Transcription
Funding Your Green ProjectOpportunities for Federal, State, and Private Funding Assistance
Table of ContentsIntroduction:Overcoming the Financing Hurdle .4Success Story: The Hill Store in Belleville Pennsylvania .5Types of Funding: .6Tax Incentives .6Example: Energy Efficient Commercial Business Deductions (Section 179D) .6Rebates .6Example: Duquesne Power and Light Energy Efficiency Rebates: .7Grants .7Example: Small Business Innovation Research Grants .7Loans .8Example: SBA 504 Loans: .8Investors .9Example: .9Energy Service Companies and Leasing of Green Equipment .9Example: Renewable Energy Equipment Leasing (REEL) .9Renewable Energy Credits (RECs) . 10Example: Pennsylvania AEPS Alternative Energy Program . 10Success Story: Ideal Self Storage. 11Resources for Finding Funding: . 12Bridgeway Capital . 12DSIRE: . 12Duquesne Light . 13Pennsylvania Department of Community and Economic Development . 13Pennsylvania Department of Environmental Protection . 13Small Business Administration . 13Small Business Innovation Research (SBIR):. 14The Sustainable Energy Fund . 14Urban Redevelopment Authority . 14Success Story: McGinnis Special Foods Store. 1510 Tips for Funding Your Green Project: . 16Success Story: Geochemical Testing . 18Bibliography: . 19Funding Your Green Project - 2 -
All Rights Reserved. No part of this publication may be reproduced in any form or by any means without writtenpermission from the publisher. All opinions, conclusions, or recommendations expressed are those of the authorand do not necessarily reflect the views of Duquesne University.The Center for Green Industries and Sustainable Business Growth has made reasonable efforts to ensure theaccuracy of this information. It may, however, include inaccuracies or typographical errors and may be changed orupdated without notice. It is intended for discussion and educational purposes only and is not intended to and doesnot constitute legal financial or other professional advice. Some materials may provide links to other Internet sitesonly for the convenience of users. The Center for Green Industries and Sustainable Business Growth is notresponsible for the availability or content of these sites. Duquesne University and the Center for Green Industriesdo not endorse or recommend any commercial products, processes, services, producer, or provider referenced inthis material or information described or offered at other Internet sites.The Center for Green Industries and Sustainable Business Growth is supported in part by the U.S. EconomicDevelopment Administration. 2014 by the Center for Green Industries and Sustainable Business Growth of DuquesneUniversity, Pittsburgh, PA.Funding Your Green Project - 3 -
Overcoming the Financing HurdleGreen project planning can be stressful! The variety of funding sources can be overwhelmingand many businesses miss out on opportunities to complete, or even start, green projects becausethey are unaware of the funding options available to them. This guide is intended to removestress from the process and provide a resource for discovering opportunities to make your greenproject financially viable.This guide describes several sources of funding, provides advice for receiving funding andprovides resources for accessing funding. It is intended to give a general overview of fundingavailable and provide guidance towards the funding that best fits the needs of your business.A difficulty associated with writing a guide on finding funding is that sources are frequentlychanging. A great deal of funding is available through government and communityorganizations and as government policies and the economy changes, the funding changes as well.Incentives, especially those sponsored by, state and local governments and utilities are in aconstant state of change, and may have expiration dates or application deadlines. Therefore,some independent research is recommended, in order to discover eligibility requirements andguidelines. This guide provides you with easy access to these resources.Funding Your Green Project - 4 -
Success Story: The Hill Store in Belleville PennsylvaniaIn 2004 Tom and Ann McNabb purchased an 1853 general store with plans to refurbish it andopen The Hill Store, in Belleville, Pennsylvania. The couple began searching for funding forseveral expensive projects including installing a new, more efficient boiler and addingcentralized air to the building. Tom contacted the Penn State Small Business DevelopmentCenter Environmental Management Assistance Program where an Environmental Specialistrecommended various state funding opportunities. Tom was awarded the PA Small BusinessAdvantage Grant through which he was reimbursed half of the cost of his energy efficiencyupgrade, a 500 rebate for his heating system upgrade as well as a second 500 ApplianceRebate. Tom also applied for the PA Advantage Grant and received 7,400. With money fromtheir grants, the couple also decided to install insulation to improve the building’s energyefficiency. By the end of the summer of 2007 the building had 2 tenants. The McNabbs haveseen savings of 5,179 annually and the payback period for their energy-savings project wasonly 9 months!11“Energy Efficient Upgrades to Store in Amish Community.” Penn State Small Business Development Center. 2008.http://www.sbdc.psu.edu/files/2008 EMAP Success Story - Hill Store.pdfFunding Your Green Project - 5 -
