Amid continued uncertainty over clean energy policy in the Ohio legislature, the state’s largest county is taking steps forward on its own.
Cuyahoga County, which includes much of the Cleveland metropolitan area, announced last week the formation of a hub to help businesses and nonprofits find private funding for energy efficiency and renewable energy projects.
“This clean energy financing hub is one of the first in the nation,” said Shanelle Smith, deputy director for the county’s Department of Sustainability (and also a 40 Under 40 leader recently honored by Midwest Energy News). “The state hasn’t necessarily been helpful in addressing these issues, so that’s where our county has stepped up to play a role.”
Smith and others say the program can help the county’s local economy, which in many areas still struggles from the loss of manufacturing jobs in recent decades.
“If a business is willing to invest in energy efficiency or solar, they’re more likely to stay in your community,” Smith stressed. “This is most definitely an economic development strategy for the county.”
Finding funders
Unlike some one-size-fits-all programs, the Cuyahoga County financing hub will offer at least four platforms to help different types of entities fund renewable energy or energy efficiency projects.
One of those platforms aims to reinvigorate the PACE financing program.
PACE refers to Property Assessed Clean Energy financing through special energy improvement districts. The idea behind the program is to let businesses pay back money for qualified projects through tax assessments on affected property – meaning the commitment attaches to the property and can be transferred if the property is later sold. State law has authorized such financing for about five years.
Yet while an advanced energy improvement district has existed in northeast Ohio, there really “hasn’t been any deal flow through it,” said Mike Foley, director of sustainability for Cuyahoga County. “They just couldn’t find financing.”
“They didn’t have a capital partner or the capacity to work with a capital partner,” added Smith. “What the hub has been able to do is step in and provide that capital partner and the capacity to move these projects through the process.”
Currently, the investment firm of Kawa Capital Management is on board to be at least one source of PACE financing, Foley reported. “There’s a bit of bureaucracy you have to go through, but the fact that we’ve got a funder who’s willing to fund these projects is pretty huge,” he said.
A second platform will help match nonprofit entities who want to install solar energy with for-profit investors. Because for-profit investors can take advantage of any current tax credits, the net costs for the systems would be lower than if the nonprofit groups purchased and installed the systems themselves.
“We’ve got the platform ready to go,” Foley said. “We’ve got at least 10 to 15 churches that all have expressed interested in being part of this.” As long as their projects add up to at least 1 megawatt of capacity, the county has a potential investor lined up.
Following through on audits
A third tool in the energy hub’s toolbox comes from cooperation with Key Bank and COSE, the Council of Smaller Enterprises.
COSE had already partnered with Dominion East Ohio to provide energy audits to nonresidential customers. Yet often energy efficiency projects identified by those audits didn’t happen due to lack of capital.
“The financing has been the thing at the end of the rainbow that hasn’t been there,” Foley said. But now Key Bank is “basically willing to do this one-stop quick loan shop for businesses that want to take advantage of it.”
Similarly, stimulus funds helped many cities have energy efficiency audits several years ago, Foley reported. “But a lot of those audits just kind of sat on shelves after they were done because they didn’t have money to implement things.”
Thus, a fourth platform would use public finance mechanisms to help cities follow through on energy efficiency projects. “We’ll work with you and try to find the best financing to help you do the upgrades,” Foley said.
Lenders are generally comfortable working with cities, Foley explained, but packaging financing and figuring it out can be complicated for many municipalities.
For both public and private energy efficiency projects, the county can provide a huge service in reviewing technical information and providing some double-checking for energy audits, Smith said. The county also offers help in figuring out how to proceed.
Optimally, Foley and Smith stressed, both the public and private platforms will work to create win-win situations.
Public and private owners’ goal will be to realize net savings as they make capital improvements. “You’re paying less for your utility costs that you are for your financing costs on a year-to-year basis,” Foley explained.
Meanwhile, lenders will build a client base and provide financing that makes good business sense.
‘We’ll push and we’ll nudge’
Putting the financing hub together “would have been much easier if the state had renewable portfolio standards and an energy efficiency standard that were meaningful,” Foley noted.
Enforceable increases in those standards are currently frozen until 2017, and a report from Ohio lawmakers last month called for an indefinite suspension of any further requirements for renewable energy and energy efficiency, as well as greater weakening of those standards.
If Ohio’s General Assembly ultimately decides to continue the freeze, “we’ll get by,” Foley said. “We’ll push and we’ll nudge” at the Department of Sustainability to keep the hub working, Foley said.
But, he added, reinstatement of those standards in a meaningful way would “add more resources to get what we want to do accomplished.”
“I think we have a moral obligation to clean up the energy grid — to reduce the amount of electricity generated from coal-fired power plants, which is the major producer of electricity in this state,” Foley continued. In his view, that calls for “both reducing demand from those sources and helping to create demand from other sources such as solar.
“That’s a huge obligation we have and a huge need and an opportunity for the county.”