Leading Through Energy Affordability: Rewriting the Rules of Lending (S5:E9)

JUST POWER PODCAST Leading Through Energy Affordability: Rewriting the Rules of Lending (S5:E9) Episode Transcript: Duanne Andrade, CEO, Solar and Energy Loan Fund (SELF) CAROLYN PARRS: What if one of the biggest barriers to energy affordability isn't the price of electricity, but three numbers - your credit score - that actually has nothing to do with whether you can pay your bill or not? That is the reality of millions of working families across America. And today's guest has spent more than a decade building a financial workaround to that broken system.

Welcome to Just Power and our series Leading Through Energy Affordability, where I ask one central question: What does a credible response to this moment in energy affordability actually look like? Today, we're talking to someone who is answering that question - not with policy or research - but with capital for the families that need it most. Duanne Andrade is the CEO of the Solar and Energy Loan Fund, otherwise known as SELF. They're a green bank and a Community Development Financial Institution based in Fort Pierce, Florida.

SELF makes small, unsecured loans for energy upgrades, fortified roofs, and climate resilience improvements to homeowners that conventional lenders have turned away. And they've proven it works - in over 13 states. Welcome to Just Power, Duanne. DUANNE ANDRADE: Thank you very much, Carolyn.

It's really an honor to be here and to talk about this issue of affordability and access to capital - it's one of my personal passions and really what we're tackling at SELF. You briefly touched on one of our most successful programs - our flagship program, which we've been operating for the past 13 years. That's offering unsecured loans to low- and moderate-income households who are otherwise denied by traditional banks due to those three numbers you mentioned, and other systemic barriers.

For 13 years, we've been challenging the paradigms of the financial system - putting it on its head - and saying, let's do things differently to break those barriers down and prove that it works. CAROLYN PARRS: Wow, that's so needed right now. You've been doing this for a while - well before energy affordability became the crisis conversation it is today. Walk me through the arc of a family that comes to SELF.

Where are they starting? What does that intervention look like? And where do they end up - not just on their energy bill, but financially, the whole picture? DUANNE ANDRADE: Sure.

Let me back up a little for context. This issue of energy insecurity and affordability is not new. Ten, thirteen years ago when I started working with SELF - my background is microfinance, so this is second nature to me - but even then, conversations were being had in silos. Energy efficiency in one silo.

Resilience in another. Clean energy in yet another. Health. Safety.

Hurricane preparedness. Everything was separate. And when you talk about energy efficiency at the household level, it's just part of someone's budget. Nobody is thinking, "I'm going to invest in a new air conditioner because it will pay off in five years."

No - they're thinking: "My roof is caving in. I don't want to lose my house in the next hurricane. I need an air conditioner so I can sleep and not suffer from mold and asthma." What we're finally seeing now is that affordability, resilience, health, and safety are all part of the same conversation.

They always should have been. And that's the lens SELF has operated from for 13 years. Being in Florida - and looking at the Southeast as our next geography - we had to think about what people actually need. We couldn't put solar on roofs that were old and out of code.

We couldn't put solar on a house with no insulation and a broken AC. We had to do the whole envelope: seal the home first, reduce the energy burden, then go to solar. All of that is why we've become leaders in consumer lending that addresses every part of the house - increasing affordability, reducing energy burdens and insurance burdens, and increasing safety. CAROLYN PARRS: So when someone walks in - say their AC just broke - do you do a big intake before you address the immediate need?

It's a complex issue. How does that work? DUANNE ANDRADE: It's as complex as you make it. So let me walk through what it actually looks like on the ground.

You're a working family. Two jobs, three jobs to make ends meet. Your AC goes out and your child has asthma. I'll give you real examples without naming names.

Take Carolyn - 80 years old, widowed, recovering from back surgery, on fixed income. She's never had debt because her husband had all the credit. He passed, and now she has no credit score. Her AC is out.

She's sitting in 120-degree heat inside her home. She goes to traditional lenders. Turned away. No credit.

So she's looking at payday lenders, who would completely annihilate her finances on a tight fixed income. But a friend tells her about SELF. She walks into our office. We have a program for people with zero credit scores.

We crowdfund through Kiva - global micro-investors - and we give her our lowest rate. Five percent, five-year loan. Because if you have zero credit and you've done nothing wrong - you simply never used credit - why should you pay three times as much as someone with resources? We believe in equity.

We test ability to repay. That's our measure. I was in the office the day she got her approval. I heard wailing and crying and ran to the front.

