Increasing Your Business’s Energy Efficiency Is More Affordable Than You Think

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It’s a basic formula for financial success – you must spend less than you make. In the never-ending quest for saving money on everyday expenses, one often-overlooked expense ripe for plucking is energy. Upgrading HVAC systems, water and waste systems and other utilities small businesses use on a daily basis can yield considerable savings by making them more energy efficient.

Conducting large utility upgrades can be expensive and, for many businesses, financial priorities generally lie elsewhere. Fortunately, helped in part through a federal program created by Congress in 2014, many rural electric cooperatives and other utilities are offering a way for businesses and homes to afford energy upgrades with no upfront cost. Participating customers take out low-interest loans to pay for cost-effective upgrades, which are paid back through a monthly fee on their utility bill, in a process known as on-bill financing.

The federal program helping make these utility programs a reality is the Rural Energy Savings Program (RESP). It is administered through the U.S. Department of Agriculture (USDA) and provides funding to rural electric utilities to develop on-bill financing programs that save members and customers money through clean energy projects. These include solar energy upgrades, lighting or building envelope improvements and small-scale renewable energy projects. Funds are provided to rural cooperatives or utilities at zero-percent interest for 20 years. The only requirement in creating a program is that the cooperative or utility must demonstrate that each financed project will be cost-effective and lower overall energy costs for participants.

One example of an innovative program is in Washington state. OPALCO, a rural electric co-op serving the San Juan Islands, received RESP funding to launch their Switch It Up on-bill financing program. This program helps individuals switch to high-efficiency electric systems from other fuel sources by providing financing for ductless heat pumps, heat pump water heaters, and electric vehicle chargers. The program is available to any member of good standing who wants to upgrade their home or business to be more energy- and cost-efficient.

Using RESP to Benefit Your Business

One business that recently used RESP funds is the Outlook Inn, which took advantage of OPALCO’s Switch It Up program to upgrade to ductless heat pumps from a propane-fueled heating system. The heat pumps would heat the inn more cost-effectively than the old system, eliminate the need for fuel deliveries, and provide air conditioning in summer. However, the inn owners couldn’t afford to do the upgrades on their own while also making other needed improvements. The Switch It Up program allowed the Inn to finance the 17 ductless heat pumps at no upfront cost; instead, they pay back the loan through a monthly fee on their utility bill while enjoying the cost savings now.

There are many programs similar to Switch It Up offered by cooperatives around the United States, each one tailored to the needs of its members. These programs can range from providing financing for specific types of upgrades, including ones focused on solar energy, as with Hawaii’s state-wide Green Energy Money $aver (GEM$) initiative, to providing financing for whole-house retrofits from the public utility for Holland, Michigan and electric cooperatives in South Carolina. These retrofits can provide peak monthly savings of hundreds of dollars on utility bills, even after subtracting the loan repayment fee.

Utilities benefit as well. Reduced energy waste at peak use times can provide dramatic monetary savings through lower peak demand charges. It can also reduce the need for expensive new power generation facilities. This creates a win-win situation for the utilities, the customer base as a whole, and homes and businesses directly participating in the program..

Taking Advantage of RESP

The Environmental and Energy Study Institute (EESI), a non-partisan nonprofit, has been a champion of RESP among rural cooperatives and utilities since the program’s inception because of its focus on renewable energy and energy efficiency. Recently, EESI launched the Access Clean Energy Savings initiative, in partnership with the National Cooperative Business Association (NCBA CLUSA), which helps rural and public power utilities apply for RESP loans through hands-on technical assistance.

Individuals and businesses can only take advantage of RESP if their local rural utility or cooperative is a RESP participant. If your cooperative or rural utility is interested in participating, EESI is available to provide no-cost assistance every step of the way, from crafting a letter of intent to USDA to submitting the full-scale proposal. Currently, $100 million is available in zero-percent interest loans through RESP. The application window is only open through September 2019. Applications are reviewed on a rolling basis, but the process needs to be initiated by submitting a letter of intent by September 30, 2019, in order for cooperatives to take advantage of the current round. To learn more about the program and how your utility or cooperative can participate, visit AccessCleanEnergySavings.org.

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John-Michael Cross
John-Michael Cross is a policy associate with the Environmental and Energy Study Institute (EESI), a Washington, D.C.-based nonprofit. He is the project manager for EESI’s Access Clean Energy Savings program that assists rural electric co-ops and public utilities to develop member/customer-focused on-bill financing and beneficial electrification programs. He has been with EESI since 2011, where he has also worked on transportation and climate policy issues.