Solar financing options for building owners seeking Net Zero

A 2021 Forrester study found that 72 percent of senior sustainability leaders believe implementing a sustainability program (or maturing an existing one) is a top business priority in today’s corporate landscape. Their responses reflect rising public concerns about the future of the environment and a corresponding increase in pressure on companies to conduct business responsibly. Companies that want to reinvigorate sustainability efforts have options for improving operations, from rethinking energy sources to reconsidering supply chains and more.

Building owners understand that reimagining building and infrastructure plans can drive the outcomes they are after, but they may be hitting a few speed bumps along the way. Perhaps the most significant obstacle on the race to net zero is cost. Sustainable infrastructural upgrades are not cheap. Luckily, commercial and industrial (C&I) building owners have plenty of innovative, flexible funding solutions at their disposal—and these solutions are becoming increasingly easy to leverage.

What’s out there

The widespread push for more sustainable business practices has spawned renewed interest in infrastructure investments, and that means there are options for organizations hoping to meet sustainability goals without going over budget. For C&I building leaders, multiple models are available.

Today’s owners are taking advantage of Power Purchase Agreements, Energy-as-a-Service Agreements and the newest option Net Zero as a Service. Additionally, competitive interest rates and government tax benefits are further reducing the barriers to investing in building upgrades. These options can be synthesized to provide organization leaders with funds to put toward energy-efficient solutions, strategic integrations and ongoing maintenance.

Government relief funding

For owners who have been putting infrastructure upgrades on hold due to a budget, federal and state relief funds can provide businesses with an opportunity to invest in modern, healthy and efficient building upgrades. One example is the implementation of solar PV arrays, though this relief funding can be used for sustainable retrofits across your entire building.

C&I leaders should note that collaborating with an experienced partner is a necessity with this type of funding model. It may be of interest to C&I leaders pursuing relief funding to call on an outside organization with experience in innovative financing and net zero leadership. Partnering with experts in non-traditional funding can streamline relief fund research and application processes.

Net Zero as a Service

Net Zero as a Service is a low-risk, high-reward funding model. Under a Net Zero as a Service (NZaaS) contract, partners working toward C&I solar improvements can connect with an experienced organization, like Johnson Controls, to make facility upgrades without impacting existing budgets. These contracts guarantee service levels, operational and utility savings which can be used to cover the costs of upgrades over an agreed-upon period. Additionally, the contract can include provisions under which the partner organization will pay any shortfall if the upgrades do not yield the forecast savings.

Businesses that use NZaaS for energy efficiency projects receive a multitude of benefits:

  • Risk transfer of the entire utility budget
  • Potential off-balance sheet treatment and more favorable capital allocation strategy
  • Facility and infrastructure retrofit costs are offset by utility and operational savings which saves money in the long run.
  • Annual energy and operational savings are greater than or equal to the required payments over the term of the contract.
  • The NZaaS model will specify the scope of improvements, associated costs, estimated energy and other savings, reducing workloads.
  • Organizations that enter NZaaS receive funding information to ensure the infrastructure can be maintained and updated to meet changing demands during and after the contract period.

One example of a performance infrastructure success leveraging an innovative funding model is the City of La Crosse, Wisc., which partnered with Johnson Controls to install four 100-kW solar PV arrays throughout the community. These solar PV arrays will help reduce energy consumption by 35 percent, while additional solar installations and LED upgrades will drive further savings.

What started as a utility savings project, led to a $9M net zero initiative expected to generate $11M in total savings for the city, without impacting the budget or taxpayers. The City of La Crosse is now well on their way to achieving their carbon net neutrality goal by 2050.

Which method should you pick?

Funding can be tough to navigate, but any business has the ability to meet net zero goals without going over budget, as long as they know where to look. Organization leaders must decide for themselves which model best fits their needs and partnering with a trusted experienced provider can help ease the journey. Regardless of the funding model chosen, a brighter, greener future is within reach, alongside the business benefits of investing in sustainable infrastructure upgrades.

Charles McGinnis is vice-president of Sales for Sustainable Infrastructure-North America at Johnson Controls, where he is responsible for leading and executing strategies to profitably advance business in North America.

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