“Most companies have a large pool of cash they could easily access, and use it to become more energy efficient…if only they realized it was available!”
According to the U.S. Environmental Protection Agency, the average industrial building is wasting 30% of purchased energy. Depending on the industry, and various operational factors, that 30% represents a large pool of money that can be accessed by companies interested in reducing waste and improving profitability.
This concept of a pool of cash was being discussed by one of the attendees at the recent Manufacturing in America 2016 event held in Detroit, Michigan.
The event brought together thousands of industry experts with a unified goal of optimizing all aspects of manufacturing. The Energy Alliance Group of Michigan’s CEO, Scott Ringlein, was one of the featured speakers and had just given a presentation on incorporating energy efficiency in manufacturing.
Ringlein’s presentation stressed how much energy is being wasted in the manufacturing process, and the availability of a unique financing program known as Property Assessed Clean Energy which was created to reduce that waste. Better known as PACE, the goal of the financing program is to make converting to energy efficient processes and technologies easy and cost effective.
“For many organizations, energy represents one of the single biggest line items in their cost basis — easily hundreds of millions, if not billions, for a company in the Fortune 500 — and there is an added threat of rising prices and increasing price volatility.” Energy Manager Today
Following Ringlein’s discussion, one of the guests who attended his presentation showed up at the EAG booth to acknowledge the power of PACE. One of his comments was voiced with a twinge of frustration: “Most companies have a large pool of cash they could easily access, and become more energy efficient…if only they realized it was available!”
He continued by noting that the pool of funds, which is a representation of all the money being spent on wasted energy, is there for the taking. It only requires that the financial decision makers stop looking at energy as simply a cost of doing business. His frustration was caused by the fact that saving money by purchasing energy saving technologies often takes a back seat to increasing production and improving sales.
“Property Assessed Clean Energy financing was established to tap into the pool of money that is presently being spent by a business on wasted energy!”
Property Assessed Clean Energy (PACE) financing was established to tap into the pool of money that businesses spend on wasted energy, and convert that money into capital that can be spent on eliminating waste! When the pool of cash that is already being spent is tapped into it for efficiency upgrades, cash flow and profits improve.
How can a business tap into the cash that is presently being spent on wasted energy?
Here are just a few suggestions for converting energy currently being wasted into a source of project revenue through PACE financing. Anything that reduces wasted energy, conserves water or improves processes should be considered:
- Equipment – The purchase of new equipment can be expensive and negatively impact company cash flow. Updated equipment can dramatically improve production costs and reduce energy usage. If a reduction in energy can be measured, the equipment most likely qualifies for PACE financing.
- Roofing – Many businesses put up with roof leaks because they can’t justify the capital expenditure to fix them or because of a long return on investment. Replacing a roof using various technologies that improve the R-value allows PACE funding to be used for the upgrade.
- Windows – Old windows are costly for a variety of reasons. By adding window films or replacing windows with high efficiency models, PACE can then be used for 100% financing.
- Heating – Old heating technology can be an energy hog and also require significant maintenance costs. Upgraded energy efficient HVAC systems can dramatically reduce the use of energy while eliminating unnecessary maintenance expense. Incorporating renewable sources of energy, such as geothermal, can provide even greater levels of money saving opportunities that can all be financed using PACE.
- Smart Buildings – The Internet of Things (IoT) has the potential of automating many processes and tasks. Using energy consuming devices only when they’re needed creates vast savings over leaving them on 24/7. Automation that reduces energy use is perfectly aligned with the goals of PACE financing.
There is not enough space to list all the ways PACE can be used to tap into the pool of money represented by those dollars a company pays out every month for inefficiencies. The possibility of using PACE to tap into that pool is best described in this way – if a process, technology or piece of equipment can be shown to reduce waste, conserve water or improve process efficiency, PACE financing should be looked at to make that money accessible now.
Interested in learning more about Property Assessed Clean Energy? A report on PACE finance, created for the Manufacturing in America 2016 event, is available for free HERE.