Jay Barber has quietly built a national business as an energy banker in Searcy, but he’s not completely hush-hush.
The president and CEO of Southeast Capital & Finance won’t discuss rates or specific projects, but the words gush out as he describes his mission. He provides commercial clients with 100-percent financing for energy efficiency projects, then watches as electric-bill savings pile up for the customers.
“These commercial and industrial energy efficiency projects are revenue-producing propositions,” Barber told Arkansas Business, noting that efficiency savings go hand-in-hand with rebates offered by utility companies. “That’s one of the main market drivers. In some markets, utility rebates can amount to 50 to 60 percent of total project costs.”
While Barber has been financing energy projects throughout the country, most of his Searcy neighbors and fellow Harding University alumni have been in the dark about it. “They ask where have you been? What have you been doing the past few years? I tell them I’ve had my head down working.”
He was a more traditional banker for two decades in Arkansas and Tennessee before finding the energy niche. He worked for Reynie Rutledge at First Security Bank of Searcy and then Larry Wilson at First Arkansas Bank & Trust of Jacksonville, mentors that he says he owes “a great debt of gratitude to,” before going out on his own.
The venture paid off, and in the last two years, more than $241 million of financing proposals have gone through Southeast Capital, which has regional offices in California and New York City. “That may not sound like a lot of money to some people, but it is significant for us,” said Barber, who has four employees who fund projects ranging from $10,000 or $15,000 up to about $25 million. LED lighting sales alone feed a $14 billion-a-year market in the United States and Canada, he said.
Working with top electrical equipment distributors like Rexel, Gexpro and Consolidated Electrical Distributors, Southeast Capital facilitates the funding of projects for commercial, industrial and government customers.
“Together they make up the vast majority of our business,” Barber said. “We work with the distributors’ sales teams to train and educate them about finance, and that way they can make the financing a major part of their sales pitch.”
The arrangement has helped Southeast prosper since 2009 without creating a lot of overhead or making a lot of noise. “We are very automated and have really good programs and procedures that allow us to run lean,” Barber said. “We don’t call on clients and we don’t advertise much. It’s our key relationships with distributors that allow us to reach out and get broad penetration. We like it that way, because we’re privately held and we don’t talk about clients, rates or deals.”
Asked if he could point to some projects that he has financed, perhaps even a few in Arkansas, Barber held firm.
“We do not discuss customers, but I can tell you we see proposals weekly on all types of commercial, industrial and municipal projects. We have closed on all types, from municipal street lights to grocery stores to warehouses.”
The Bottom Line
Barber says the big selling point for energy efficiency retrofits, in addition to the 100-percent financing, is the bottom line. Energy savings are immediate and significant, and utilities routinely offer rebates and incentives to cut upfront costs of lighting projects. These inducements improve payback time by as much as 20 to 25 percent, according to Brightswitch, an organization that helps businesses to identify utility rebates and tax incentives across the United States and Canada.
Barber offered an example. “Not only are businesses getting rebates from their utilities, but take the case of a client whose energy bill was $7,000 a month,” he said. “The energy efficiency retrofit lowered the bill to something like $4,000 a month, which is $3,000 a month in direct savings. Those savings cover the monthly payment, so it’s cash-flow positive.”
Along with retrofits, Southeast Capital finances solar energy projects and a relatively new market: battery systems that store energy.
“That’s where we think the future is headed. It’s rare to have the opportunity to pick and choose the markets you want to be involved in. But we understand these things; we get it. We don’t touch anything residential whatsoever.”
Energy storage can benefit both utilities and their customers, Barber said.
“This commercial customer in California was paying the regular price per kilowatt-hour, but times of peak demand were driving up the price,” Barber said. “So they buy an energy storage system from one of our vendors and install it on their premises. That lets them capture some of their own energy and store it for use at peak periods, saving substantial amounts of money. And at some point, the market is going to allow excess power to be sold back onto the grid.”
For utilities, he said, energy storage systems allow handling peak loads without the expense and time of building generation plants. “Battery storage fixes a couple of problems for utilities: It reduces carbon emissions, an important thing these days, and reduces the cost of energy.”
Matt Golden, an entrepreneur and energy efficiency advocate based in California, told Arkansas Business that utility rebates are not a giveaway, but rather a recognition by utilities that they reap big benefits from efficiency projects.
“From a utility standpoint, it’s far cheaper to store energy or change the shape of the load on the grid than it is to build new generation and distribution.”
A founder of Efficiency First, a national trade association for the home retrofitting industry, Golden says rebates are only fair.
“Value is being created for the utilities, and building owners shouldn’t be expected to take out a loan on an efficiency project without rebates or inducements. Otherwise they’d be giving this benefit to the grid away for free,” he said.
Golden also doesn’t expect the Trump administration’s emphasis on fossil fuels to have much effect on efficiency efforts and other clean initiatives. “The decarbonization of the electric grid is going to continue regardless of what’s happening in Washington, D.C.,” he said. “These efforts will continue to be driven on the state and local levels, and by consumers and businesses recognizing the benefits.”
Looking Forward
Beyond simple business interests, Barber sees an image advantage for companies investing in efficiency. He also holds a long view that includes promoting the environmental and economic benefits of emerging technology.
“I have two boys at Harding, and I’m looking forward to creating energy efficiency and creating jobs, all while helping customers. There are so many benefits, and I want to give back in some sense,” he said.
It was that attitude, and a tip from a business contact, that led Barber into a partnership with the federal Department of Energy and its Better Buildings Challenge program. Southeast announced last month that it had committed $25 million for this year to the program, which connects building owners and facility energy managers with financiers to make efficiency projects happen.
“We’ve seen the financing community make tremendous progress,” said Kathleen Hogan, the Energy Department’s deputy assistant secretary for energy efficiency. “Now more than ever, we can bring these smart financing solutions to the market and move forward more rapidly.”
One key to Barber’s success has been his cooperation with distributors, and particularly with their sales staffs.
“We’re often calling on distributors and training their staffs,” he said. “Just recently, I was involved in a training webinar with 18 sales representatives and a sales manager from Oregon and Washington.
“We tell sales staffs that we’re not training them to be bankers, and that we don’t know their business of selling lights. But we think that financing can be something in their arsenal. Some sales reps lead with a pitch about financing.”
Southeast Capital is “zeroed in” on what it does, Barber said. “Energy financing has always intrigued me. I realized that there was a need there, and I had some great contacts early on among the distributors who trained and mentored us.”
Mentors in banking were also crucial, said Barber, who never would have become an energy banker if he hadn’t first learned at the side of Rutledge and Wilson.
“Reynie Rutledge taught me how to be a banker, how to run a business.” Barber said, referring to the First Security Bancorp CEO and president. “But Larry Wilson was also a tremendous mentor, one who helped me hone skills and gave me tons of responsibility. He also may have been the best boss I ever had.”
It was while he was a senior vice president at First Arkansas that he was an Arkansas Business 40 Under 40 honoree in 2006.
Barber, who grew up outside Bald Knob on Barber Road, credits his parents with teaching him about “hard work, the importance of God and doing right,” but he said that in business, he uses the lessons Rutledge and Wilson taught every day. “Without them, I wouldn’t be where I am.”