ORION TWP. — Powers Distributing Co. Inc., a beer distributor in Orion Township, teamed up with Newman Consulting Group, Lean & Green Michigan, and Michigan Solar Solutions to complete Michigan’s first refinanced PACE (Property Assessed Clean Energy) project and the first PACE project of any type in Oakland County.
The project also made Powers Distributing the first beer distributor in the United States to finance energy efficiency with PACE.
“Clean, renewable energy has evolved from being just a good idea to being proven business strategy,” said Powers Distributing COO Gary Thompson.
Thompson and Powers’ staff welcomed Orion Township officials and environmental professionals to their Orion Township headquarters Jan. 20, to celebrate the announcement. Guests learned about the company’s ongoing environmental efforts while gaining insight into how other businesses can use PACE financing.
“Powers is a family business with deep roots in our community,” said Thompson. “Investing in sustainability and clean energy is part of our commitment to our community, our state and to future generations.
Thompson noted that “the entire beer supply chain from brewing to distribution to your refrigerator is a long and energy hungry road.”
Under the Michigan PACE statute, any project that qualifies for PACE financing can also be refinanced by PACE, allowing companies to obtain long-term financing for recently completed clean energy projects.
Between 2013 and 2015, Powers Distributing added a 95-kilowatt solar system to the roof of its recycling center and installed LED lighting throughout its plant. The combined efforts reduced energy costs by an average of $4,000 a month. Newman Consulting Group uncovered the refinance opportunity while working with Powers’ on their efficiency measures. Lean & Green Michigan stepped in to support the passing of PACE legislation in Orion Township that allowed the project to move forward. Newman Consulting provided technical expertise and financial analysis to verify the project’s qualification for PACE financing.
Powers Distributing is one of the first companies in Michigan to take advantage of PACE, a new method for financing energy efficiency projects. Although Oakland County and Orion Township play a vital role in the PACE process, not one dollar of taxpayer money is used, or risked, in the process.
Commercial buildings spend approximately $200 billion per year on utilities, yet according to the EPA, 30 percent or more is wasted due to poor maintenance and obsolete equipment. Almost every building more than 10 years old can benefit from energy efficiency upgrades, often resulting in an energy savings of 15 to 40 percent. The energy projects that could make these buildings more energy efficient usually require a large amount of up-front capital and take many years to achieve profitability. Typically, commercial loans have a term of 3-5 years, making the annual payment much greater than the energy savings, and few companies can afford to take the huge capital expense out of operating budgets to finance these projects.
PACE changes this by allowing property owners to finance energy efficiency and renewable energy projects through a special property tax assessment with the local government. One of the advantages to this method of financing is that the loan (actually a tax assessment) is off balance sheet, meaning that the tax payments are an operating expense, not a liability. In the event that the building is sold, the tax assessment stays with the building.
Since the local government, Orion Township in this case, will enforce the PACE assessment like any other tax obligation, lenders feel secure in providing low rate, fixed-interest loans, with terms of up to 20 years. The result is immediate positive cash flow for commercial property owners because the savings generated by the project are greater than the PACE loan repayment.
In the case of Powers Distributing, the refinancing was for $435,000. The project will save an average of $48,000 in energy bills a year. It will displace more than 360,000 kilowatt hours of traditional electricity — equal to preventing the burning of 267,000 pounds of coal, or enough electric power for 20 average American homes. The environmental impact includes the carbon soaking capacity of 203 acres of forest.
Besides this project, Powers Distributing’s green efforts also include the world’s largest privately held fleet of hybrid-powered tractor trailers. More at www.powersdistributing.com.
More about Newman Consulting Group at www.newmanconsultinggroup.us. The founder of the company, Jim Newman, is a longtime member of The Engineering Society of Detroit.
In the photo above, left to right, are Alaina Campbell, executive director, Orion Area Chamber of Commerce; Matt Gibb, Oakland County; Chris Barnett, Orion Township; Gary Thompson, COO, Powers Distributing; Kyle Peczynski, Petros PACE Financing; and Andy Levin, Lean & Green Michigan.