Types of Funding:This section of the guide is intended to introduce you to types of funding available tosmall businesses. This section defines types of funding and provides examples to understandhow these funds can be utilized.Tax IncentivesBoth state and federal governments utilize tax incentive options in the form ofdeductions, credits, and rebates2 to encourage businesses to invest in renewable energy andenergy efficiency projects.3 The American Recovery and Reinvestment Act of 2009 provides taxincentives for a wide variety of projects.4 These incentives can be utilized to reduce the cost ofenergy efficiency projects, renewable energy, green building, and alternative fuel projects amongother things. Many green building projects are also eligible for depreciation deductions, whichallow for accelerated depreciation of energy property. 5 Businesses can access IRS databases6 orconsult with their tax preparer to apply for these incentives.Example: Energy Efficient Commercial Business Deductions (Section 179D)One example of a federal tax deduction is the Energy Efficient Commercial Business Deduction.Using this deduction, businesses can deduct up to 1.80 per square foot of space in new orexisting buildings when they reduce power usage by 50% compared to a reference building byinstalling interior lighting, HVAC or hot water systems, or building envelope property. A 0.60per square foot deduction is available for certain lesser reductions.7RebatesAs of 2013, the Database of State Incentives for Renewable Energy (DSIRE) haddocumented 20 rebate programs for green projects, administered by state or local utilities forPennsylvania alone. Rebates for your green project are also available from local and federalgovernments. The Department of Energy’s Office of Energy Efficiency offers rebates for theinstallation of solar photovoltaic technology, solar water heating, wind systems, and biomasspower systems. Sources offer two types of rebates. The first is for the purchase price of green2Starbuck, Steve, Paul Naumoff, and Dominick Brook. Working Together: Linking Sustainability and Tax to Reduce the Cost ofImplementing Sustainability Initiatives. YY2654 Vol. Ernst and Young, 2012. Print.3“Understanding the Section 179D Federal Energy Tax Deduction.” Cherry, Bekaert,& Holland, CPAs and Consultants. 2012.http://blogs.cbh.com/midmarket/?p 12874Waxer, Cindy. "Get Tax Breaks for Going Green." ProQuest Science Journals 44.4 (2010): 28-9. Print.5Cook Jr., David R., and Roland F. Hall. "Financing ENERGY EFFICIENCY Initiatives." Financial Executive 27.2 (2011): 169. WebCosmo Jr, Vito A. "States Provide Tax Incentives for Investing in Alternative/Renewable Energy Products." Journal of StateTaxation 29.6 (2011): 11-64. Web.6"IRS: Credits and Deductions." irs.gov. 1/1 2013.Web. http://www.irs.gov/Credits-&-Deductions7"Green Tax Incentives and Credits for Businesses and Individuals." Grant Thornton. 2010.Web. df .Funding Your Green Project - 6 -
equipment and the second is for the performance of this equipment.8 These rebates vary fromstate to state. In Pennsylvania Duquesne Power and Light provides rebates for the purchase ofCFL bulbs and Energy Star certified appliances9 and Philadelphia Gas Works provides rebatesfor larger projects, which improve natural gas efficiency for businesses.10Example: Duquesne Power and Light Energy Efficiency Rebates:One specific rebate offered by Duquesne Power and Light in Western Pennsylvania is a 75 rebate for the installation of exterior lighting with a timer. Duquesne Power and Light alsooffers rebates for hundreds of efficient light fixtures and other commercial appliances, whichimprove efficiency. These rebates have a fairly simple application process and typically takethree months at most to receive.11GrantsCompanies interested in green projects can apply for grants from several governmentsources including the U.S Environmental Protection Agency,12 The Small BusinessAdministration,13 The Economic Development Administration14 and the U.S Department ofAgriculture.15 These grants are available for numerous projects including green productdevelopment, creation of jobs in green fields, green innovation, improving energy efficiency,development and usage of renewable energy, and research and development.16 Grant funding isunique in that it is usually awarded with the intent that it be spent on a specific project. Grantapplicants are required to write a project proposal and then track and report all funds spent.Receiving grant funding does require some additional work, however in the long-term it can berewarding as it does not have to be repaid and often can be a source of funding year after year.17Example: Small Business Innovation Research Grants (SBIR)The U.S Department of Energy has an annual small business grant dedicated to theresearch and development of green products. This grant includes three phase lasting one year8Lantz, Eric, and Elizabeth Doris. State Clean Energy Practices: Renewable Energy Rebates. NREL/TP-6A2-45039 Vol. Golden,Colorado: National Renewable Energy Laboratory, 2009. Print.9"Watt Choices For Your Business." Duquesne Power and Light. 