small company (several of which are green startups) will win $100,000 and lots of great PR.  Five finalists have been whittled down from over 1,500 applicants, and it is time to pick the winner.

It is a chance to test your business analysis skills. Which company do you think can [...]

I love to read, but am lucky if I have time to finish even one book a month. Fortunately, I can “cheat” and listen to author interviews on the radio or via podcasts, and I just listened to an engaging interview with Pamela Hartigan, the founding partner of the yet-to-be-launched Volans Ventures and the founding director of the Schwab Foundation for Social Entrepreneurship, about her new book titled The Power Of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World.

The podcast is part of Stanford Social Innovation Review’s “Design for Change” series, and I recommend that you listen to it.

But if even that shortcut is too much for you, I’ll give you a couple of highlights.

Marketplace Radio wants to hear from green business owners about how they are doing in the down economy.  Looking at their Web survey form, it seems that they are looking for companies to feature in stories as much as they are in taking the pulse of green business at the moment.

Perhaps it is an opportunity to get some publicity for your business.

Regardless of whether you are able to get any free PR, by participating, you will also be contributing to a discussion about issues that may be critical to your green business’ success.

Ecopreneurist recently received a question from a reader about whether manufacturing an eco-friendly product in China is a good idea.  We thought his question would make a good topic for discussion and encourage other Ecopreneurist readers to give Chris your advice too by commenting below.

Chris wrote, “I have designed some great eco-friendly items [...that...] are not eco- or green-washed, but [are] designed from the start to be green and are made with fully sustainable and recycled materials… The problem I am having is, the only place I can find a supplier to make these green products is in China. I am afraid that there could be criticism, backlash or negative comments made about the brand because the products are not made in a more eco-friendly perceived Country. I have made a huge effort to have the items made elsewhere without any luck… Do I make the items in China if that is my only option and risk criticism?”

Chris, you are right to see this as an important branding question.

I assume that you have checked into the potential manufacturer and have confidence in that factory’s environmental record and labor practices. If you know that it is possible to manufacture a product in China in a sustainable way, then it is just a matter of either transportation or image. And, for products sold on the West Coast of the US, shipping from China can have less impact on the environment than other transportation means, such as trucking or air freight.

So, let’s assume that your product will be truly green in all ways (materials, manufacturing and shipping) and that your issue is only a matter of impression. What can you do?