What an exciting and fascinating concept for the food chain – sell all the products grown on a farm within a 10 mile radius. It’s interesting to contemplate the reduction in transportation costs as well as the improved availability of fresh, locally grown produce for any community!
A real life example of this extremely short food chain was introduced to EAGM’s Vice President, Curt Monhart, during a visit to a greenhouse operation that is pursuing an operational expansion with a focus on reducing energy costs. Once fully up and running, the farm will sell all it produces with 10 miles of where it’s grown. The growing demand for their products is prompting the expansion, but it’s critical the operation lower the cost of energy used in production in to be competitive!
The year-round greenhouse operation is located in Michigan’s Upper Peninsula where the summers are short and winters long. The operation requires much high-cost energy to maximize production by heating and lighting the greenhouses during the long winter months.
The owner of the farm presently has two operating greenhouses heated with wood and propane and lit with a large number of energy devouring 1000 watt High Pressure Sodium (HPS) lights. A third greenhouse was recently constructed that was also slated to use HPS lights. Monhart drove to the farm to propose the alternative of using high efficiency of LED TotalGrow technology.
“..long term desire to incorporate geothermal heating and solar panels to reduce the high cost of propane and grid-based electricity.”
During a discussion about the benefits of the TotalGrow technology, the farm owner discussed his long term desire to incorporate geothermal heating and solar panels to reduce the high cost of propane and grid-based electricity. The need to conserve cash in the short term would require a piecemeal approach to these upgrades, and they would probably take place over the course of multiple years.
Monhart told the owner the project would qualify for a utility rebate if he used the highly energy efficient TotalGrow lights. He also explained that by incorporating all the energy efficiency technologies being considered and doing them in a single project, the owner could take advantage of a unique financing tool requiring no capital investment. Monhart further explained repayment for the loan would be made by a special assessment on the property tax, and the project would be cash flow positive from day one. The farmer noted that would be the ideal way for the energy efficiency technology to be added to his operation since protecting cash flow was vital!
The financing tool Monhart was referring to is known as Property Assessed Clean Energy or PACE. While PACE is frequently used for commercial, industrial and (in some states) residential energy efficiency projects, the power of the program is not yet clearly understood by the vast majority of owners of agricultural operations. It has become Monhart’s goal to change that situation and educate agricultural operations on the many financial benefits of PACE.
Here are some of the financial benefits Monhart discussed with the greenhouse owner:
- PACE can be used for almost any energy efficiency and water conservation project where the energy and water consumption can be measured
- PACE is non-recourse – the financing is attached to the property and not the owner.
- 100% financing requiring no up-front capital
- Long-term financing up to 20 years which allows for large capital projects like solar and geothermal that have relatively long paybacks
- No need to pay off the loan if the property is sold – PACE assessments remain with the property
- For projects costing $250,000 and greater, the energy savings are guaranteed by the PACE project developer and must be cash flow positive for the term of financing.
“PACE financing allows a business to begin capturing all possible energy efficiency and water conservation benefits immediately instead of in phases. This is the power of PACE” Curt Monhart, EAGM V.P.
When you think about the potential for family owned growing operations – functioning with a high level of energy efficiency – as a cost effective way to feed people at a very local level, the possibilities become abundant! One example is the city of Detroit which has a large supply of vacant land. If just a small portion of this land was converted to greenhouse operations, fresh produce would become available for the urban market where it is typically very scarce. PACE can make that happen.
It will interesting to report on this project as it progresses! It is my sense it will be a trendsetter paving the way for other agricultural operations to expand in an energy efficient and sustainable manner. I look forward to sharing the case study in the future!
The Energy Alliance Group of Michigan works with businesses and building owners desiring increased profitability and environmentally friendly facilities through energy efficiency. That process often includes a reduction in energy use as well as an increase in renewable energy production and begins HERE!