Cut Costs and Go Green with Utility Energy Efficiency Loans

In 2007, San Diego Gas & Electric pioneered an innovative zero percent loan program that allowed businesses as well as institutional and government customers to finance new energy-efficient equipment on their utility bills.

Known as On-Bill Financing, similar programs are now available from most of California’s major utilities as well as utilities in other states like Connecticut, Illinois, Massachusetts and Michigan. So far, 900 commercial customers in San Diego have acquired $21.5 million in state-of-the-art energy-efficient equipment through the program saving an estimated 55 million kilowatt hours (kWh) of electricity, 185,000 therms of natural gas and more than $7 million in energy costs each year (based on average kWh and therm rates of participants).

A study by the Lawrence Berkeley National Laboratory estimated that the U.S. building sector could cut energy use by one-third through energy efficiency improvements saving $170 billion per year by 2030.

Lawrance, a family owned and operated contemporary and modern furniture retailer, in San Diego participated in the program in April 2011. The store acquired $20,282 in energy-efficient lighting for its two showrooms. Just over $5,000 was financed through rebates and the remaining $15,000 through a 16-month zero percent program loan.

Lawrance saved 62,509 kWh of electricity and more than $10,000 per year on its utility bills.

“I’m happy with the quality of light, and that is really important,” said Howard Haimsohn, President of Lawrance. “Compact fluorescent lights are not great for a retail store. There’s no drama. You need lighting that makes displays and colors pop.”

The showrooms’ 75- and 90-watt halogen and flood lights were swapped for new 12-watt LED floods and spotlights. In addition to the direct energy savings from the lower wattage, Haimsohn cites indirect energy savings as the LED lights produce less heat, lightening the load on his air conditioners in the summer months. They also last longer, which means he saves both time and money on replacement bulbs.

With no money down, no interest payments and long-term energy and cost savings, it’s worth investigating whether your business could green its operations from a similar utility offer. Here’s how On-Bill Financing typically works:

· Check your utility’s rebate and incentive programs to see if the equipment you need qualifies for this type of financing.

· If you are not sure what type of equipment you need or what the cost savings potential is, your utility may be able to direct you to consultants to help you understand your options.

· At SDG&E, there are no up-front costs or credit checks to qualify, but you do need to be a utility customer in good standing. These requirements may differ from utility to utility.

· Once your application has been approved, an energy audit conducted by the utility or a contractor will calculate where efficiency savings can be achieved in your operation, how much you can expect to save and what rebates may be applicable.

· Loan amounts through the SDG&E program range from as little as $5,000 to up to $100,000 for businesses and $250,000 for taxpayer-funded organizations.

· The loan repayment period will be based on the equipment’s cost and estimated energy savings to ensure that the cost savings offset the monthly loan installment. At SDG&E, the terms range from three to five years for businesses and up to 10 years for public sector customers.

If your business does not meet the minimum loan requirement, do not despair. You may be eligible for other energy-efficiency programs through your utility. For instance, SDG&E offers a no-cost program, called Direct Install, to replace less-efficient equipment including lighting elements with energy-efficient products.

With businesses seeking savings everywhere they can, teaming up with your utility on programs such as these is a smart move.

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