Building owners know that making energy improvements is one way to reduce operating expenses, but they may not understand how to get started. They might consider energy-efficiency upgrades or explore renewables, such as solar photovoltaic (PV) systems, but financial questions can slow or derail their investigations. Instead of moving forward, they end up with deferred maintenance and aging equipment in uncomfortable, inefficient buildings.
But what if there was a way that building owners could make energy upgrades that improved their bottom lines, resulted in positive cash flow and a competitive edge, and made their buildings more comfortable? In Connecticut, where energy costs are high, it is possible to improve a building’s energy use and efficiency and create measurable savings. This “found” money can be re-invested into the business, strengthening a company’s ability to focus on its core mission and to thrive in the future. Building owners who make these upgrades also have more comfortable buildings for their employees, tenants or customers, and contribute to a healthier community and economy in Connecticut.
Finding the right way to pay for energy upgrades, however, requires balancing business priorities. There are bank loans and lines of credit, but these can have short repayment terms or high interest. A business owner might not have the desire, or ability, to take on this type of debt. Cash payment could be an option, though this method will immediately divert funds from a business’s primary competency, and it might take time to recover the cash outlay. Paying for energy improvements in these ways means building owners give up control of their cash flow, tying up resources and distracting them from what they need to focus their attention on most.
An innovative program called Commercial Property Assessed Clean Energy (C-PACE) offers a better option. Through C-PACE, a building owner can pay for green energy improvements over terms as long as 25 years through a voluntary benefit assessment on their property tax bill.
Building owners can secure long-term, low-interest capital to fund these energy improvements or renewables with no up-front costs. Best of all, the program is structured so that the energy savings offset the benefit assessment – meaning positive cash flow for the business – and includes a technical review process that leaves building owners feeling confident in the predicted energy savings of their project. This allows them to invest the savings into equipment, personnel, materials or whatever they need to achieve their goals. Deferred maintenance is no longer necessary, and renewables such as solar PV are in reach for building owners of all types, including nonprofits, manufacturers, commercial real estate, retail, and others.
For many businesses, especially those in energy-intensive sectors such as manufacturing, adding a renewable energy source can save money and enhance performance. This was the reason Paul Breglio, president of Crest Mechanical in Hartford, decided to go solar. At first, Breglio was stalled by the initial cost of the project, until he found C-PACE.
“With electricity rates being so high in Connecticut, we needed a way to bring that cost down,” said Breglio. “The C-PACE program allowed me to access low-cost and long-term financing to further support our desire to deploy solar energy and stabilize our energy costs over the long term.”
Through C-PACE, he was able to install a 55 kW roof-mounted solar PV system, which offers projected energy savings of more than $400,000 over the life of the upgrade. For Crest Mechanical, which provides services including the construction and maintenance of mechanical systems, such as HVAC and cogeneration, to commercial, industrial and institutional customers, this savings is significant.
Galleria Design Center, an importer, distributor and fabricator of tile and natural stone, whose building is easily seen from I-91 in Middletown, is using C-PACE financing to add a 125 kW solar PV system. The estimated annual energy cost savings exceeds $37,000.
“The C-PACE financing program is the smartest long-term solution for achieving our clean energy demands,” said Jerry Martorelli, owner of Galleria Design Center. “With C-PACE, we are able to reduce operation expenses and increase efficiency, all while making a measurable impact on the environment and surrounding community.”
While C-PACE is not only for those in the manufacturing sector, manufacturing facility owners recently benefited from a program called Energy On The Line, a partnership between the Connecticut Green Bank, the Manufacturing Innovation Fund, and the state Department of Economic and Community Development. The program provided up to $50,000 in grant money for project-related expenses at manufacturing facilities.
More than 160 building owners across the state have benefited from solar PV and energy-efficiency projects financed using C-PACE, and more than $100 million in closed project financing has been made available. For more information, visit ctgreenbank.com/business.