Pushing on Forward
by Joel on May 12th, 2009
Even reaching the low hanging fruit often requires a ladder
Every year, as part of our Earth Day events, ShoreBank hosts a seminar for nonprofits about the opportunities available to reduce energy usage in their facilities and incentives available from utilities and foundation to complete the energy efficiency retrofits. As part of this year’s event, we asked representatives from ComEd, our local electrical utility, to complete an energy audit of a nonprofit facility. ComEd graciously agreed and presented the findings at the event.
The results were typical of our nonprofit customers – lots of low cost opportunities, such as changing bulbs/ballasts to more efficient varieties, switching to LED exit signs, and adding sensors for irregularly used spaces, such as meeting rooms and bathrooms. The identified measures included replacing inefficient lighting in a building that was built less than 3 years ago. In total, the costs of the measures was less than $40,000, with a pay-back estimated under 3 ½ years.
The reaction to the findings was also typical. The CFO was against spending the funds, especially to replace lighting that was only a few years old, irrespective of the large incentives offered by the utility and the quick pay-back on the measures.
Fortunately, the story doesn’t end there. Thanks to a recoverable grant from the Federal Home Loan Bank of Chicago, ShoreBank is able to offer very low-cost loan to cover these upfront cost. With this low cost funding, and an Executive Director committed to making the improvements, the retrofit is moving forward.
The story is instructive for a couple of reasons. For one, it demonstrates the importance of intermediaries such as ShoreBank. ShoreBank was instrumental in connecting the facility owner to the resources needed to understand the options available. In this case, we discovered that for-profits in Illinois are eligible for free energy audits, while nonprofits are not. So, without our focus on this sector, a whole set of owners, who maintain a large number of older buildings, would fall outside of the established programs.
Secondly, the example illustrates the importance of capitalizing loan funds focused on energy efficiency retrofits. In this case, the risk is very limited – it is a small loan to a large and well established nonprofit. But the perceived risks are high – since the loan is collateralized only by the lighting equipment and the nonprofit is dependent upon state grants, at a time where the state faces a massive budget deficit. By utilizing the funding from the Federal Home Loan Bank, we could offer terms that allowed the project to move forward. We see this financing piece as a critical mechanism to providing a ladder to pick the low hanging fruit.
Tags: community development, energy conservation loans, energy efficiency, green banking, ShoreBank, triple bottom line
That is a very interesting article. Thank you for sharing it.