We can all agree that increasing energy efficiency and transitioning to cleaner forms of energy are good things – the underlying question is always how do you pay for it? Completing the smaller projects (i.e. the low hanging fruit) is generally a “no brainer”; the energy savings will pay for the extra cost within a year so it makes sense to do as a business or home owner. Some of the larger, more expensive projects can be harder to finance though – how do businesses justify spending $250,000 on a project that’s not going to pay off for 20 years? The standard options are taking out a loan or spending valuable cash on hand on these projects. However, many companies or individuals do not want to do this because of the opportunity cost of not investing in much needed equipment or other improvements. Fortunately independent groups have come up with solutions to that problem.
One of those solutions is a financing method called PACE (Property Assessed Clean Energy). PACE has been in Michigan since 2012 and got its start in Ann Arbor. PACE has slowly been making its way to other Michigan municipalities & counties (current list of PACE locations here). If your municipality or county isn’t covered and you’re interested in implementing an energy efficiency or clean energy project contact your local elected officials to find out how you can get PACE where you live.
PACE provides ways for industrial, commercial, and even some residential properties to finance clean energy projects that cost over $250,000. Your PACE project can be 100% financed and repaid in a period up to twenty years. The main restriction to receiving this financing is that the project has to have a positive cash flow – in other words you have to save more in energy savings then the project costs you.
One of the advantages to using PACE as opposed to other financing options is if you decide to relocate your business or just sell the property the project was implemented on the next owner takes over the payments (i.e. the special assessment). Another advantage is that the organizations that help you implement PACE financing can help you find the best ways to implement your clean energy or energy efficiency.
If you’re looking for ways to make your business more energy efficient & cleaner, PACE may be an excellent route to use. Please reach out to MCEF if you have any questions about how PACE financing works – if we don’t have the answers we can connect you with people who do!