Earlier this year the Utah Legislature passed and Gov. Gary Herbert signed a bill enabling business owners to utilize a financing mechanism that will help cut energy costs through efficiency and renewable energy upgrades and water conservation projects.
Kevin Emerson, senior policy associate with EDCUtah investor Utah Clean Energy and his organization worked with a coalition of supporters and interested parties to develop and assist the passage of SB211, which allows businesses to receive 100 percent financing for energy savings retrofits and onsite renewable energy developments repaid through property tax assessment in terms up to 20 years.
Utah, he says, is one of 30 states to adopt the Commercial Property Assessed Clean Energy (C-PACE) financing program, which is voluntary and the details of the financing program must be implemented locally by county governments or municipalities. Once the program is in operation, financing will be available for all types of commercial and industrial properties. As yet, the C-PACE program is not operational at the local government level in Utah, but several county and cities are working to get the program running.
“The average commercial building in Utah will waste about 30 percent of the energy it consumes through inefficiencies,” says Emerson. “Utah’s commercial buildings currently consume one-fifth of the state’s total energy and close to 40 percent of the state’s electricity, the majority of which is generated by burning coal. That’s a big opportunity for financial savings.”
Through C-PACE financing, he continues, commercial property owners have the financing mechanism to cut those energy costs, become more energy efficient and contribute to a cleaner environment through on-site renewable energy efforts.
“Air quality is on everyone’s mind, but the first and most immediate benefit is the ability for commercial property owners to cut their energy costs,” he says. “Every business or commercial property owner would like to reduce costs and improve the bottom line. C-PACE is a tool that provides that opportunity.”
A macro benefit, he adds, is the ability for the state to meet its energy needs by reducing energy consumption. The cheapest unit of energy is the unit of energy saved. “If our building stock can be improved to do the same amount of work while becoming more efficient and less wasteful, that will help keep Utah’s energy rates among the lowest in the country,” he says. “That puts downward pressure on the need to increase rates in a state where low energy rates are one of the hallmarks of our economic development.”
While not financed through the C-PACE program, energy efficiency upgrades at the 15-story high rise at 170 S. Main St. in Salt Lake City provide an example of the types of projects that could become more regular once C-PACE financing is in place. In this example, energy efficiency upgrades reduced the building’s energy bills by 4 percent per year, saving an estimated 212,600 kilowatt hours annually with a payback of the investment in less than one year. Furthermore, the building’s Energy Star rating increased from 68 to 80, qualifying it for LEED certification.
Energy efficiency upgrades at the Sorenson Unity Center in Herriman provide another example of savings potential through the C-PACE program. The sports-focused community center achieved 35 percent energy cost savings, reducing electricity use by 190,000 kilowatt hours and CO2 emissions by 800 tons.
Emerson says Utah Clean Energy is working with its coalition of supporters, local municipalities, local businesses, lenders and commercial real estate groups to help interested jurisdictions develop C-PACE guidelines and launch programs. Supporters include the Clean Energy Business Coalition, the Building Owners and Managers Association of Utah, Salt Lake County, Salt Lake City, Utah League of Cities and Towns, Utah Association of Counties, Utah Association of Energy Users and the Vest Pocket Business Coalition, which is a group of small businesses in Utah. Supporters also worked closely with the Utah Bankers Association to make sure the policy worked for Utah’s banking and lending community.
While reduced energy consumption and costs are the primary focus of the C-PACE program, he notes that energy upgrades stay with the property, continue with the new owners and, in many cases, help increase property values. Further, Emerson believes there is also enormous job creation potential by improving the energy efficiency of our current building stock. A 2012 study by the Rockefeller Foundation and DB Climate Change Advisors shows that a national investment through the C-PACE program of nearly $280 billion over the next 10 years would translate into over $1 trillion in energy savings, 3 million jobs and 600 million fewer metric tons of carbon emissions per year.
The improvement of a building’s energy systems can also help attract and retain employees because the building will be more comfortable. “It won’t be cold when it should be warm. It won’t be hot when it should be cool,” he adds. “The productivity and retention of employees will be greater.”
If local leaders think the program could be of interest to the commercial property owners in their jurisdiction, they should come up to speed about how C-PACE works and then promote it, he continues. “Learn how commercial property owners can walk through the process, and then make it happen. Commercial property owners and local governments need to work together.”
While Utah Clean Energy is a “policy shop,” Emerson says the organization has information to promote best practices and more information regarding C-PACE. To get started, interested commercial property owners should contact traditional resources like local utilities to conduct energy audits and determine what energy savings opportunities are available.