Capitalizing on the benefits of green
June 11, 2014 —
On a day’s outing to SUNY Orange last month for the presentation, “Getting to the Triple Bottom Line: Innovative Finance Strategies to Green Your Business,” I learned about some amazing New York State programs that offer incentives and creative financing for energy efficiency and renewable energy for businesses of all sizes.
“Triple bottom line” refers to a concept of business operation that addresses three essential benefits: social, environmental and economic—also expressed as “people, planet, profits.” The initiatives I learned about are all crafted to help businesses increase their conventional bottom line by significantly reducing energy costs. They address environmental needs by reducing greenhouse gas emissions, improving energy efficiency and expanding renewable energy generation. The social benefits that flow from this transformation include better health outcomes from the reduction in fossil fuel use, improved building stock, and local economic development and employment opportunities for qualified building contractors.
One of the most interesting presentations focused on innovative “Property Assessed Clean Energy” (PACE) financing for energy projects. The PACE model arranges 100% financing for energy improvements and uses the existing property tax system to assess and collect finance payments. The property owner pays for energy improvements by authorizing the municipality where the property is located to add a special tax charge to the property (a financing charge) for that purpose. If the property is sold, PACE financing transfers to the new owner, along with the energy savings on the property.
PACE is built upon the idea that the energy improvements will create positive cash flow, meaning that the energy savings achieved will be greater than the cost of the financing, making it a sound investment for both the property owner and the lender. The concept originated in 2008 and is authorized by 31 states and the District of Columbia. Both Connecticut and New York have robust and growing commercial PACE programs. Connecticut’s PACE program, recently re-christened “CT Green Bank,” has just closed on its first $30 million in securitized loans.