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Financing programs fund energy efficiency projects in Michigan

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Powers Distributing Inc. in Orion Township has saved an average of $2,000 per month on electricity by installing a rooftop solar panel array and investing in LED lighting and other energy-efficient technologies, said Gary Thompson, COO of Powers.

Powers also tapped into an underused financing mechanism to fund renewable energy and efficiency projects — the Property Assessed Clean Energy program, or PACE.

"PACE is designed so that the energy savings generate the funds to make the bank payments, which the township collects through our property taxes," Thompson said. "It is cash flow positive and encourages people to make sustainable improvements."

Thompson said PACE has allowed Powers Distributing to extend its bank payments over 20 years, reducing monthly payments and giving the beer distributor greater cash flow to fund other projects.

For example, Powers Distributing is considering whether to add up to 25,000 additional square feet of solar panels to a second building sometime in the future, he said.

As the price of electricity goes up and companies look to reduce their carbon footprint for public health reasons, a growing number are looking into projects like solar and wind energy or energy-efficiency technologies.

From 2013 to 2015, Powers added more than 16,000 square feet of solar panels to its recycling center, purchased LED lights and began working toward becoming a zero-landfill business. Its annual electric bill dropped to $139,000 from $205,000.

Michigan Solar Solutions of Commerce Township and Dembs Roth Construction Co. of Plymouth worked on the Powers project.

PACE is one of two programs in Michigan that help businesses and home owners finance energy-efficiency and renewable-energy projects. The other program, geared more for smaller businesses, schools, municipalities and residential home owners, is called Michigan Saves.

"We back the loans in case people default, up to $30,000, at rates less than 5 percent with longer terms," said Mary Templeton of Michigan Saves in Lansing. "We work with contractors who talk with owners about financing options."

Like PACE, Michigan Saves works closely with DTE Energy Co., Consumers Energy Co. and other utilities to develop energy-efficiency programs and incentives, Templeton said.

Over the past four years, Michigan Saves has helped 403 customers with $12.8 million in mostly energy-efficiency projects, Templeton said.

Under PACE, which has been approved in 32 states, including Michigan in 2010, property owners can receive long-term loans for energy upgrades at fixed interest rates by working with municipalities to repay the loans through their property tax bills.

Michigan's Lean and Green PACE program is being promoted by Andrew Levin, the son of U.S. Rep. Sander Levin, and president of Levin Energy Partners LLC. Levin is the former deputy director and acting director of the Michigan Department of Energy, Labor and Economic Growth in the Gov. Jennifer Granholm administration.

In Michigan, PACE has been somewhat limited because it's a new and requires local governmental taxing bodies to approve the program for businesses in their jurisdiction, said Robert Mattler, managing director in Michigan of PACE Equity LLC, a national PACE development and finance company.

"Many banks are not that familiar yet with this alternative financing mechanism, and local jurisdictions usually prefer to have a developer or building owner show their interest for such financing before opting in," Mattler said.

Improvements that qualify for financing include upgraded heating and cooling systems, LED lighting, savings on water usage, solar panels, wind turbines, and basic upgrades to windows and doors.

Last year, Levin persuaded Bloomfield Township to approve PACE for its businesses, said Leo Savoie, township supervisor.

"Detroit Skating Club asked us to participate, and our feeling is if we can set up a program that doesn't cost the township money and helps commercial owners, why not do it?" Savoie said.

The Detroit Skating Club is planning a $1 million investment in the next couple of years to upgrade its arena and parking lot lighting systems to LED lighting, said Jerod Swallow, managing director of the nonprofit arena in Bloomfield Hills.

"We are always trying to improve the building and keep costs down for our members," Swallow said.

Swallow said the project — which also includes a 150-square-foot rooftop solar panel — is hoped to be completed by the end of 2018 and help cut electricity costs of $20,000 per month by 30 percent. ABM Industries Inc. is advising the arena.

"Our electricity savings will pay for the project and free up cash for other projects," he said. "It's really a great program."

Levin has been able to persuade more than 18 counties in Michigan to approve PACE. So far, in Southeast Michigan, Levin has persuaded Wayne, Macomb and Washtenaw counties to participate along with eight municipalities in other counties, including Southfield and Troy.

Kenneth Randazzo, DTE's manager of energy optimization and energy partnership, said PACE and Michigan Saves are financing options for customers.

Last year, DTE processed more than 8,000 applications for business customers but had only about 100 who went through the programs.

"Some may have gotten financing from their own bank," Randazzo said. "It is underutilized."

Jay Greene: (313) 446-0325. Twitter: @jaybgreene

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