Startup Appalachia Accelerating the Entrepreneurial Economies in Appalachia Project NarrativeStartup Appalachia aims to (1) identify promising efforts that could produce larger results for theeconomic transition of Central Appalachia, (2) encourage direct organizing by foundations to fundaround the most promising work in the region, (3) leverage additional resources to scale projects,and (4) offer funders insight on how to capitalize on the investments they have made to date.Section I: Project IdentificationProject Title:NCIF/MACED Grocery Energy Savings CollaborationIdentify the name, contact number and email address of the following Startup Actors: Supportive Coach: Lisa Sharp, USDA, Rural Development Nominator: Sandra Mikush, Mary Reynolds Babcock Foundation Project Leader: Marten Jenkins, NCIF Paul Wright, MACEDSection II: To be completed by the Nominator1. Please provide a short summary of your motivations for funding this project and what you hope togain out of participating in Startup Appalachia.The Grocery Energy Savings Collaboration is a promising effort to help local grocery stores rein inrising utility costs to stay competitive. Local grocers are a key part of the infrastructure for the ruraleconomy, making food available to communities without access to large-scale grocery chains. Withnotoriously low profit margins, grocers can reduce utility bills, which are often the second largestexpense behind employee salaries. For participating groceries, the utilities savings could be thedifference between retaining employees or even staying in business. This project relates to twopromising economic sectors – local foods and energy – identified by the Appalachia FundersNetwork and the Babcock Foundation as key to economic transition toward a sustainable economythat offers economic opportunity and a healthy environment for all its citizens. As a collaborationbetween two leading community development financial institutions, the project can expand access tocapital for rural entrepreneurs and create a financing vehicle that can spread across Appalachia.Section III: To be completed by the Project Leader1. Clarify the short-term and long-term results of the project.The Mountain Association for Community Economic Development (MACED) and the NaturalCapital Investment Fund (NCIF) provide a suite of services – energy audits, technical assistance, costshare grants and loans – to help small businesses control their energy costs and operate moresustainably. MACED, which primarily serves eastern Kentucky, and NCIF, which primarily servesWest Virginia, have seen increased demand for credit from businesses and farms in the local foodsvalue chain that seek to implement renewable energy/energy efficiency (RE/EE) projects. Inparticular, MACED and NCIF have had great success in applying this suite of financial and technicalassistance services to grocery stores. These are often projects that traditional banks are hesitant to
Startup Appalachia Accelerating the Entrepreneurial Economies in Appalachia Project Narrativefinance (either partially or fully) because of uncertainty about the relatively new field of EE/REfinancing.During the next three years, NCIF and MACED will focus our resources and more intentionallytarget the small grocery industry. In the short term, theGrocery Energy Savings Collaboration willprovide the following results: 59 EE/RE loans. $4.4 million in loans. $900,000 in energy savings. 47 new jobs created/retained.The long-term results of the project are geared toward creating meaningful examples of EE financingmodels that can be replicated at scale in other commercial sectors beyond groceries. Specifically, wehope to achieve the following long term results: Help groceries – which are vital community institutions providing food and important, locally-based jobs – become resilient in the face of rising energy costs. Demonstrate that the energy efficiency financing and technical assistance market can be successfully financed with less risk than is currently assumed by more traditional financial institutions. Successfully demonstrating this would encourage other organizations to invest in these deals, thus reducing barriers to capital for commercial business owners. Create a suite of packages that can be replicated at scale by other financial institutions. Create a base of grocers and other appropriate commercial entities who can serve as examples to utilities, decision makers, and others about the viability of energy efficiency and renewable energy markets. EE/RE in the commercial market represent a key component of advancing a clean energy economy in Appalachia. The goal here is to build political support for demand-side management, on-bill financing, and other types of state- and utility- supported retrofit and rebate programs. Increase long term support by local utilities for cost share programs.2. Please provide a detailed description of howthis project couldbe expanded.Through the Grocery Energy Savings Collaboration, NCIF and MACED will collaborate to increasemarket penetration in West Virginia and eastern Kentucky, educate entrepreneurs about economicincentives, and build capacity among stakeholders along the energy and food systems value chain. Toexpand our current efforts, NCIF/MACED would explore the following broad areas of work:Market Penetration: Develop multiple referral sources among utility providers, food distributors, equipment vendors and regional banks that serve the grocery industry. Develop communication tools and marketing activities to communicate the value of energy cost savings audits, incentives/rebates packaging, and financing provided by NCIF and MACED to finance energy saving retrofits. Increase direct marketing to grocery store owners through mailings, trade shows, press coverage of completed projects, and other publicity highlighting the benefits of energy efficiency cost savings.Economic Incentives Packaging:
Startup Appalachia Accelerating the Entrepreneurial Economies in Appalachia Project Narrative Demonstrate viability of commercial energy efficiency retrofits with payback on the investment in less than three years, using utility rebates, REAP grants, and other external incentives. Collaborate with commercial energy service representatives to package utility rebate subsidies for businesses. Aggregate grant funds from private and public sources to provide subsidy and create incentives for retrofit projects. Capacity Building: Share lessons learned in the energy and food systems (e.g. underwriting, industry and outcomes metrics, technology/interventions) with stakeholders in the energy and food systems value chain, and with policy and decision makers who play an important role in accelerating the demand and market for these services. Develop a qualified pool of contract consultants across the region that would provide energy audits at reasonable prices. Provide financing to EE/RE service providers and equipment manufacturers to increase the number of qualified service providers in the region. 3. What resources are needed to assist in this expansion?The collaborative initiative needs some expertise in marketing to grocery store owners. We need amarketing action plan that details our targeted marketing efforts, establishes metrics and methods formeasuring success, and trains our loan officers on how to best communicate with local grocers.We also need to develop depth and breadth in our energy audit capacity between our two agencies.This includes sourcing new consultants and more efficient methods and systems of conducting energyassessments and providing quality recommendations and reports to grocers.Funding Requirements (next three years) $316,500 in operating support to scale up marketing and build referral system $198,000 in program funds to provide energy audits and build audit capacity in the region $3.5 million in loan capital and $500,000 in loan loss reserve capital. 4. Please list the specific activities that will lead to this expansion. (Provide a timeline for these activities.) In order to expand our collaborative work NCIF and MACED has identified the following activities and work that needs to occur in the next 12-24 months: (Fall 2012) MACED and NCIF receive technical assistance from Opportunity Finance Network that will expand the organizations’ knowledge of how best to market to grocers and how best to structure financing deals with small-to-midsized grocery store owners. MACED will receive the marketing TA, while NCIF will receive the underwriting TA. Both organizations will share their learning with the other. (Dec 2013) Hire a full-time contract consultant to coordinate and implement the marketing strategies, measure marketing metrics and outcomes. (Jan 2013) Train lending and program staff on RE/EE marketing and talking points. (Jan/Feb 2013) Develop a detailed marketing plan and tools that includes marketing messages, a website and marketing collateral targeting grocers and EE/RE referral sources.
Startup Appalachia Accelerating the Entrepreneurial Economies in Appalachia Project Narrative (March-June 2013) Cultivate relationships with public and private sector leaders who can help us with market penetration strategies, incentives and referrals. (2013-2015) Asses the need for developing more efficient, targeted loan products for other EE projects beyond the grocery sector. (2013-2015) MACED and NCIF continue to explore creative financing tools, rebates, and other incentives to help implement RE/EE packages. (2013-2015) NCIF and MACED continue to develop and finance EE/RE projects. (2013-2015) MACED and NCIF continue to share best practices and knowledge they have gained with each other and with others, especially for-profit and nonprofit financial institutions.Section IV: To be completed by the Nominator and Project Leader 1. How does this project contribute to the economic transition of Central Appalachia? The primary contributions of the Grocery Energy Savings Collaboration to an economic transition in Central Appalachia are two –fold. In the short-term, this partnership has the real potential to increase the financial security of grocery stores, which are vital community organizations in Central Appalachia. The profit margins for grocers are extremely thin, and one of their greatest expenses, after people, is their utility bills. Helping them implement RE and EE retrofits helps them save money in the short term while also protecting them against future rate increases. The more resilient these businesses are, the more stable they are, thus increasing their presence and ability to serve the communities in which they are located. se In the long-term, the Grocery Collaboration can prove the viability of and provide a model for the implementation of RE/EE at the commercial scale. If additional for-profit and nonprofit financial institutions were to see the value in this approach to financing EE/RE, the chance for this market to grow is greatly increased. Likewise, the base of existing rural grocers who have benefitted from EE/RE services will serve as valuable examples to policy and decision makers, thus helping to build the political case for expanded support of these initiatives. Once there is a legislative or utility-driven mandate to provide a portion of energy generation through EE/RE, the contractor market for providing these serviceswill greatly increase and will help to create a great deal of meaningful, local jobs.2. Provide a 1-paragraph summary of your project to share on the Appalachia Funders Networkwebsite.The Grocery Energy Savings Collaboration is a joint effort between the West Virginia-based NaturalCapital Investment Fund and the Kentucky-based Mountain Association for Community EconomicDevelopment that seeks to develop and increase the availability of energy efficiency and renewableenergy financing and technical assistance services to rural grocers in Appalachia. The implementationof energy efficiency and renewable energy measures represent a direct path for these vital communityinstitutions to save money and increase their profit margins, thus ensuring their longevity byprotecting them and their employees from future rate increases.Section V: Conditions for ParticipationDue to the educational nature of this initiative, your participation in Startup Appalachia confirmsyour willingness topublically share and encourage the use of the ideas and strategies behind yourorganization’s project.