PACE Renewable Energy Program Plan and Pilot Project (2017)
The State of Michigan passed Act 270 in 2010 allowing local units of government to establish a Property Assessed Clean Energy (PACE) program. On November 17, the Leelanau County commission voted to establish a PACE program for the entire county by joining Lean & Green Michigan, a statewide shared-services program made up of 18 counties and 6 cities and administered by Levin Energy Partners. This program facilitates commercial property owner’s application of energy efficiency, water efficiency, and renewable energy production which significantly lowers their energy costs by obtaining reasonably priced, long-term financing through a special a special assessment on their property taxes. A University of Michigan’s School of Natural Resources and Environment (SNRE) Master’s Project Team would implement some of the Action Plan for 100% Renewable Energy in Leelanau Township and the Village of Northport by implementing the PACE program in the area and identifying other financing resources available for local businesses. The team would develop a survey of eligible businesses to gather data on interest in the PACE program, eligibility of each property, and identify issues that may limit the ability of a commercial property owner to take advantage of PACE. A transparent, public engagement methodology with businesses and nonprofits will be designed and implemented, identifying eligibility and fit. The team would also identify challenges to using the PACE program and develop solutions to these challenges, such as identifying alternative sources of finance and navigating additional local government processes and incentive programs. Several Leelanau County firms have expressed interest in PACE participation. A pilot project would match the graduate students with Northport Energy and Levin Energy Partners, giving them real world experience. The project will create a methodology/plan for rural Michigan areas to implement the PACE program.
Goals and Objectives: Facilitate the achievement of significant new renewable energy production as proposed in the 2014-5 SNRE Northport 100% Renewable Energy Feasibility Study through the development of a methodology and implementation of a pilot project using the State of Michigan 2010 Act 270 and the Property Assessed Clean Energy (PACE) program already established in Leelanau County through Levin Energy Partners and Lean & Green Michigan.
Theoretical Justification, Social Benefit, or Significance: This project will result in the development of a PACE program implementation methodology which can be adopted by other communities in Michigan, particularly rural communities which face some of the most daunting energy challenges in Michigan. It will facilitate further renewable energy and energy efficiency projects which will significantly move our community towards its 100% renewable energy goal. The social, health and economic benefits derived from this project provide a good role model for other communities to follow in addressing climate change.
The Village of Northport and Leelanau Township already have a portfolio of highly successful renewable energy and energy efficiency projects that have established the communities’ leadership in project design and implementation. These projects include:
- The Northport Energy Action Taskforce , Inc.: Founded in 2008, NORTHPORT ENERGY achieved 501©3 non-profit status in 2011. Northport Energy broadly advances community sustainability efforts through building consensus around and effectively advancing a variety of clean energy strategies. NORTHPORT ENERGY has promoted energy efficiency and renewable energy, has secured grant funding to weatherize low-income homes, audited and weatherized homes and conducted public information programs. /li>
- Leelanau Community Energy LLC, a for-profit corporation founded in 2010 to qualify for renewable energy grants and subsidies. Leelanau Community Energy deployed Michigan’s first community wind project – a 120 kW wind turbine went on line in November 2012 and provides 40% of the energy for the Northport and Leelanau Township Utilities Authority (NLTUA). A 30 kw solar array was completed in August 2015 resulting in 50% renewable energy for the sewage plant./li>
- The Northport Energy Action Taskforce succeeded in obtaining a University of Michigan School of Natural Resources and Environment six person graduate project team for 2014-5. They produced a “Northport 100% Renewable Energy Feasibility Study.” Study outcomes utilized a team-designed community survey and community meeting methodology. This proposal is part of the implementation process outlined in the report./li>
- Leelanau Township and the Village of Northport have already achieved what we believe to be Michigan’s largest per capita renewable energy capacity of approximately 454 watts per capita. /li>
- Northport is the home for the United States first 100% solar powered golf course. Other solar energy systems are being designed and planned for local agricultural operations, wineries and local government owned facilities./li>
- Northport was part of the MSU Small Town Design Initiative in 2008 which resulted in the successful Future by Design Project. /li>
- Northport is already in effect a "complete streets" community, having authorized the use of electric powered golf carts on village streets and encouraging the use of bicycles and pedestrian traffic./li>
Levin Energy Partners, LLC, as the statewide administrator of the Lean & Green Michigan PACE program, is well prepared to work with students on the implementation of the Leelanau County PACE program and to help identify financing options – PACE and alternative methods – for local businesses. Levin Energy Partners is the PACE administrator for 18 counties and 6 cities, manages documentation for all PACE deals that happen under the Lean & Green Michigan program, and has trained over 200 individuals from various local governments and private companies on PACE, it’s benefits, and how to take advantage of the program.
Leelanau Township and the Village of Northport use approximately 22 million kW-hours per year of electricity. This energy production can be achieved with a mix of utility and residential scale solar PV, wind energy installations and efficient combined heat and power systems. We envisage a peak capacity of 25.5 megawatts of solar energy production at a cost of $76 million or $38,000 per capita. District heating with sustainable biomass could be viable. Because of unique community leadership profiles, Northport and Leelanau Township are also potential early-adoption candidate communities for advanced energy storage system development and electric vehicle promotion.
