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An Opportunity for Creating
Economic ActivityWith
Property Assessed Clean Energy Act;
Advancing Facility Improvements and Conservation Related Retrofits
into Commercial and Industrial Properties
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2015
Created in Texas for Texans
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Local Adoption of PACE in Texas
“PACE in a Box” is a toolkit of recommendations and document templates for counties and municipalities to:
► Create uniform, user friendly, scalable, and sustainable PACE programs
► Encourage and support local discussions about forming regional or multi-jurisdictional programs
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Impact = Immediate
● As soon as the City or County Government officially adopts the PACE resolution!
● Model Resolution is already written and included in PACE In a Box guide
● Put this on your next Council or Commissioner’s Court agenda for approval
● Be a PACE Setter!
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Support & History
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• SB 385, Sen. John Carona and Rep. Jim Keffer
• The coalition:• County Judges and Commissioners Association of Texas• Independent Bankers Association of Texas• Texas Association of Business• Texas Association of Counties• Texas Bankers Association• Texas Building Owners and Managers Association• Texas Combined Heat and Power Initiative• Texas Conference of Urban Counties• Texas Manufactures Association • Texas Municipal League• Texas Renewable Energy Industry Association • US Business Council for Sustainable Development• US Green Building Council• Dozens of other organizations and companies
PACE is a Win-Win-Win
● Property Owners – lower utility bills, energy independence (CHP) energy efficiency, property value increase
● Contractors – source of increase in business, more local hiring, best practices, keeping up with technology advancements
● Lenders – new loans, steady & stable process, fully collateralized, 1st lien position, improved asset value
● Communities – increased economic development and jobs, improved building infrastructure, more appealing building stock
● State of Texas – reduced peak demand, improved grid loading, renewables as source, improved air quality, better water conservation
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PACE How it Works
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Critical Elements
● Economic Activity
● Conservation through efficiency
● People making a Difference
● Industry competitiveness
● Removing the Barriers to private investment
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Energy in Texas Today
● Texas leads the nation in energy consumption, accounting for 12% of the nation’s energy use and is the fifth largest energy consumer in the world
● Demand for electricity has increased 20% since 2000
● Population and Industry growth in Tx is skyrocketing!
Projected Texas Population
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“More than 1,000 people…move to Texas every day.” Gov. Rick Perry, 12/29/2012.
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U.S. v. Texas Energy Consumption
Industrial Sector Energy Consumption
Texas19%
Texas19%
Remainder of U.S.81%
Remainder of U.S.81%
Texas’ industrial sector is a huge, untapped market for energy saving retrofits. They understand the value of making these
improvements, but have roadblocks to getting these projects done
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Texas Drought Impact
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Water: Supply v. Demand
STOP: talking about the problem.START: talking about the solution!
● Texas Leadership is investing in water and power infrastructure – Water, Energy, Roads
● Private Investment in Building Infrastructure – part IV of the solution
● By far the cheapest and most affordable supply we find will be the existing supply we can reallocate because of conservation
● Old approaches called for mandates or tax and incentive policies that distorted the market and reduced revenues to local governments
● New approach…15
PACE - Fulfilling Critical Objectives
● Economic Activity Opportunities are Key
● Conservation through efficiency gains
● Property owners enhance building stock
● Businesses continually look for ways to lower operating costs and increase competitive advantage
● Local government is pressured to lead in areas of conservation and sustainability
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Example: Retrofit Bid for 5-Star Hotel
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ECM Description Annual Dollar Savings Project Cost
Pay-backElectric Gas Water O&M Total
Replace two 350 ton Chillers $5,000 $5,000 $10,000 $720,000 72.0
Add Cooling Tower Isolation Valves
$5,000 $5,000 $7,000 2.5
BAS for Central Plant $1,000 $4,000 $5,000 $65,000 10.8
Convert penthouse DX systems to CHW
$15,500 $4,000 $19,500 $97,500 5.0
VFDs on 4 AHUs Economizer $750 $3,000 $3,750 $50,000 13.3
Water Conservation Retrofits $1,000 $5,000 $25,000 $31,000 $255,000 8.2
Convert PIB/VAV boxes to EMCS Control
$20,000 $20,000 $80,000 4.0
Add DC Controls to AHUs in Penthouse
$3,000 $1,500 $4,500 $60,000 13.3
Lighting Retrofits $92,000 $1,500 $93,500 $221,000 2.9
BAS Night Setback for Meeting Rooms
$4,000 $4,000 0.0
Totals $230,250 $5,000 $25,000 $20,500 $280,750 $1,806,000 6.4
Economic Impact of 5 Star Hotel
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● Jobs for $ general contractors $ water conservation companies$ lighting specialists$ HVAC designers/developers$ energy managers$ commissioning agents$ architects, PE’s, energy engineers, auditors, estimators,$ mechanics, plumbers, electricians
● Revenue and business growth for lighting, controls, automation, HVAC, financial companies
● $1.8M’s economic impact = $9,000,000
PACE Tearing Down Barriers
Barriers
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Scarce internal capital budget
No access to, aversion to financing
• No investment-grade credit rating
• Lack of collateral assets that don’t fall under first mortgage
Uncertain holding period
Owner / tenant split incentives
Skepticism savings/ROI will be realized
No down payment and costs spread over time w/ savings
• Repayment security through senior lien position
• Backed by property, not by owner or equipment collateral
PACE obligation transfers to the new owner upon sale
Qualifies as NNN pass-thru cost
ESCO/contractor guarantees or third party insures performance
PACE Solutions
Regional PACE is best for Texas
1,200 Municipalities 254 Counties
24 Regional Councils of Government
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PACE Setters
• Create a local PACE Program. PACE in a Box provides everything you need including model docs.
• Volunteer at http://www.KeepingPACEinTexas.org/support-pace/join-the-effort
• Join our members: http://www.KeepingPACEinTexas.org/join-pace
Questions?
Michael West [email protected]
Charlene Heydinger [email protected]
Bring PACE to your Community
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Pick Up the PACE