It was her, hugging our loan officer, crying tears of joy. She hugged everyone in that office. Within two or three days, she had a high-efficiency air conditioner installed. She's paying less than she was before with her old window unit.

And she repaid her loan - 100 percent. Then there's Pam - a real client who has given us permission to use her name and her story. She's a U.S.

veteran, single mom, raising four kids plus her sister's kids. She'd had cancer. She couldn't work full time. And her roof was just gone - buckets all over the house catching rain.

She was about to lose the whole structure. She couldn't get a loan anywhere. So she came to us. We replaced her roof.

With a sound roof, she could get insurance again. Then we helped her with the AC. Now she's safe, insured, and moving forward. To your question about assessment: we used to do full energy audits when we had DOE grant funds.

Now we have an online tool called Canopy Climate - people can go on for free, enter their home details, and see what upgrading their roof, AC, or going solar would cost and save, including available rebates. But in the end of the day, when someone's roof is caving in, you have to address the immediate need. We let organizations that specialize in auditing and education handle that side. We focus on what we do: getting capital to people quickly and responsibly.

CAROLYN PARRS: And in the process, they're building credit they didn't have before. DUANNE ANDRADE: Financial inclusion is a big piece of what we do. Absolutely. CAROLYN PARRS: You work in some of the most climate-vulnerable communities in the country - the South, oldest housing stock, lowest average credit scores, highest concentration of low- to moderate-income households.

How does geography shape what an affordability response actually looks like? DUANNE ANDRADE: Great question. Every location responds a little differently - climate vulnerability, energy and utility policies, what programs exist at the state level. And this is why when the industry talks about standardizing everything, I push back a little.

We can standardize processes and procedures. But because we're mission-driven and serving non-traditional clients, we need room to customize. Otherwise, we leave people out again. What we've built is what I describe as a four-lane highway.

Everyone can participate. The fast lane: you have a solid credit score, no issues, you can get a loan. You might even ask why you're coming to us instead of a bank. The answer is that we also provide project management - we vet the contractors, we check for price gouging, we manage the project, and you don't release payment until you're satisfied.

That consumer protection piece is huge, even for borrowers with an 800 credit score. The middle lane: your credit score is on the fence - some issues, maybe a rough patch. We look at your ability to repay, not just the number. We don't penalize you for going through something.

The slow lane: your credit score is lower, but not because you're a bad payer. Maybe a divorce, a cancer diagnosis, an emergency. We underwrite deeper. We give you the same rate or better, and a chance to rebuild your credit.

And then what I call the scooter lane: zero credit, crowdfunded through Kiva. It takes about 30 days to raise. More work for us. But there is a lane.

A four-lane highway where everyone can participate. That's the model. CAROLYN PARRS: Is this model proprietary to SELF? Because it really could be a template.

DUANNE ANDRADE: It is - not rocket science, but 13 years of learning how to serve each segment. And the proof is in the numbers: we've deployed about $60 million, our default rate is under 2%, and 70% of our clients are low- and moderate-income. We're doing it right because if you can demonstrate ability to repay a loan, that's all we need to know. What do those numbers prove?

That the system is wrong. It has mislabeled a large group of people and left them out. I came back to this country after being away for 20 years. I had no credit.

If my mother and stepfather hadn't been here, I couldn't have rented a home or bought a car - even with savings in the bank. My first credit card came from Best Buy because they wanted to sell me equipment badly enough to find a way to approve me. That experience made me realize how bad it was here for people trying to access fair credit. And this matters because right now we're seeing an average 7.

1% increase in energy bills. Low- and moderate-income households are already paying up to 20 - 30% of their income on energy alone. Add rent at 50%. Add insurance.

How do you get ahead? CAROLYN PARRS: They just get caught deeper and deeper in that cycle. I really wish this model could be baked into how utilities operate. DUANNE ANDRADE: We wish more people cared about these things.

As a CDFI, we're a nonprofit filling gaps that traditional for-profit lenders leave out. And that's where the irony lies: nonprofits with less funding do the hardest work, to the highest standard. And losing federal funding right now has a massive negative impact, because this is the work that allows people to function. If someone can't have a safe home where they can rest and be healthy, how do they go out and work effectively?

Everyone has a role to play. The private sector, philanthropy, government - and the mission-driven organizations like us who fill in what others can't. Sometimes it feels frustrating. But somebody's got to do it, and that's what we're set up to do.

