Keeping Pace with C-PACE
The following article was submitted by Shipman & Goodwin LLP. It is posted here with permission.
In 2018, industrial manufacturing accounted for roughly 25% of total energy consumption for end-use sectors of the U.S. economy and approximately 74% of total industrial energy consumption.
Generally, manufacturing facilities are highly energy intensive as they run in multiple shifts and sometimes around the clock.
Needless to say, manufacturers use a lot of power. With great power (use) comes not only great responsibility, but opportunity.
Clean energy measures such as solar photovoltaics, lighting upgrades, building controls, and HVAC improvements are great ways to ease the financial burden of high utility bills.
Further, upgrading building systems can help make a building more comfortable for workers and even increase productivity.
For Connecticut manufacturers who own buildings and are interested in clean energy upgrades, there is a special financing program that has a proven track record of providing cost savings and return on investment.
C-PACE, Commercial Property Assessed Clean Energy financing is available through the Connecticut Green Bank.
Eligible Green Improvements
C-PACE provides commercial property and building owners a unique opportunity.
Companies can enter into an agreement to finance 100% of eligible green improvements on existing or new construction and pay it back over time periods (up to 25 years) through a voluntary benefit assessment on their property tax bill.
Owners work with an approved contractor to develop project-specific solutions to reduce energy usage below existing or baseline levels to suit the owner’s needs.
Eligible green improvements include lighting, heating and cooling, insulation, high efficiency motors, pumps, and solar panels.
The C-PACE program underwriting criteria requires a modeling to demonstrate that the energy savings projections will more than offset the tax benefit assessment.
While C-PACE has mostly been used for retrofit projects, it is also available for new construction projects and can be used to replace other, more costly sources of capital or to increase the total available capital.
Using C-PACE financing for energy improvement expenses and upgrades can help preserve funds for core business expenses, such as new manufacturing equipment or hiring employees.
Achieving energy cost savings and cost control over a long period of time can provide a competitive advantage and insulate owners from some energy price fluctuations over time.
Connecticut has been a leader in developing and implementing its C-PACE program.
The General Assembly authorized the program in 2012. Since then, the Connecticut Green Bank has closed 93 industrial projects totaling approximately 45 million dollars in financing with C-PACE.
Currently, 140 municipalities participate in C-PACE, so it is available to nearly all manufacturers in the state.
For manufacturers who aren’t property owners, other renewable or energy efficiency opportunities may be available, including the following from the Connecticut Green Bank:
- Solar roof lease program
- Solar Power Purchase Agreement
Stakeholders can contact the Green Bank directly to get started.
Another resource for manufacturers is the Southern New England Industrial Assessment Center at UConn, which offers manufacturers free assessments and technical assistance to connect with financing and other incentives.
About the authors: Matthew Ranelli is chair of Shipman’s renewable energy practice and a member of the Green Bank Board of Directors. Kristie Beahm is an associate in the environmental practice group.
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