Energy Efficiency Incentives for Municipalities
For local leaders across Pennsylvania, energy efficiency improvements are becoming increasingly more manageable and affordable.
With the assistance of new utility incentive programs, free benchmarking tools and low-cost public financing, energy management programs are able to significantly reduce municipality operating costs. Addressing inefficient or unnecessary energy consumption can limit wasteful spending by nearly 30%.
Beyond saving money, municipalities that upgrade to energy-saving equipment can make valuable investments in their communities, improving the economic strength, resilience, competitiveness and wealth of a community, as more resources become available for local economic development.
Plus, energy efficiency improvements lower equipment maintenance costs, enhance building occupant comfort and—for many lighting upgrades—improve building and neighborhood safety.
Energy savings may even result in better municipal bond ratings. Recently, Standard and Poor has specifically cited a municipality’s commitment to energy upgrades. A better bond rating could potentially result in lower interest rates for bond financing.
Step 1: Benchmark Energy Performance
A complete municipal energy management program starts with determining each facility’s energy-saving potential through a baseline inventory and facilities audit. Taking these steps recently became easier thanks to new government- and utility-sponsored tools.
The free, online ENERGY STAR® Portfolio Manager tool simplifies tracking energy performance metrics over a given period of time for a single building or across multiple buildings.
Energy benchmarking may yield surprising results, with similar-sized buildings potentially producing remarkably different scores. Understanding which buildings within a municipality have the most striking performance issues helps to focus investment dollars to wherever the biggest gains can be achieved.
In Philadelphia, for instance, officials have benchmarked about half of all municipal properties. Their analysis revealed significant discrepancies among similar buildings, as well as variations in energy intensity across different building types. For example, city prisons represent less than 18% of square footage, yet accounted for more than 30% of the city’s energy consumption.
To facilitate the benchmarking process, utilities such as PECO offer automated systems to transfer utility data into Portfolio Manager.
Step 2: Identify Energy Efficiency Projects
The second energy management step is to identify and select appropriate projects.
As technologies advance, more energy savings become achievable through measures such as installing LEDs and controls in lighting fixtures; replacing traffic signals; upgrading to high-efficiency heating, ventilation and air conditioning (HVAC) systems; replacing inefficient water treatment pumps and controls; and implementing custom energy management systems.
Low-cost measures that pay back quickly can help demonstrate the benefits of energy efficiency investments to decision makers, while generating revenue streams for larger projects. In Delaware County, recent lighting upgrades in Glenolden and Sharon Hill generated savings that paid back initial investments in less than two years.
Municipalities should be cautioned, however, against simply choosing projects with the shortest payback period. By combining short-term projects with deeper retrofit measures, municipalities can justify authorizing projects with extended payback periods given their larger and longer-term savings.
Consider the remaining useful lifespan of a building when evaluating the merit of an upgrade. Projects with multi-year paybacks, such as HVAC equipment replacements, commonly provide longer-term value.
In Southeast Pennsylvania, PECO provides per-fixture incentives for new interior or exterior lighting, per-ton incentives for new HVAC equipment or system upgrades and per-kWh-saved rebates for custom projects such as water and wastewater treatment improvements.
Municipalities who replace lighting equipment with their own maintenance staff are encouraged to contact a distributor who offers PECO Instant Lighting Discounts on energy-efficient interior and exterior lighting. Save instantly at checkout on approved products.
Additional utility incentives include rebates for water heaters and chillers, data centers, food service and refrigeration equipment, new construction and more.
Step 3: Secure Project Financing
The final step is determining how to finance the project. In addition to traditional public financing options, Pennsylvania municipalities investing in energy efficiency are eligible for performance contracting agreements and low-interest bonds.
The Guaranteed Energy Savings Act (GESA) allows for third-party financing, repaid through energy cost reductions. Unlike the typical design-bid-build process, municipalities participating in GESA procurement select among a pool of qualified Energy Services Companies (ESCOs). A request for proposals (RFP) procedure allows the issuer to award a contract to any entity whose proposal is timely and meets the municipality’s requirements.
ESCOs typically provide design-build services, operations and maintenance support, and an energy savings guarantee for a maximum period of 15 years. Rather than taking funds from operating or capital budgets, municipalities receive a guarantee that the ESCO will deliver energy savings to cover each year’s financing repayment obligation.
Under GESA, eligible energy conservation measures include a wide range of facility alteration or technology upgrades designed to reduce energy, water, wastewater or other consumption or operating costs.
PECO representatives are available to help municipalities in Southeastern Pennsylvania identify appropriate energy-saving measures and navigate the rebate application process. Municipalities interested in maximizing the energy efficiency potential of their facilities should contact a PECO representative at 1-844-4BIZ-SAVE (1-844-424-9728) or visit peco.com/biz.