12/30 2012.Web. cfm?tab 2&win main .10"Pennsylvania Philadelphia Gas Works: Residential and Commercial Construction Incentives Program."DSIRE: Database ofState Incentives For Renewables and Efficiency. 12/13/2012 2012.Web. ncentive Code PA83F¤tpageid 3&EE 1&RE 1 .11"Watt Choices." Duquesne Power and Light. 1/1 2013.Web. cfm?tab 2&win main .12"Small Business Innovation Research Program." United States Environmental Protection Agency. 1/1 2013.Web. http://www.epa.gov/ncer/sbir/ .13"Loans and Grants." SBA.gov. 2012.Web. oans-grants .14"Green Growth: Environmentally-Sustainable Economic Development." E.D.A: U.S Economic Development Administration.2012.Web. http://www.eda.gov/pdf/GreenGrowthOverview.pdf .15"United States Department of Agriculture: National Institute of Food and Agriculture: Grants." United States Department ofAgriculture: National Institute of Food and Agriculture. 8/9 2012.Web.16"Green Growth: Environmentally-Sustainable Economic Development." E.D.A: U.S Economic Development Administration.2012.Web. http://www.eda.gov/pdf/GreenGrowthOverview.pdf .17Nance-Nash, Sheryl. "Seeking Seed Money." Black Enterprise 35.10 (2005): 88-97. Web.Funding Your Green Project - 7 -
each. These phases include; proposal writing, training and award of the grant. This grant can beawarded for up to 1,000,000 upon completion of all three phases. These grants are onlyawarded to independently owned small businesses (defined as having less than 500 employees)interested in conducting research.18LoansTraditional mainstream loans are available for green projects and are becoming more andmore commonplace. There are also a variety of state, local, and federal government loansdedicated specifically to green projects for small businesses.In 2012 alone the federalgovernment issued 3.6 billion to 70 development organizations nationwide. In most of thesecases the government has partnered with private banks such as PNC Bank in order to distributethese funds.19 Small Business Administration offices are also involved in the distribution ofgovernment loans.20Several private banks also provide additional loans specifically for green projects. Since2005, Wells Fargo, PNC, and Bank of America have all set aside funding specifically forbusinesses interested in conducting green projects.21While most microfinance loans are typically dedicated to new entrepreneurs indeveloping communities,22 there are also specific microfinance companies, which targetbusinesses looking for small loans to fund green projects.23Example: SBA 504 Loans:The United States Small Business Administration 504 Loan program allows smallbusinesses to benefit from loans as well as for the development of local economies. In thisprogram the SBA partners with banks. The SBA provides loans for up to 40% of the totalproject costs and the bank provides up to 50%. The business owner is then required to fund 1020% of the total project costs. These loans benefit the business because they allow for longerloan amortization and fixed interest rates.2418"SBIR/STTR: Small Business Innovation Research, Small Business Technology Transfer." 2012.Web. http://www.sbir.gov/applicants .19Mauriello, Tracie. "Federal Tax Credits should Bring Projects to Region." Pittsburgh Post Gazette, sec. Business: B-1. 2/252012. Print.20"Loans and Grants." SBA.gov. 2012.Web. oans-grants .21Korda, Peter J., Sean M. O'Brien, and Robin J. Gotshall. "Green Lending: An Evolving Industry." Real Estate Finance Journal25.2 (2009): 46-50. Web.22Kaufman, Rachel. "10 Top Microfinance Companies." CNN, sec. CNN Money:July 15 2011. Print.23"Green Microfinance: Publications." greenmicrofinance.org. 1/1 2013.Web. blications/GMf-Publications .24"SBA Loan Programs." 1/1 2013.Web. http://www.sba.gov/content/cdc504-loan-program .Funding Your Green Project - 8 -
InvestorsInvestors in the last few years have begun to pay more attention to a company’s greeninitiatives. Impact investors often will be more likely to invest in a company in order to supporttheir green projects.25 A venture partner also can often provide resources in addition to financing,such as research and marketing connections to a smaller or start up business that they wouldoften otherwise not have access to.26Example:Bridgeway Capital is a resource for businesses to find many sources of funding, howeverone specific service provided by this group is connecting small businesses with investors.Specifically Bridgeway Capital works with investors who are interested in communitydevelopment.27Energy Service Companies and Leasing of Green EquipmentThere are several options available for businesses who are interested in utilizing green orenergy efficiency equipment, but are hesitant to make the