The Number One Barrier to Energy Efficiency Projects

A commercial energy efficiency project can save vast amounts of money in the long run but often requires significant capital to launch! The number one reason energy efficiency projects never get started is the lack of access to adequate financing!

Energy Efficiency Projects Require Unique Financing

In a recent discussion Scott Ringlein, CEO of EAG, noted that in reality there are a vast amount of funds available specifically for energy efficiency projects. These funds are available through a variety of programs that typically have specific requirements for financing energy projects and are not available through typical commercial loans.

Property Assessed Clean Energy – PACE

One program that is successfully being used to launch energy projects is known as Property Assessed Clean Energy or PACE! Here are some of the benefits of the program:

#1 – Positive Cash Flow – the PACE program, which is available in thirty one states, mandates strict requirements for the program to be used. The most appealing requirement is that funded projects must be CASH FLOW POSITIVE! All project costs, including the cost of financing, must be paid for out of the reduced energy costs.

Benefit #2 – Long Term Loans – One unique aspect of the PACE program is the mechanism for repayment of a loan. The property owner agrees to a special assessment that is secured by and repaid through the property tax system. The loan is attached to the property and if the property is sold, the repayment mechanism goes seamlessly with the property. PACE will finance qualifying projects up to 20 years. Property owners can increase the value of their property and make necessary upgrades using long term financing which makes taking action easy!

Benefit #3 – Low Investor Risk –Securing the PACE financing to the property and using the tax system as a repayment tool has dramatically lowered the risk for investors. Private equity, retirement and insurance funds prefer PACE investments due to the safety associated with them. A large availability of funds lowers the cost of borrowing money and because of the low risk of PACE financing; the interest rate is usually one to one and a half points less than a typical commercial loan.

“The idea of PACE is to broker long term financing so business property owners can undertake energy improvements profitably. That makes their business more efficient and they gain positive cash flow to plow back into their operation.” Andy Levin, Lean and Green Michigan

EAG Launches Next Michigan PACE Project

There is a huge pent up demand for energy efficient upgrades in the business environment. Up until now there hasn’t been a system in place that made those upgrades easy or affordable. That has all changed with PACE financing. Just this week EAG CEO Scott Ringlein announced that the iconic Detroit entertainment facility, The Roostertail, has entered into a contract with EAG to develop a PACE project. According to Ringlein:

“Through the Lean and Green Michigan PACE Program, the Roostertail will transform its 1950 energy inefficient technologies to 21st century energy efficient technologies while incurring no out of pocket costs and achieving an return on investment from day one. The scope of the project is expected to include building envelop improvements, lighting, geothermal, solar, and improvements to the commercial kitchens and laundry facilities.”

Keeping PACE with Energy Efficiency in Michigan

If you’re interested in learning more about funding an energy efficiency project with Property Assessed Clean Energy, The Energy Alliance Group of Michigan has convened a panel discussion that will address the program in detail. The free event will take place in Lansing, Michigan at the Lansing Community College, West Campus on April 23, 2015. Registration is required due to limited room size. If you would like to register or get more information about the event titled Keeping PACE with Energy Efficiency in Michigan simply click HERE.

The Energy Alliance Group is a leader in clean energy PACE project development and financing in Michigan