How can municipalities help taxpayers save billions of dollars each year and put people back to work? The answer is one of growing recognition and necessity: energy efficiency (EE) retrofits in city-owned buildings.
Around 19,492 cities and public entities in the U.S. control billions of square feet of building space and spend billions of dollars per year on energy. Retrofitting these municipal buildings for increased EE and financing the retrofits with the energy cost savings is a clear answer to the nation’s growing budget constraints.
The case is not only of national importance; local entities will experience a more secure and sustainable economic environment as a result of investing in municipal EE, including:
Reduction in maintenance and operating costs of city buildings and vehicle fleets
Decrease (or prevent increases) in local taxes or utility rates
Increased investment in the local economy
Creation of local jobs
Improvement in local energy security
Reduction in greenhouse gas emissions and other air pollutants
Challenges & Solution
Despite the significant need for municipal EE retrofits, the barriers to financing their implementation is often perceived as too high. The upfront capital costs of comprehensive whole-building retrofits coupled with the need for quick payback periods creates a clear tension for local elected officials.
It’s clear no silver bullet exists as a solution for all cities; however successful EE retrofit projects tend to follow the following three steps before the actual construction begins:
Step 1: Baseline Inventory & Audit
The first step in an EE retrofit is to understand the impacts that improvements in energy efficiency would have on a particular building. This step requires establishing a baseline for energy consumption and periodically reviewing energy performance post-improvement.
Step 2: Choosing Your Projects
In choosing which projects will be the ones to implement in an EE retrofit, it is important to consider the potential savings of the projects as well as determine the appropriate scope.
While it can be tempting to cherry pick the obvious projects with very short (1-5 year) payback periods, we recommend that cities consider the comprehensive life-cycle of the improvements being considered, as well as the anticipated future savings derived from avoiding escalating energy costs. Often, more expensive energy efficient investments (such as boilers, chillers, heat pumps, control systems, etc) have longer-term paybacks, but also substantially longer useful lives. If a building has a 50-60 year remaining useful life span, does a 2 to 3 year payback period make sense or should paybacks of 10 or more years and more substantial savings be valued equally or more heavily?” – Environmental Financial Advisory Board, Financing and Implementing Energy Efficiency Retrofits in City-Owned Facilities
Step 3: Financing Your Projects
Finding funds to retrofit an existing government building or to increase the efficiency of planned new construction can be a challenging endeavor. Several mechanisms have been developed to help cities meet the need for sustainable municipal financing of EE retrofits in public buildings. These include grants, bonds, sale-leaseback, performance contracting, sustainable energy utility, community revolving loan funds, utility funding programs, state revolving loan funds, and public-private loan funds.
Source: Clean Energy Coalition