"Did you know that lighting upgrades can pay for themselves in as little
as 2.2 years and the payback continues over the lifetime of the system?"
- Energy Cost Savings Council
According to The U.S. Department of Energy, LED lighting can save up to 85% of the electricity used by incandescent bulbs and up to 50% of the electricity used by fluorescents. The Department Of Energy estimates that widespread adoption of LED lighting by 2025 will:
- Reduce electricity demands from lighting by 62%
- Eliminate 258 million metric tons of carbon emissions
- Reduce the amount of materials being put into landfills
- Avoid the building of 133 new power plants
- Save the US over $280 billion
ENERGY SAVING INVESTMENT OPTIONS
A. OBF (On-Bill Financing)
OBF program is funded by California utility customers and administered by different utility companies under the direction of the CPUC (California Public Utilities Commission). OBF provides qualified, non-residential customers with a means to finance energy-efficiency (EE) retrofit projects under select rebate programs. The OBF agreements and rules are approved by the CPUC.
The loans offered under OBF are interest free (0%) and free of any fees, pre-payment penalties, or other charges. (The loan terms and conditions are set to provide simple payback from energy savings during the maximum allowed loan term, and are calculated by dividing the loan amount [eligible project cost less qualified program incentives] by the estimated monthly energy cost savings resulting from the retrofit project. The ensuing number of monthly payment must not exceed the maximum loan term).
To qualify for financing through OBF, a project’s estimated energy savings must be
sufficient to repay the loan during the maximum allowable payment term. The monthly
payment is calculated based on estimated monthly energy savings.
For example:
The loan terms for the Customer in this example would be $3,000 per month for 25 months.
If the Customer closes his/her utility account before the loan term ends—for example,
if the Customer’s business closes or the Customer moves to a new location
—the Customer must pay off the loan balance when the final bill is settled,
unless the loan is transferred to a new Customer via submitted written consent.
B. PACE (Property Assessed Clean Energy)
PACE is a simple and effective way to finance energy efficiency, renewable energy, and water conservation upgrades to buildings. PACE can pay for new heating and cooling systems, lighting improvements, solar panels, water pumps, insulation, and more for almost any property – homes, commercial, industrial, non-profit, and agricultural.
Your business or organization can obtain 100% financing for clean energy improvements from a local PACE program. Municipalities and counties work with private-sector lenders to provide this financing for qualified projects, such as solar panel installations, which is paid back through an annual assessment on the organization’s property tax bill.
The payback term may extend up to 20 years, which can save your business money by ensuring that yearly utility bill savings from your energy improvements are greater than your annual PACE payment.
C. Third Party Lender Financing
Private lenders offer various options to consider:
Dollar Buyout Lease
A dollar buyout lease may also be referred to as a capital lease. The advantage of a dollar buyout lease is that it guarantees the opportunity to own the equipment at the end of the lease for a minimal payment of $1.00. A Lessee (customer) that plans on keeping the equipment at the end of the lease term often selects the dollar buyout option.
Equipment Finance Agreement
Equipment Finance Agreement (EFA) is a loan which is secured specifically by the equipment financed unlike an installment loan which is typically secured by a blanket lien on all of the customer's assets. An EFA will also provide early buyout options for the customer without the restrictive covenants of an installment loan.