A New Property Assessed Clean Energy (PACE) project was just launched in Michigan. It’s the third PACE project in the State and it’s likely to pave the way for many more due to the energy savings that are guaranteed by the programs unique requirements.
A desire to cut energy costs prompted Star Lincoln of Southfield, Michigan to request proposals for converting the parking lot lighting to energy efficient LEDs. A local light contractor was brought in and a quote was given to the dealership’s management that had a significant price tag. The bill would become due and payable within 30 days of finishing the project.
The dealership asked the contractor if there were any available rebates or incentives that would help bring the price tag down. The contractor noted all he did was sell and install lights but he did know someone who had that information. At that point The Energy Alliance Group was brought in.
Various rebate and incentive programs were discussed but the dealership was still left with a sizable bill that would be due in a short time frame. EAG CEO Scott Ringlein and VP Curt Monhart at that point discussed the PACE program but noted it only funds projects starting at $250,000 and up. This includes the equipment, installation labor and materials and the financing costs.
The dealership was built in the early 70’s and much of their energy infrastructure was from the original construction. Some of the technology was no longer even up to code! The EAG energy team began to discuss all the areas the dealership was losing money on wasted energy because of their inefficient technology and floated the idea of an all encompassing “Green Renovation”.
The owners of the dealership agreed to look at a complete makeover if it made sense financially.
After getting all the bids and factoring in the PACE financing it was calculated that the dealership could do a complete green renovation, with the total project funded from the energy savings, and still achieve a 17% reduction in their overall energy expenses. That is, for every energy dollar saved, seventeen cents went right to the bottom line! When the CFO saw the numbers his comment was “This is a no brainer. There’s no reason NOT to do this”
“it was calculated that the dealership could do a complete green renovation, with the total project funded from the energy savings, and still achieve a 17% reduction in their overall energy expenses.”
Andy Levin of Lean and Green Michigan, the overseer of the PACE program observed recently that the energy efficiency industry typically attempts to propose energy projects in small chunks so the cost of projects are not overwhelming. He noted that approach is not in the best interest of the customer. The best approach is to figure out how to save the maximum energy possible. But in the past that was massively expensive and the return on investment was too far in the future. PACE changes all that with a unique financing structure that that includes terms up to 20 years. This is 10 to 15 years longer than a commercial bank loan, and is the key to generating sufficient energy savings to more than offset the entire cost of the project.
The Star Lincoln project will be an interesting green transformation to watch as it progresses!
If you’re considering a “Green Renovation” the Energy Alliance Group has compiled a free report entitled Ten Questions to Ask Before an Energy Efficiency Upgrade! The report details the most important information you should consider to insure a successful project launch. If you would like a copy of the report just send an e-mail to email@example.com with “10 Questions” in the subject line.