Show me the money!

May 7, 2011

A common critique by naysayers of green design is that the return on investment does not cover the up front cost of energy efficient products.  I say these people are just impatient.  The payback on lighting upgrades can occur in less than 5 years.  Solar installations can be a little less certain, but usually are profitable in 20-30 years (based on today’s energy costs).  Proponents of sustainable technologies often argue that up-front costs will decrease as more people implement the products.  In the interim, the government can provide incentives to make energy efficient design more competitive.

I recently attended a presentation sponsored by the Chicago branch of the US Green Building Council entitled, “Where’s the Money – Building Energy Retrofits.”  A series of presenters, with intimate knowledge of the energy retrofit business, explained how companies and individuals can get support for improving energy efficiency in their homes and businesses.  The monies come from a variety of sources including: utility companies, finance companies, and government backed loans.

My electricity is provided by ComEd.  I was surprised to learn that a legislative act allowed the utility to add a surcharge to energy costs that would be used later to promote energy efficiency.  Now ComEd offers many incentives.  For example, replacing your old inefficient fridge could warrant a $35 rebate.  Businesses can get $20 per exit sign.  In all ComEd estimates that lighting incentives can reduce annual costs by 75% and cover the initial investment in 2 years.

The American Reinvestment and Recovery Act also known as “the stimulus bill” provided states with funds for improving energy efficiency.  Many cities and states applied that money directly to upgrades of government facilities, like police and fire departments and government buildings.

Illinois, Cook County and Chicago teamed together to leverage those funds for greater impact.  Several organizations have sprung up to access these funds. The Chicago Region Initiative for Better Buildings and the Chicago Metropolitan Agency for Planning are two such organizations.  Through their work, several loan programs are available to local institutions and businesses, such as: employer assisted housing retrofits, energy saver loan loss reserves, multi-unit retrofits, residential retrofits, and more.

Navigating all of these available incentives can be a daunting task.  For businesses with other priorities, professional consultants can take charge of an energy retrofit.  Johnson Controls will even guarantee energy cost savings.  They’ll also help arrange 3rd party financing and some incredibly complex contract structuring to help companies fund an upgrade.

I tend to thing of achieving energy efficiency as a technical challenge.  However, the speakers stressed that the financial hurdles have the greatest influence on building owners and developers.  Fortunately, a maturing financing industry and government support is helping more buildings go green.

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