initial investment. An energy servicecompany (ESCO) specializes in managing the process of developing, installing, and financingenergy efficient equipment. Businesses then use their energy savings to make repayment ontheir financing. Most ESCOs also assume the risk in the case that the equipment does notdecrease energy costs for the business.28A second option is for businesses to lease green or energy efficient equipment. Leasesare available from private companies for green transportation, electrical and lighting equipment,alternative energy equipment, power equipment, manufacturing equipment, and even commercialreal estate. Businesses that lease equipment also are able to update this equipment more oftenand avoid using obsolete equipment.Example: Renewable Energy Equipment Leasing (REEL)REEL assists businesses with finding energy efficiency equipment for lease and fund theseleases. REEL connects businesses with everything from commercial real estate, to the leasing ofgreen buildings, to photovoltaic equipment.2925Stern, Gary M. "Impact Investing." Financial Planning 41.9 (2011): 66-72. Web.Ivanov, Vladimir and Xie, Fei. "Do Corporate Venture Capitalists Add Value to Start-Up Firms? Evidence from IPOs andAcquisitions of VC-Backed Companies." Financial Management (2010): 129--152. Print.27"Bridgeway Capital: Green Loans." Bridgeway Capital. 2013.Web. http://www.bridgewaycapital.org/pages/green-loans .28"Resources: What is an ESCO?" NAESCO: National Association of Energy Service Companies. 2011.Web. http://www.naesco.org/resources/esco.htm .29"REEL: Renewable Energy Equipment Leasing." Think REEL Green: Renewable Energy. 1/1 2013.Web. http://www.thinkreelgreen.com/page.php?page ourProductsAndServices .26Funding Your Green Project - 9 -
Renewable Energy Credits (RECs)A company that invests in the generation of renewable energy, for example solar or wind energy,has the option to sell renewable energy credits. One REC is equal to 1000-kilowatt hours, or 1megawatt hour of electricity placed on the grid.30 These credits vary in value based ongovernment environmental policies as well as the economy.Additionally, companies that produce more energy than they use have the option to sell energy totheir local electricity provider. In Pennsylvania, Duquesne Power and Light installs a net meterat no cost to the customer, which monitors electricity generated and added to the power grid.31Example: Pennsylvania AEPS Alternative Energy ProgramAn example of a REC available in Pennsylvania is the Pennsylvania AEPS Alternative EnergyProgram. This program connects businesses and residents who are generating their own energywith programs that will purchase renewable energy credits. These credits range in value but theaverage value of a credit for 2012 is 180.39.3230"Renewable Energy Certificates (RECs)." The United States Environmental Protection Agency. October 16 2012.Web. http://www.epa.gov/greenpower/gpmarket/rec.htm .31"Customer Generation." Duquesne Light . . . Our Energy, Your Power. 2012.Web. EnergyAndSaveMoney/CustomerGeneration.cfm .32"Pennsylvania AEPS Alternative Energy Credit." Pennsylvania PUC. 2012.Web. http://paaeps.com/credit/pricing.do .Funding Your Green Project - 10 -
Success Story: Ideal Self Storage in Hummels Wharf,PennsylvaniaIdeal Self Storage is a storage facility located in Hummels Wharf, PA that provides clean, securestorage units. Gerald Stauffer and Dennis Brubaker, joint partners of Ideal Self Storage, wereseeking to install a 15.12 kW solar photovoltaic (PV) system to provide electricity at theirfacility. This system would be interconnected with the electric grid utility.Gerald and Dennis contacted the Pennsylvania Small Business Development Center’s (SBDC)Clean Technology Resource Center (CTRC) to help start cutting utility costs. The CTRCTechnology Consultant made several recommendations about ways energy costs could bereduced. After carefully reviewing their options, Gerald and Dennis worked with a contractorwho drew up a plan to install a 15.12 kW solar PV system. The solar PV system will produce upto 1,233 kWh of power per month offsetting a portion of the 3,591 kWh of power provided bythe utility company. The solar PV project was estimated to cost about 67,247. However, inorder to complete this project, Gerald and Dennis needed funding assistance to offset the cost.Once again Gerald and Dennis contacted the PA SBDC CTRC Technology Consultant forassistance with funding opportunities for their solar PV project. The CTRC TechnologyConsultant informed Gerald and Dennis of the U.S. Department of Agriculture (USDA) RuralEnergy for America Program (REAP) Grant, the PA Department of Environmental Protection(DEP) Sunshine Grant, Federal Tax Incentives, and Solar Renewal Energy Credits(SRECs). Gerald and Dennis applied for and were awarded a USDA REAP Grant for the amountof 13,499. Their solar installer assisted them with the PA Sunshine Grant for the amount of 10,060, and their CPA helped them receive the federal tax credit for the amount of 20,173. Ideal Self Storage has plugged in their solar PV project and it is currently generatingelectricity!Through the innovative and proactive approach towards achieving greater energy efficiency,Gerald and Dennis have demonstrated a commitment to the public’s best interest. With limitedrenewable fuel resources, every effort made to reduce energy consumption helps ensure thatthere is some left for future generations.3333"Solar Energy for Self Storage." Pennsylvania SBDC: Success Stories. 2012.Web. lar-energy-for-self-storage .Funding Your Green Project - 11 -
