Help us help property owners do the right thing
We know that energy efficiency pays, and solar PV is now attractive compared to conventional sources of power. So why aren’t more commercial property owners looking for new systems and substantial upgrades? Here are the main reasons:
- They don’t have the money to invest or they have other priorities for their capital
In many cases businesses simply do not have the cash to invest, or if they do it’s earmarked for core business functions. We hear about corporate funds “sitting on the sidelines,” but not every corporation has such reserves. The economic downturn has depleted many businesses, especially the small to midsize ones. Larger companies do have the cash, but don’t necessarily want to use it for non-core purposes or hard to quantify improvements. The “credit crunch,” felt by many businesses that had their credit lines reduced or simply terminated overnight, means that capital is scarce and has to be allocated based on business priorities. This is even more true for nonprofit institutions, such as hospitals or college campuses or churches. A marginal savings on energy costs isn’t the most urgent priority.
- They don’t want an added liability on their balance sheet
Even when they can borrow the money, they don’t want to add further debt to their balance sheet. It creates a financial burden that weighs down performance, and reduces their ability to borrow for more essential purposes. (PACE solves this by attaching the financing to the property and securing the repayment stream via a special assessment. Only the annual assessment payments are considered liabilities, but the owner has added value to his or her asset — thereby strengthening his balance sheet rather than weakening it.)
- They’re not sure how long they will keep the property or building
In many non-residential sectors properties are always “up for sale” at the right price. If the owner expects to sell in the near future, or believes that it’s always possible, he or she will be reluctant to make any long term investments. (PACE solves this by bringing in outside investors, and linking the repayment to the property so that it’s automatically transferred upon sale. Since the savings accrue to whoever is the current owner, so do the assessment payments.)
- They don’t want to wait for a multi-year payback
Whether they expect to keep the building or not, they may not want their capital “tied up” for the period it takes to break even, if they’re not seeing any current savings. (PACE provides net positive returns to the owner from day one.)
- They are not energy experts and therefore don’t know what’s possible or available
For example, most property owners are not aware of the opportunities to create significant added revenues from frequency regulation and demand response, while ensuring sufficient backup storage capacity to operate on an “islanded” basis during an emergency.
The bottom line is that they aren’t making these investments today. PACE allows other capital providers to make these investments in a way that ensure a secure long-term return. Knowing that someone else is willing to invest 100% of the cost is also an assurance that the investment is a worthwhile one. PACE is the “miracle” solution to the problem of a business community that is failing to invest in its own long-term energy security. It uses a municipal power to create a secure connection to a property’s future revenue stream, making it possible to invest today on a beneficial and profitable basis.
This is just one of the key elements of PACE. We came up with the idea of telling 28 stories in 28 days, and this is the first one. Stay tuned for more remarkable insights, examples, case studies, and explanations of how New Jersey PACE can benefit your community, and why you should support us to bring PACE to your business or your town.