It may become more financially feasible for Alaska’s business owners to make their buildings more energy efficient in the coming years. One of the few bills to pass the legislative session this year will allow local governments to provide a new financing tool for energy efficiency projects, but there are still more steps in the process. The Alaska Energy Authority is working with four of Alaska’s largest boroughs and Anchorage to implement the program.
House Bill 80 was among a handful of bills that made it through the legislative fray this year as lawmakers grappled with the state’s budget crisis and as a result, received few headlines.
The legislation allows local governments, such as the Kenai Peninsula Borough, to deploy a program that enables businesses to pay off loans for energy efficiency projects through commercial property assessed clean energy financing or C-PACE.
What that means is local governments would serve as a middleman between business owners and private lenders. Business owners would be able to pay off loans via property taxes.
“That loan is repaid through a line item on their assessment. The debt then stays with the building instead of the building owner, which means there’s a little bit less risk,” Katie Conway said, Alaska Energy Authority’s government relations manager.
Conway explains the program’s participants would also be able to spread the cost of the loan to any renters on the property. All these factors make lenders more comfortable with longer term, low interest loans and could make cost-saving projects less cost prohibitive.
“The term of the deal is probably going to be so favorable that the energy savings I generate through making these improvements will essentially pay for the cost of the repayment,” Conway said.
Conway facilitated a meeting between the Kenai Peninsula, Matanuska Susitna, Fairbanks North Star and Juneau boroughs earlier this month. The Municipality of Anchorage is also participating.
The idea is to have all five implement a uniform program and consolidate management of the initiative into a statewide entity. Smaller cities and boroughs could then jump onto the program at later point, but how all this will be done still needs to be worked out. Other details such as what types of projects would qualify are also unclear.
“Pretty typical efficiency improvements would be included like weatherizing the building envelope, adding insulation, improving the heating and ventilation system,” Conway explained. “You could probably do lighting upgrades. You could perhaps add solar panels if you wanted to.”
Other states have opened the door for C-PACE programs. Loan terms can go as long as 20 years and typically fund large projects, running around $200,000.
Kenai Peninsula Borough Chief of Staff Larry Persily attend the June meeting to learn more about the possible benefits. He wants to know how a C-PACE program could work in Alaska.
“What works in California isn’t going to work here. Projects are going to be smaller, buildings are going to be smaller,” Persily said. “There are costs to any loan program. You got to figure out if this is affordable for small projects, not big projects.”
Persily said no one is committed just yet and putting a program in place could be more than a year away.
“This is going to take time to investigate, figure out legal, financial issues,” he said. “If the answers are good, set it up.”
Representatives from the four boroughs and Anchorage will start meeting on a regular basis in August. Conway said other stakeholders such as state entities, lenders and contractors will also participate.
If an agreement is reached, each borough and municipality would have to issue a report detailing how the initiative would work locally. They would also need to pass an ordinance to implement the program.