More Choices Equal Greater Energy Savings for Commercial Markets

Glass terrarium in the shape of a pig with moss like plants in the shape of buildings inside

In 2016, Michigan Saves’ business, multifamily and public sector energy financing programs funded an impressive $7.6 million worth of energy-efficiency and renewable energy improvements in the commercial sector. How did they do it? Two words — more choices.

“Although our programs for these markets are still quite young, they’re maturing quickly, in part, because we keep looking for opportunities to expand our financing and program options,” says Michigan Saves executive director Mary Templeton.

Buydowns help two sectors expand their reach

Last year, Michigan Saves continued partnering with Consumers Energy and DTE Energy to offer the commercial sector interest rate buydown programs where utilities pay for a portion of the interest due on financing.

“These programs allow us to work closely with our utility partners and lenders to offer customers interest rates that are significantly lower than our already low standard program rates,” says Templeton.

In fact, this past year, the buydowns eliminated interest altogether, providing up to 36-month loans at 0% APR.
“It doesn’t get much cheaper than that,” says Templeton.

Buydowns make financing more affordable which, in turn, makes it easier for business leaders and public sector officials to invest — and often on a much larger scale than they otherwise would have — in energy-efficiency improvements. In 2016, buydowns triggered $6.4 million in financing.

Because Michigan Saves’ buydown programs have been so successful this year, the organization plans to continue them in 2017 as a way of further extending its reach.

New lender doubles financing capacity

Adding Team Financial Group as a Michigan Saves lender also gave commercial markets more choices by doubling the organization’s financing capacity.

“For the past few years, we’ve had one partner — Ascentium Capital — serving the business, multifamily and public sector markets,” explains Templeton. “While they’ve done a fantastic job, we saw a growing need for additional options.”
After going through a rigorous request-for-information process, the organization selected Team Financial Group because of its competitive interest rates, commitment to fast approval times, strong approval rates and ability to reduce or remove security requirements.

“Adding a flexible and responsive institution like Team Financial Group to the fold has allowed us to reach more audiences and help them make energy improvements at a much faster pace,” Templeton says.

One of the things that made Team Financial Group particularly attractive was its longer financing terms for solar work. Typically, solar projects are more expensive than other energy-efficiency efforts and, consequently, take longer to pay off. The 84-month terms offered by the new lender compare favorably to most other lenders’ 60-month terms.

New initiative affords public schools more opportunities to save energy 

In 2016, Michigan Saves met another of its goals — increasing program offerings to the public sector, particularly schools. It did that, in part, by partnering with The Ecology Center and Michigan School Business Officials (MSBO) to launch the Energy Efficiency Pilot Initiative — a program designed to help schools prioritize their energy-efficiency needs and find grants, incentives and low-interest loans to address them.

“We’ve known for a long time that schools understand and value energy efficiency and want to make upgrades, but they face a number of obstacles,” says Templeton.

Those obstacles include a lack of resources, a lack of financing options and a lack of staff with energy-efficiency experience.

Fortunately, each project partner had skills to help address these impediments. The Ecology Center leveraged its network of energy-efficiency experts to help schools develop sound improvement plans and identify priority projects. Michigan Saves leveraged its network of lenders with attractive financing options and utilities offering interest rate buydowns to fund the highest-priority projects. And, MSBO helped assess the need and spread the word about the availability of resources.

“School officials want to create more comfortable, better lit classrooms so their students have a better chance to learn,” Templeton says. “Our partners on this pilot project are helping to make that happen.”

The benefits of options

Giving people choices is critical for the business, multifamily and public sector markets because their needs and challenges are so diverse.

“One-size-fits-all just doesn’t work when you’re trying to serve three very different markets,” says Templeton. “That’s why we’re constantly trying to learn more about the barriers they face, the opportunities they present and the services we and our partners can provide to make improvement possible.”

In 2017, Michigan Saves plans to identify, research and implement new programs and financing options to better serve the business, multifamily and public sector markets.