Energy efficiency returns quadruple bond yields, study finds
A 30 percent improvement in U.S. building efficiency by 2030 could yield annual energy savings of $34 billion for American businesses and another $31 billion for households and governments, according to a new study.
Commissioned by United Technologies Corp. (UTC) and released May 20, the study found that investing in a 30 percent improvement in building efficiency would have an internal rate of return of 28.6 percent over a 10-year period ”“ which is four times better than the average corporate bond yield.
The study was conducted by Rhodium Group.
A Fairfield nonprofit that provides housing to low-income senior citizens and the disabled is witnessing the savings firsthand.
Church Housing for Fairfield Inc. recently completed $647,000 in upgrades to its Parish Court housing complex, which has 100 apartments. Prior to the project, the facility”™s units were running primarily on original equipment that had been installed in the 1970s.
The upgrades, which included the installation of ductless heat pumps in every unit, the elimination of all window air conditioners, the replacement of every unit”™s refrigerator, the replacement of windows and doors in both the units and common areas and the addition of insulation in all units, are expected to result in annual energy savings of nearly $45,000.
Church Housing for Fairfield hired Millennium Real Estate Services L.L.C., which is based in Rocky Hill, to look into the modernization of the Parish Court complex.
“It needed an injection of capital,” said Frank Stellato, associate director of real estate for Millennium. “We looked at and analyzed the existing costs of operating the facility and one of the largest expense-line items was the electric use. Everything was old baseboard electric and an energy hog, as they call it.”
As a result of the project, the complex”™s energy costs dropped 44 percent from December 2010 to December 2012, 43 percent from January 2011 to January 2013 and 34 percent from February 2011 to February 2013. In all, the upgrades are expected to pay for themselves over the course of about 12 years, once state incentives are factored in.
Stellato said the combination of energy savings and available state incentives clinched the deal for the property owner. “A reduction in costs means an increase to their net operating income, which meant in the context of this deal that they”™re able to leverage more out of the same pool of dollars,” Stellato said.
“I think the incentives were probably just enough to make it economically viable for them.”
The Parish Court project received about $87,000 in incentives from the Connecticut Energy Efficiency Fund, a statewide fund that is supported by all of the state”™s electric and natural gas consumers through their electric bills and gas rates.
Church Housing for Fairfield also took advantage of a long-term, low-interest energy-efficiency financing program through the Connecticut Housing Finance Authority.
Patrick McDonnell, senior director of conservation and load management for United Illuminating (UI) Co., said there is a wide range of incentives available for residential, commercial and nonprofit customers. UI also assisted on the Parish Court project.
“One of the things we find, especially with commercial customers, is that energy efficiency upgrades have to compete for capital with every other business investment a company is considering,” McDonnell said. He said the available incentives help to make the return on investment for energy upgrades much more attractive.
Information on the state”™s incentives is available at energizeCT.com.