In June 2010, northwestern Ohio was recovering from a period of both high unemployment and a substantial drop in business activity associated with the nationwide recession. With utility prices for electricity and natural gas at record lows, building energy efficiency improvements were a tough sell.
Using $15 million in seed funding from the U.S. Department of Energy’s Better Buildings Neighborhood Program, BetterBuildings Northwest Ohio was able to make cost-effective energy upgrades more accessible to businesses and government entities across northwestern Ohio, as well as homeowners. Starting in Toledo and expanding to other localities in the state, BetterBuildings Northwest Ohio offered energy upgrades and financing for buildings, from offices and schools to firehouses and wastewater plants, emphasizing how building owners could save on energy costs while increasing the value of their investments.
The Toledo-Lucas County Port Authority (TLCPA) not only regulates the area’s transportation hubs but also focuses on job growth and economic development throughout the region. TLCPA and the City of Toledo formed an energy improvement district, a mechanism that enables commercial and industrial property owners to install and finance energy projects on their property. Under this district, TLCPA launched BetterBuildings Northwest Ohio.
What began as the Toledo Ohio Advanced Energy Improvement Corporation expanded to become the Northwest Ohio Advanced Energy Improvement District, one of the largest of such programs in the country. With a myriad of financing options available to its customers, including energy bond pooling and power purchase agreements, BetterBuildings Northwest Ohio program has become a model program for financing energy efficiency and clean energy projects across broad energy districts.
BetterBuildings Northwest Ohio promoted energy efficiency upgrades across building sectors through a variety of program elements.
- Commercial Program Design: BetterBuildings Northwest Ohio helped commercial customers identify opportunities for whole-building energy efficiency upgrades by demonstrating where in these building that deferred maintenance and aging mechanical systems made them ripe for improvements. The revolving loan fund acted as a financial warehousing mechanism through which small businesses could bundle smaller transactions for long-term bond financing. Qualified professionals conducted energy assessments and provided recommendations for building controls and systems integration, software, high-efficiency lighting, power correction, renewable energy systems, air handling units, and high-efficiency boilers and chillers.
- Marketing and Outreach: The program engaged regional economic development organizations and professional service groups to help drive demand for building energy upgrades and promoted major commercial upgrade projects in local media. The program conducted nearly 2,300 meetings over three years with area businesses, government, economic development entities, and professional and industry organizations to promote, educate, and identify energy upgrade opportunities.
- Financing: BetterBuildings Northwest Ohio created a $10.5 million revolving loan fund and loan loss reserve to help finance upfront costs for commercial and institutional building upgrades. Loans could cover the entire upgrade cost including energy assessment, project design, and construction management, and were paid back through a special energy assessment on the property, made available through energy special improvement districts. Financing was provided by the Northwest Ohio Bond Fund, which offered long-term fixed-rate financing for up to 10 years on equipment purchases.
- Workforce Development: The program trained energy professionals as certified building energy and envelope specialists. A professional energy services partner provided field training, customer marketing skills, and training on a proprietary computer system for energy savings and project modeling. The program also trained professionals to specialize in upgrades for small businesses, nonprofits, and multifamily homes. A sustainability class within the University of Toledo’s civil engineering department also performed an energy inventory of more than 300 Toledo and Lucas County buildings, many of them large consumers of energy.
- Residential Program Design: BetterBuildings Northwest Ohio also provided training for home energy professionals and partnered with a local utility, Columbia Gas of Ohio, to offer a residential upgrade program that provided whole-home energy assessments for $50 ($20 for income-eligible customers), as well as options for improvements, rebates, and other technical assistance. BetterBuildings Northwest Ohio worked with Owens Community College and Conservation Services Group to provide Building Performance Institute energy assessment training for residential energy professionals. After receiving 140 hours of training and $10,000 in specialized equipment, these new energy experts were fully trained, certified, and equipped to perform home energy assessments in conjunction with the Home Performance Solutions program.
BetterBuildings Northwest Ohio learned a great deal about promoting upgrades in the commercial and institutional sector:
- Keep it simple. BetterBuildings Northwest Ohio tried to simplify and refine the application process to make funding readily available to building owners once they were prepared to commit to a project. The program recommends matching the complexity of the process to the size and complexity of the project, noting that detailed energy assessments are not needed for single-measure projects such as lighting replacements.
- Identify the right partners. The program recruited professional, customer-facing partners, such as engineering firms, general contractors, electrical and mechanical contractors, and energy services companies, to help refer customers and drive demand. It also leveraged relationships with local educational institutions to conduct research and train professionals to support commercial and institutional upgrades.
- Establish transparent financing tools early in program design. BetterBuildings Northwest Ohio recommends having financing in place in advance of program launch, making it easy to understand, and offering simple, streamlined documentation and processes at fair market prices.
- Pool resources. By aggregating smaller projects, the program was able to access investment-grade markets. TLCPA aggregated smaller projects using a combination of bond proceeds and its revolving loan fund. The Northwest Ohio Bond fund provided access to long-term investment grade bond financing over 7-, 10-, and 15-year terms.
BetterBuildings of Northwest Ohio continues to serve commercial, nonprofit, government, and institutional facilities with energy upgrade financing. The program has partnered with the City of Toledo in the President’s BetterBuildings Challenge, committing to achieve a 20% energy savings across 7.5 million square feet of buildings by 2015.
- The program continues to offer fixed-rate financing with terms up to 15 years for projects that focus on energy efficiency and generating savings through equipment upgrades in existing facilities.
- Financing is structured so that the energy savings will cover the cost of equipment upgrades and the installation and transaction costs, making these projects “self funding.”