Sustainable By Design: Financial Aid Available For Renewable Energy
By Anne Cosgrove
Published in the May 2007 issue of Today’s Facility Manager
Anyone with an eye on sustainability knows energy consumption will continue to be a hot topic. And as developing countries use more energy, projections for worldwide demand are skyrocketing. Consequently, many facility professionals are considering renewable energy as part of their overall plan.
Whether the reasons to pursue an alternative energy endeavor are economic, altruistic, or a combination of both, there is one constant (with few exceptions)—these projects cost money. When budgets are an obstacle to renewable energy approaches, facility managers may still be able to get the job done by seeking out financial assistance. In fact, government entities and utility companies have been offering incentives for energy efficiency changes for a number of years.
However, financing programs focused specifically on renewable energy projects have not always been prevalent. But with the World Bank projecting electrical generating capacity increases up to five
million megawatts (MW) by the year 2020, more renewable energy programs will be necessary. Subsequently, the World Bank is estimating the global market for solar electricity alone will reach $4 trillion in about 30 years.
The majority of programs that exist for renewable energy projects are administered by public entities, namely governments and utilities. According to the Database of State Incentives for Renewables & Efficiency (DSIRE), financing programs for renewable energy are available in 49 of the 50 states. (Arkansas offers several programs related to energy efficiency but does not have renewable energy financing in place.) These programs include rebates, tax incentives, and loans.
Along with the increase of renewable energy financing options is another development—private entities are starting to become more involved in the market, so funding sources are expanding. It is notable that, for the most part, programs in which private entities are involved are administered by a government entity or utility.
However, financing solely from private entities may become more readily available over the next few years as the market develops. Wells Fargo, a major financial services firm based in San Francisco, CA, recently announced its loan offering for commercial projects that implement solar energy. Wells Fargo has partnered with Verde Energy of Austin, TX, to deliver the loans to its customers.
Verde Energy already provides information about rebates and incentives that may be available to facility managers who want to introduce renewable energy to their buildings. The partnership with Wells Fargo, finalized this past February, adds another option to the mix.
This service will enable potential buyers to search for qualified vendors and installers through an online portal. Facility managers can complete a service request and receive quotes from providers. Requests must include the type of energy being pursued (Verde works with service providers in the solar, wind, and hydroelectric industries); building characteristics; and average monthly energy usage.
“This has extended the choices we provide to our customers by offering financing options for solar power projects nationwide,” says Rob Powell, chief executive for Verde Energy. “Many of our customers indicate an interest in financing options for their projects yet have a difficult time finding lenders who are familiar with renewable energy systems.”
Says Clint Pyatt, Wells Fargo sales manager, “[Our firm] has an approach which allows us, because of flat rate pricing, to deliver loans at very competitive rates. We are eager to work with Verde Energy’s customers to deliver financing solutions that take advantage of our low cost approach and the growing market for renewable energy systems.”
Whether the source is public, private, or both, financing a renewable energy project may make it easier for facility managers to fit it in their budgets. Loan programs in this realm are often offered with low interest or no interest terms. According to the DSIRE, while most repayment schedules are determined on an individual project basis, the loan term can be as long as seven to 10 years in some cases.
So for all those facility managers embarking on a renewable energy project, the increasing number of financing programs may help to speed along the process. Time will tell if a shift to renewable energy use will happen quickly enough to meet the growing demand.
Information for this article was based on literature from DSIRE and Verde Energy. To research other financial assistance programs, visit the Database of State Incentives for Renewables & Efficiency atwww.dsireusa.org. For more about the Verde Energy and Wells Fargo program, visit www.verdeenergy.com.