Title: UNH-Inclusiv Consumer Solar Lending Guide

DISCLAIMER:

The materials presented in this Guide are intended as an informative and educational summary of general information for lenders interested in launching a consumer solar loan program. Inclusiv has taken reasonable measures to ensure the quality of the data and other information available in this Guide. Inclusiv, however, makes no warranty, express, or implied, nor assumes any legal liability or responsibility for the accuracy, correctness, or completeness of any information that is available through this document. This document is intended for educational and discussion purposes and does not constitute legal advice nor replace independent professional judgment.

Please do not share this website or the materials embedded throughout with anyone outside of your lending institution. These resources were developed and shared with the understanding they would be used only by community-based financial institutions who took a UNH-Inclusiv Solar and Green Lending training course.

Step 1: Increase Your Knowledge About Solar

The first step in developing a solar loan is to learn the basics about solar and clean energy in your market so that you are confident and knowledgeable when building interest and support for these new loan products.

You are already well on your way by having completed the Inclusiv-UNH Consumer Solar Lending Professional Training course. This step will help you refresh and continue your learning with links to webinars, research papers, online resources and videos.

Objectives:

Objectives

Understand the basics of solar power systems

- Become familiar with common energy terms, along with Solar Photovoltaic (PV) systems and components: Course Lecture – Solar PV System and Components.

If you’d like to learn more:

- Watch this video on how solar panels work: Department of Energy – “Solar Photovoltaics: The Basics.”
- Read about how long solar panels last: EnergySage – “How long do solar panels last? Solar panel lifespan explained.”

Understand different types of solar loan products and how offering solar loans can benefit your members and the environment

- Explore this course resource to learn about different loan types and benefits: Course Lecture – Consumer Solar Loan Types and Benefits.
- Become familiar with the economic benefits of solar energy: Department of Energy – “Benefits of Residential Solar Electricity.”
- Learn about the environmental benefits of solar energy: Solar Energy Industries Association – “Climate Change.”

If you’d like to learn more:

- Read this toolkit for local governments: SolSmart – “Why Lend for Solar?”
- Read this report for community financial institutions: National Renewable Energy Laboratory – “Solar Lending Practices By Community and Regional Financial Institutions.”

Understand social and economic justice perspectives related to clean energy costs and access

- Understand the interconnectedness of energy justice, the racial wealth gap and racial equity, and learn about different wealth building strategies for low- and moderate-income (LMI) communities:
  - Definition of Racial Equity: Race Forward – “What is Racial Equity?”
  - Definition of Energy Justice: Department of Energy – “Promoting Energy Justice”
  - Explore the Initiative for Energy Justice website

- Learn how, as lenders, you can work with trusted partners to reach underserved markets and create additional access to solar products, here:
  - Read the Low-Income Solar Policy Guide – “How to Build an Inclusive Solar Program”
  - Read the report by the Department of Energy and Clean Energy States Alliance – “Solar+Storage for Low-and Moderate-Income Communities”

If you’d like to learn more:

- Explore the Asset Building Policy Network’s – “Racial Wealth Gap Infographic.”
- Review the Aspen Institute Financial Security Program’s “101 Solutions for Inclusive Wealth Building” and “The Future of Building Wealth.”
- Read “Revolutionary Power: An Activists Guide to the Energy Transition” and/or watch the Book Launch and Q&A video.
- Gain awareness of how the White House is driving environmental justice initiatives via the Justice40 Initiative.

Understand how your financial institution could benefit from solar lending

- For a refresher on the benefits of solar, watch this Course Video – “Top 10 Reasons Your Financial Institution Should Consider Solar.”
- Identify the goals of your clean energy loan program:
  - Examples of strategic goals:
    - Meet your community’s demand for clean energy products
    - Position your financial institution as an alternative to national lenders and dealer financing that add up front fees to consumers
    - Align with your organization’s mission and values
  - Examples of financial goals:
    - Reach new members and markets (typically 75-90% of solar loans at a community-based financial institution go to borrowers that are new to that financial institution)
    - Gain asset diversification and liability management
    - Open up cross-selling opportunities: new members, small businesses and deposits
- Connect with other solar lenders to understand their experiences in this space:
  - One great place to start is on our private LinkedIn group page, the online platform we have created specifically for the Inclusiv-UNH solar lending alumni community, where you can connect with other lenders, share resources and learn about upcoming events.

Step 2: Assess Your Financial Institution’s Readiness for Solar

Now that you’ve become more familiar with residential solar, the next step is to conduct a high-level evaluation of your financial institution’s readiness to offer solar loans. This initial assessment will help determine if your internal capacity, systems infrastructure and financials are well positioned to launch a solar product.

At the end of this assessment, you will have identified small or more significant barriers that should be addressed in your planning before you move forward.

Objectives:

Objectives

Understand your internal readiness to launch a solar program

- Review the Consumer Solar Readiness Assessment Tool that you completed in the Consumer Solar Lending course. This tool helps evaluate your financial institution’s readiness for solar lending, including:
  - Clean energy product awareness and knowledge
  - Lending experience (internal lending vs. outsourced underwriting for Real Estate, credit scoring vs. manual underwriting)
  - Capacity (people, systems and infrastructure)
  - Alignment with strategic and financial goals
  - Senior leadership interest and support
- Collect internal data to see if your borrowers are already using solar:
  - You likely have internal capacity in your core software systems that allows you to scan for key vendors and payee names in your depository transaction files (i.e. Bank Secrecy Act scans for key names)
  - Using a similar process you might scan “Payee Names” to include solar vendors in your market
  - This might give you an indication if your members have already financed solar projects

Understand your existing customers/members and your local market

- Determine which of your customers/members will be good candidates for solar and if you should target new customers, existing customers or both.
- Use the Borrower Category Segmentation – Loan Program Estimator Template to help identify different potential borrower segments in your region. This template will help you consider the following questions to get a better sense of potential borrowers:
  - What are their ages, backgrounds, language preferences, and overall experiences with financial institutions in your community?
  - Do your borrowers use the internet or prefer a more personal/manual approach?
  - What are the types of homes in your market (i.e. single family owner occupied homes, rentals condos, co-op housing, etc.)?
  - How high are their energy bills as a percentage of household income? Will this product be positioned as a way to save money?
  - What are the energy efficiency/weatherization needs of potential borrowers?
- There are many ways to collect this information, including:
  - Sending a survey to your members/customers
  - Leveraging census data from the United States Census Bureau website
  - Exploring the National Association of Realtors Housing Statistics website
  - Reviewing research from the American Council for an Energy-Efficient Economy – “Energy Burden Research Report”
  - Understanding different State Electricity Profiles compiled by the U.S. Energy Information Administration
  - Diving into the Solar Energy Industry Association – “State-By-State Map” that provides the latest solar market insights and policy updates in all 50 states and Washington, D.C.