PACE saves Texans Energy Money & Water
By Jim Cardle
Texas Insider Report: AUSTIN Texas Two bills currently moving through the Texas Legislature have the potential to
solve a significant part of the often-feared electric shortage issue many
Texans have come to be concerned about. PACE or the Property Assessed Clean Energy programs in
SB 385 by Sen. John Carona (R-Dallas) and
HB 1094 by Rep. Jim Keffer (R-Eastland) provide workable options for Texas businesses municipalities and counties if they choose.
Commercial and industrial buildings in Texas consume enormous amounts of water and energy and experts estimate approximately 30 of all energy used in commercial buildings is wasted. The cost to building owners in Texas of wasted energy and water consumption is billions annually.
Minimizing or avoiding these costs could not only provide electric & power savings to Texas businesses but would also go a long way toward eliminating the potential brown-out threats which often preclude business re-locations to Texas particularly in the booming high-tech industries which are dependent upon reliable sources of power.
Finding a way to keep the last crucial 5 of electric power available on the Electric Reliability Council of Texas (ERCOT) grid via PACE or other options would put Texas well ahead of other states competitively and facilitate continued growth within these highly competitive industries.
Unfortunately the current market is not aligned to encourage energy efficiency savings.
Why? Because capital spending to upgrade inefficient equipment such as chillers and boilers often takes years to pay for itself in utility cost savings. Investors typically expect a short term return on capital investment and resist investments with long term pay backs.
In addition many building owners simply dont know how long they will own a building or are unwilling to invest in capital improvements that provide acceptable returns during their period of ownership.
The difficulty of overcoming these barriers prevents many buildings from realizing the significant utility cost savings that result from upgrading aging building infrastructure equipment. Among other things these upgrades enable Texas business to install equipment protecting them from power brown-outs or power outages due to excessive demands on the energy grid and weather-related events.
Building owners in Texas need the ability to access utility cost savings that would avoid obsolescence and increase the buildings net operating income and market value.
Property Assessed Clean Energy (PACE) market-based solution will enable Texas commercial and industrial building owners to secure affordable private-sector financing for water conservation projects and energy efficiency retrofits. Participation in PACE is entirely voluntary. There are no mandates no picking winners and losers and no cost to tax payers or risk to communities.
PACE financing is an extra tool for building owners to use in reducing their utility costs making all businesses more competitive.
How PACE Works
A building owner selects a contractor for a water and/or energy retrofit project obtains a 3rd-party review to verify projected utility savings and chooses a lender to provide the PACE financing. If the property is mortgaged the owner
must obtain the mortgagees written consent before proceeding with the planned PACE financing.
The building owner presents the retrofit project to its local PACE program to arrange for the PACE assessment to be placed on the property and assigns the future payment stream to the lender. Because the payment stream is secured by an assessment lien on the property the lenders investment is well secured enabling the lender to provide low-cost long-term financing for the retrofit project.
By facilitating the PACE financing local government uses the PACE program as an economic development tool at no cost or risk to the local government. Businesses would use PACE financing only if it makes good business sense.
PACE supporters include amongst others:
- Blue Bell Creameries L.P.
- Cities of Austin
- Dallas and
- El Paso
- Dixie Chemical Company
- Dow Chemical Company
- Independent Bankers Association of Texas
- Real Estate Council of San Antonio
- Schneider Electric
- Texas Association of Business
- Texas Association of Counties
- Texas Bankers Association
- Texas Building Owners & Managers Association
- Texas Combined Heat & Power Initiative
- Texas Conference of Urban Counties
- Texas Manufacturers Association
- Texas Municipal League
- The Real Estate Councils of Texas
- Thompson & Knight LLP
- Transwestern
Economically PACE would allow businesses to overcome upfront financing obstacles to investment in infrastructure and reduces pressure on the state electric grid. PACE also unlocks the pent-up demand for energy-efficient equipment boilers combined heat & power units (CHP) chillers window systems cool roofs pipes wires controls and more.
PACE will result in increased demand for manufactured goods and provide new opportunities for job creation.
With
Sen. Carona &
Rep. Keffers efforts Texans may be able to stop talking about water and energy problems and
provide a solution driven by private enterprise and rooting in free-market economics.
PACE will create new business opportunities reduce demand on Texas already-strained-by-growth energy infrastructure and help preserve Texas water resources.
For further information on Keeping PACE in Texas visit www.KeepingPACEinTexas.org
