“We are in the midst of a paradigm shift in this nation, but like most changes, it will take a considerable time.” Scott Ringlein, EAG CEO
Over 98% of all major energy efficiency proposals, including large renewable energy projects, never leave the drawing board due to the traditional barriers of:
- A deficiency of capital
- Unacceptable payback periods
- Mistrust of the “proposed” energy savings
When those barriers are overcome the savings are often extraordinary and they continue to yield benefits many years into the future.
A recent article describes the benefits from an energy renovation of the Lenawee County Judicial Building funded by the resultant energy savings. An audit report detailed almost twice as much energy savings as had been expected. The following quote describes the energy saving results most business and property owners would enjoy reporting:
“We are not spending anywhere near as much as we would have spent had we not undertaken this project,” Martin Marshall, Lenawee County Administrator
One way the barriers to energy efficiency are being overcome is with what is being recognized as the “PACE paradigm shift”. PACE stands for Property Assessed Clean Energy and it’s a relatively new way to fund energy efficiency projects. These can be newly considered initiatives, or previously “shelved” projects that are now financially viable with PACE funding, especially since the term of a PACE loan can be up to 20 years. PACE is available for both new construction as well as existing buildings, and can also be used to refinance prior energy efficiency upgrades.
Positive Cash Flow Mandate
PACE loans are repaid with a special assessment on the building’s property taxes, similar to those levied for sidewalks, streets, sewers and a number of other improvements. One facet of PACE that has a big appeal to financial decision makers is the mandate for a positive cash flow from day one without any capital outlay and without long-term debt. Other attractive aspects include PACE loans are “off balance sheet” and the loan “goes with the building”. If the owner decides to sell the property before the loan is paid off, the special assessment becomes a responsibility of the next owner.
The challenge of implementing this paradigm shifting program is educating the industry about what PACE is and the value it can bring to a company or property from a long-term perspective. PACE not only reduces energy costs without a capital invest, but also provides an improved workplace for employees that has been documented to improve efficiencies and morale.
PACE energy renovations not only benefit specific businesses, they also benefit local economies which is why so many counties are embracing it. When a PACE project launches there is an incremental increase in employment of local contractors. Service and technology suppliers also enjoy increased sales and the building undergoing renovation becomes more profitable, has an increased property value, and a statistical decrease in vacancy rates. Plus PACE is a key contributor to the “greening” of those counties and municipalities that have approved the program. This is an important factor in attracting new businesses.
The PACE Paradigm Shift Webinar
To help speed up the PACE paradigm shift EAG has organized a series of PACE workshops. The next event will be a free webinar that will explain how PACE overcomes the barriers listed above. The webinar will take place on July 15, 2015 and will provide valuable information to business and building owners and also to energy efficiency contractors and vendors. To register for this informative event, simply click HERE.