Resources for Finding Funding:The previous section was intended to assist you in understanding the wide variety of types offunding. Next, it is important that you know what resources are available to assist with findingthis funding and with the application process.While the majority of the sources listed below are limited to Pennsylvania, it is important toknow that most states have similar resources. These resources can be found through the DSIREdatabase, as well as through the United States Small Business Administration.Bridgeway CapitalBridgeway Capital is a non-profit organization in the Pittsburgh area, which is committed tostimulating economic development through providing loans for small businesses. Bridgewayalso provides green loans for energy efficiency and green building projects34. Bridgeway Capitalcan be found at: www.bridgewaycapital.orgDSIRE:DSIRE is a comprehensive database for finding funding. DSIRE allows the user tosearch for funding, state-by-state and even by specific cities. It provides information on grants,loans, rebates, tax incentives, and energy credits both private and government funded. Thisdatabase also provides an extensive library on renewables and information on applying forfunding. DSIRE can be found at: http://www.dsireusa.org/.353435"Bridgeway Capital: Green Loans." Bridgeway Capital. 2013.Web. http://www.bridgewaycapital.org/pages/green-loans ."DSIRE: Database of Energy Incentives for Renewables and Efficiency." 1/1 2013.Web. http://www.dsireusa.org/ .Funding Your Green Project - 12 -
Duquesne LightDuquesne Light provides a wide variety of sources for both businesses and residents ofWestern Pennsylvania to fund green projects. The utility provides rebates for energy efficiencyequipment and directs businesses towards other sources of funding including loans and grants.Many other regional utilities provide similar resources. Duquesne Power funding informationcan be found lt.cfm?tab 2&win main 36Pennsylvania Department of Community and Economic DevelopmentThe Pennsylvania Department of Community and Economic Development provides a widevariety of resources for small businesses, including loans and other sources of funding.Specifically for green projects, The Pennsylvania Department of Economic Development hastheir Pollution Prevention Assistance Account Program (PPAA). This account provides fundingfor energy efficiency and pollution prevention projects and will provide loans for up to 75% ofthe costs of the project up to 100,000 for small businesses of 1ess than 100 employees37. ThePennsylvania Department of Economic Development can be found at: www.newpa.comPennsylvania Department of Environmental ProtectionFor businesses within the state of Pennsylvania, The Pennsylvania Department of EnvironmentalProtection provides businesses access to project funding from both state and federal government.This source provides access to grants, loans, as well as financial planning tools for projects. Thiscan be found community/funding opportunities/10488.38Several other states also have web pages for their departments of environmental protection whichdirect businesses to sources of fund.Small Business AdministrationThe United States Small Business Administration (SBA) is also a source for businesses to findfunding for their green projects. While SBA is not a direct lender to businesses, thisadministration does assist small businesses with gaining access to grants and loans. Links to this36"Watt Choices For Your Business." Duquesne Power and Light. 12/30 2012.Web. cfm?tab 2&win main .37"Pollution Prevention Assistance Account Program (PPAA)." The Pennsylvania Department of Community and EconomicDevelopment. 1/1 2013.Web. tance-account-program-ppaa38"Pennsylvania Department of Environmental Protection: Funding Opportunities." 2013.Web. munity/funding opportunities/10488 .Funding Your Green Project - 13 -
data can be found at: oans-grants.39 The SBAalso has state offices to assist businesses with receiving SBA funding.40Small Business Innovation Research (SBIR):The United States Environmental Protection Agency connects small businesses interested inconducting research with several sources of funding including investors, grants and loans, mostlyfor the funding of research. SBIR can be accessed at http: //www.sbir.gov/
Funding Your Green Project - 6 - Types of Funding: This section of the guide is intended to introduce you to types of funding available to small businesses. This section defines types of funding and provides examples to understand how these funds can be utilized. Tax Incentives
