Clean energy legislation could help water, energy upgradesJuly 7, 2013
A. Lee Graham
Passing it was one thing, but implementing recently approved energy upgrade legislation presents its own challenges.
Still, those backing Property Assessed Clean Energy (PACE) consider it a win for commercial and industrial building owners contemplating pricy energy upgrades.
“We have an entirely untapped market now,” said Charlene Heydinger, executive director of Keeping PACE in Texas. She and others helped push through the financing program signed into law by Gov. Rick Perry in June.
The initiative, brought by Senate Bill 385 and House Bill 1094, allows commercial and industrial building owners to finance water conservation and energy-efficient upgrades to existing property with long-term loans repaid through local taxing districts under voluntary property taxes.
It could help Fort Worth fund building efficiency plans.
“PACE is just a financing mechanism that can help the city pay for the improvements,” said Heydinger, referring to the Fort Worth Better Buildings Challenge, in which the city last year committed to making its buildings 20 percent more energy efficient by 2020.
“It ties in beautifully with the city’s ongoing effort,” Heydinger said.
A Houston executive has high hopes for the plan in his community.
“For our business, we will be able to recommend projects that have longer-term value to our clients purely based on the ability to secure financing,” said Dan Parsley, president and chief operating officer of EES Consulting, which recommends energy-saving strategies for AT&T Corp., Texas Instruments Inc. and other clients after analyzing their workplaces.
Even before PACE gained momentum statewide, Parsley kept busy helping clients reduce utility costs. For example, Hunt and Hunt Ltd. sought EES’ analysis before installing reflective roof coatings and solar window treatments on two of the Houston metal machining company’s buildings. The upgrades are expected to save about $100,000 in annual energy costs, Parsley said.
He believes PACE will bring his business more clients that, until now, may have thought installing pricy heating and cooling systems was beyond reach.
According to a 2009 study by McKinsey & Co., a New York-based management consulting firm, the U.S. economy has a potential to reduce annual non-transportation energy consumption by about 23 percent by 2020, yielding gross energy savings exceeding more than $1.2 trillion, beyond the $520 billion needed through 2020 for initial investment in energy-efficient strategies.
“Such a program is estimated to reduce end-use energy consumption in 2020 by 9.1 quadrillion BTUs [British thermal units], roughly 23 percent of projected demand,” reads a portion of the study.
Still, implementing PACE could prove challenging for those unfamiliar with the approach. That’s why Heydinger recommends municipalities and other property-taxing entities work together in creating regional PACE programs instead of individual taxing authorities enacting their own.
“If every community does it differently, it will be slow to roll out,” said Heydinger, describing the program as complex and difficult to set up.
“The way the legislation is written, we can work in regions. We are hoping this will be easy for local governments and for businesses to use.”
Aiding that effort are “tool kits” expected to help local officials and property owners create their own PACE programs.
Though Fort Worth has not established its own PACE program – “PACE just got enacted two weeks ago, so we haven’t even started marketing this to cities yet,” Heydinger said on July 3 – Fort Worth is a longtime proponent of water conservation and energy efficiency. For example, the Water Department has helped Tarrant County College, Lockheed Martin Corp. and others minimize water usage through water audits.
“We don’t finance the improvements, though,” said Water Department spokeswoman Mary Gugliuzza, whose department has offered such services for three years.
Such audits pinpoint areas where potential efficiency can be improved and how much such improvements would cost.
“It’s up to the companies to decide [whether to make the improvements],” Gugliuzza said.