Specific Activities & Duration: The research methodologies proposed for this project are similar to those used in the SNRE 2014-5 Energy Feasibility Study. A survey will be developed and administered and a community outreach program designed and implemented. The target audience will be businesses and nonprofits, including agricultural operations, eligible to participate in the PACE program. This is a limited audience and should have a high participation rate. Consideration will be given to extend the program to the entire county as a number of businesses not in Leelanau Township or Northport have already expressed interest in PACE – eg. Cherry Republic in Glen Arbor/Empire; Black Star Farms near Suttons Bay.
There will be a finance element in the project. The PACE program as adopted in Leelanau County is a public-private partnership, which leverages private dollars to finance clean energy projects. Levin Energy Partners works with a network of private lenders interested in financing projects, and each deal is dependent upon reaching agreement with one such lender. These lenders work with Levin Energy Partners to conduct a financial project assessment to determine whether the project will generate sufficient cost savings to repay the loan and ensure that the projects generate positive cash flow for the property owner (for projects above $250,000). Students will be asked to help develop survey methodology that helps prequalify and streamline the preliminary underwriting process for these projects, helping make projects more investment ready. Beyond qualifying and underwriting, the project will also examine alternative financing methods. Qualifying a local business for a PACE project will yield information that can also help determine eligibility for creative PACE financing or for other forms of non-PACE financing. Current market conditions for PACE lending may prove challenging for small businesses, which don’t spend large amounts of money on energy in comparison to large businesses based in more urban areas. Still, there are savings to be had. For example, smaller projects (below $150,000) have a hard time finding traditional lending sources in the PACE market due to current fixed costs, interest rates, and general interest from private lenders. In instances where traditional PACE lenders are hesitant to participate, graduate students will have the opportunity to think creatively and help raise money for alternative financing vehicles (PACE or non-PACE) and Levin Energy Partners will help provide guidance.
There should be an opportunity for hands-on implementation of a PACE project. This would include working with Levin Energy Partners to perform an analysis of the opportunity and working with a Northport Energy Action Team and potential partners to perform or facilitate an energy audit, and eventually build an appropriate energy efficiency and /or renewable energy facility. A likely project is a Northport business, Thomas and Milliken, which produces a ton of waste wood/saw dust daily from its wood-working business. The owner is a public proponent of PACE.
Suggested project timelines are:
- March 2016 – Business survey and communication strategy development/li>
- April 2016- Project team and Northport Energy Action Taskforce client work out the final details of the project scope and work plan/li>
- April 2016 – Pilot project identified and scoping initiated. Energy audit completed. /li>
- May 2016 – Funding for pilot project developed with Levin Partners/li>
- Summer 2016 – Survey research is conducted by the team and business community meetings conducted; pilot project installation begun /li>
- Fall 2016 - Team members analyze data, explore funding options, assist with pilot project implementation /li>
- December 2016 – Draft report completed and discussed with client/li>
- April 2017 – Project completion/li>
Integrative Approach: The project provides an opportunity to integrate a wide variety of team member’s skills and interests. Social science research survey and community facilitation skills are an essential initial task. Financial analysis skills for identification of financing options and project financial evaluation. Technical skills for project evaluation and participation in a pilot project. All would be expected to integrate their work in a final report which could be designed to be used by other Michigan communities seeking a methodology for implementing the Lean & Green Michigan PACE program.Energy and economic models are available to simulate and demonstrate how to optimize business community renewable energy systems. With graduate student assistance from the SNRE, data inputs can be gathered and various scenarios can be assessed. Renewable energy and energy efficiency targets and solutions can then be agreed upon by the community business and farm stakeholders. Necessary policy and financial solutions can then be selected, debated and implemented.
We will initiate strategic planning with the SNRE Team and business stakeholders to scope the project. The following are our current project component items but we will welcome other ideas.
- Business and farm community survey and brain-storming sessions to identify issues and potential outcomes/li>
- Study how best to persuade businesses to accept sustainability as a community goal and participate in achieving this goal./li>
- Develop a communications strategy to persuade businesses and farms to adopt renewable energy and energy efficiency measures/li>
- Develop a methodology to identify and qualify projects./li>
- Prepare cost models for homes, farms, business and local government./li>
- Identify issues with utilities, such as the net-metering cap and local grid capacity, and propose policies to overcome these issues./li>
- Research available sources of project funding./li>
- Analyze and propose optimization of the PACE renewable energy legal framework./li>
- Examine meter aggregation, permitting and interconnection issues. /li>
- Identify barriers and strategies/options to overcome barriers and impediments./li>
These tasks will provide the graduate students with skills and develop their interests in renewable energy technology, public policy, economics, communications and psychology.
The NORTHPORT ENERGY members who will be involved in the project include:Doug McInnis, President of NORTHPORT ENERGY and a retired engineerSkip Pruss who was Michigan’s Chief Energy Officer as Director of the Department of Energy, Labor and Economic Development (DELEG) under Governor Jennifer GranholmSteve Smiley, renewable energy economist and pioneer wind and energy efficiency expertTom Gallery, solar engineer, research engineer Peter Wolcott, member of the implementation team for the National Environmental Protection Act.Cory Connolly, Clean Energy Project Manager, Levin Energy Partners
Rees Blanchard, MS Sustainable Systems