Michigan Saves stepped up its Business Energy Financing (BEF) offerings this year with more utility-supported promotional rates and a greater focus on Multifamily Energy Financing.
The focus in 2016 is for the Michigan Saves team to increase awareness of energy-efficiency financing for the public sector, especially schools.
Multifamily Energy Financing Program
In 2015, Michigan Saves focused on a new market in multifamily that shares a financing platform with its successful Business Energy Financing program, offering the sector incentives and greater outreach. As a result, Multifamily Energy Financing has grown steadily between 2014 and 2015.
While the program is able to reach an untapped market, it still comes with challenges. One of those challenges is known as a “split incentive,” where the property owner repays the financing and the tenants pay the utility bill and realizes the cost savings from the energy-efficiency improvements. In the long run, however, property owners benefit from energy-efficient upgrades.
“Turnover in multifamily properties is expensive and a hassle,” says Todd O’Grady, commercial contractor coordinator for Michigan Saves. “The improved comfort and safety means higher tenant retention for property owners while improving their financial bottom line.”
One property manager learned the benefits of Michigan Saves’ Multifamily Energy Financing Program early on and worked quickly to explain how the improvements help property owners increase the return on their investment. Leslie Etterbeek has used Michigan Saves financing on several properties she manages. Already she’s seen the cash savings from the improvements.
“Financing through Michigan Saves was a beautiful way of doing the work without affecting the bottom line of the project,” Etterbeek says. “I’m helping my owners understand that I’m going to make them more money.”
These multifamily projects don’t just benefit the property owners and managers, either.
“It’s nice to see the repeat business not only from the property manager, but the contractor as well,” O’Grady says. “Our contractors are able to develop a portfolio of successful projects so they can approach other property owners.”
Throughout 2015, the Michigan Saves team developed different ways to grow the program.
“We recognize that this market is really unique,” O’Grady says. “We’re being diverse in our messaging—tailoring it to senior and assisted-living facilities or high-rise apartment building owners. By recognizing the unique needs of multifamily property owners, we’re building awareness about this program.”
The more buydowns, the better
This year also brought in more buydowns and promotional interest rates from Michigan Saves’ utility partners. Lansing Board of Water and Light, DTE Energy, and Consumers Energy all stepped up to buy down interest rates to as low as 0% APR.
“The utilities’ willingness to continue offering buydowns is a testament to how effective these programs are,” Laura Palombi, operations manager for Michigan Saves, says. “And it is really exciting to see the kind of work that gets done when customers see the great financing opportunities available.”
One of the benefits to the buydowns is that a wider variety of projects are now available to business owners, due to the lower interest rates and longer terms. In mid-2015, many of the utilities worked with Michigan Saves to extend terms for these special incentives from 24 months to 36 months and expand eligible measures in addition to prescriptive measures.
With the books closed on a successful 2015, this month Michigan Saves announced a continuation of the buydown programs with even more options and flexibility for customers.
“We love the growth we’ve seen,” Palombi says. “I want to continue to strengthen our external relationships with our customers, contractors, and lending partners.”
A focus on the public sector
Now that the Multifamily Energy Financing Program is starting to get traction, Michigan Saves’ plan is to increase outreach and program offerings to the public sector in 2016.
The special interest rate incentives funded by DTE Energy and Consumers Energy were recently opened to public sector projects—a step that will help Michigan Saves reach new customers.
“In addition to promoting these special incentives, we’ll do some contractor awareness, and reach out to our networks to find opportunities to connect with audiences that deal primarily with the public sector,” Palombi says.