CAROLYN PARRS: I am so glad you are on this planet doing what you're doing. And now the central question of this series: From SELF's perspective, what does a credible response to energy affordability actually look like in this moment? DUANNE ANDRADE: There's no silver bullet. Location matters.

Climate, utility policy, what programs exist at the state level - it's all different. But in general terms, here's what a credible response looks like. You need policy that understands what's happening on the ground - not just top-down mandates. For example: a policymaker might say, "We need everyone to get a fortified roof."

Great. But how does a low-income family afford that? Policy has to come with funding partners. Green building standards should be standard across the board - for new construction especially.

The argument that building sustainably costs more isn't even true anymore. You can design around affordability and resilience. Nobody wants to change the way they've always done things, but it's long past time. For existing homes - what the industry calls NOAH, Naturally Occurring Affordable Housing - local governments need to care about upgrades, not just because it's the right thing to do, but because when people lose homes to climate events, it costs the local economy.

Local governments should be working with CDFIs to fund these upgrades. Energy efficiency, resilience, water conservation - this shouldn't be tagged to climate as something exotic. It's just logical home improvement. So: policy, access to capital, the right partnerships - public, private, and philanthropic - and private impact capital.

All of it together. It's an ecosystem. There's no single solution, but there is a system that works when everyone plays their part. CAROLYN PARRS: An ecosystem - I love that.

And you've built one. Thirteen partners now, from Nevada to the Carolinas. Tell me about the thinking behind making SELF the engine - the Intel inside - for other organizations rather than just your own brand. DUANNE ANDRADE: We decided to go white-label - to be the engine and the capital deployment facilitator - so other organizations don't have to spend 10 years learning what we learned.

That was the idea. We anticipated the Greenhouse Gas Reduction Fund and knew capital was going to start flowing. New green banks were going to pop up. CDFIs were getting into climate lending for the first time.

Consumer lending - which is risky and different from business loans or affordable housing - was new territory for most of them. So we launched the Climate Equity Accelerator, funded by a major grant from JPMorgan Chase's global philanthropy arm. The goal: help new green banks and CDFIs plug into our back office, use our proven model and underwriting system, save years of trial and error, and start deploying capital faster. We raise grants so they don't pay licensing fees in the early years.

It's plug-and-play. Our first three partners - in the Carolinas, Georgia, Texas, and Nevada - have already deployed about $6 million, with less than 1% default and delinquency rates. The other 10 are building up. The question now is: how much of this that was seeded with federal funds that have since been frozen will survive?

SELF will survive - we were here before the Greenhouse Gas Reduction Fund and we'll be here after. But what about the newer organizations that relied on that funding to get up on their feet? That's the biggest concern. CDFIs and green banks need sustained funding - from philanthropy, from private impact investors - because their survival means economic development.

Period. CAROLYN PARRS: Last question: 10 years from now, SELF becomes the model rather than the exception. What does energy affordability look like in this country? DUANNE ANDRADE: I think we're already heading in that direction.

In 10 years, I suspect this kind of lending - addressing energy burdens, home upgrades, resilience - will be offered not only by CDFIs but by banks. Technology and AI are making it possible to go deeper in underwriting without the cost that's historically made consumer lending in this space feel too risky. I already see big players advertising loans that aren't credit-score-dependent. They're catching up.

The gap is closing. At SELF, we're already working on integrating ethical AI into our processes. The future is a system where these products are just standard - accessible, in demand, proven - because the market has been ignored for too long, and these borrowers are genuinely creditworthy. We've proven it.

And by then? SELF will probably be breaking down the next barrier. Give me the next problem. CAROLYN PARRS: I love it.

How can people find SELF and connect with you? DUANNE ANDRADE: Visit us at www.solarenergyloanfund.org.

Look us up on social media - search Solar and Energy Loan Fund and you'll find us. And if you want to reach me directly, look me up on LinkedIn: Duanne Andrade. We work with homeowners, nonprofits, and businesses through our commercial lending arm as well. Reach out with any questions.

CAROLYN PARRS: Duanne, thank you for this conversation - and for proving that when you design a financial system around people instead of profit, it works. I started this series asking what a credible response to energy affordability actually looks like. You just answered that question. When I started this series, the central question was: What does a credible response to energy affordability look like?

Duanne not only answered that - he proved it. When you design a financial system around people instead of just profit, it works. It's financially viable for SELF as an entity and for the families they serve. If you want to see more of that on Just Power, please subscribe.

It helps us grow, and it helps us bring more guests like Duanne on the show. Thank you for tuning in. Because you, me, Duanne, and everyone listening - we're all in this together.