ENERGY EFFICIENCY FINANCING
MAXIMIZE YOUR PROJECT'S RETURN
Executing a clean energy project is often the combination of identifying the right energy-saving solutions and securing the funding, if available, to help offset the cost. Through our experience at the intersection of building technology and finance, we may recommend one of the following clean energy finance options to maximize your project’s return:
Property Assessed Clean Energy (PACE) Finance
Power Purchase Agreements
PACE finance is an innovative solution for building owners and commercial real estate developers to increase access to capital for clean energy projects, while simultaneously reducing operating costs. PACE capital finances for 100% of a project’s clean energy component costs and is repaid for up to 30 years with an assessment added to the property’s tax bill. Our goal at Donovan Energy is to help you leverage low-cost, third-party capital to achieve 100% positive cash flow from the start. PACE finance is available throughout Ohio, Kentucky and more than 30 other states. Eligible PACE project development includes:
Commercial buildings like offices, hotels, retail and industrial buildings; multi-family residential buildings; and even nonprofits
A broad range of project types, including new construction, deferred maintenance, major renovation, redevelopment and tenant improvements
Energy efficiency, renewable energy water conservation projects, spanning lighting, HVAC, plumbing, insulation, elevators, rooftops, windows, solar panels and more
PROPERTY ASSESSED CLEAN ENERGY (PACE) FINANCE
DON’T LET CAPITAL CONSTRAINTS STOP YOU FROM COMPLETING BUILDING OR EQUIPMENT UPDATES
WHY DOES YOUR PROJECT NEEDS PACE FINANCING?
TAX DEDUCTIONS FOR ENERGY EFFICIENT COMMERCIAL BUILDINGS
IRS Section 179D: Federal tax deductions for energy efficiency upgrades
Section 179D of the U.S. internal revenue code is a popular tax incentive that
provides building owners and eligible designers/builders the opportunity to claim a
tax deduction of up to $5.00 per square foot following the installation of qualifying
energy-efficient systems. Upgrades include lighting, HVAC systems, and
improvements to a building’s envelope. These upgrade categories and their
associated deductions can be pursued either individually, or in aggregate.
WHICH TYPES OF COMMERCIAL BUILDINGS ARE ELIGIBLE FOR THE 179D DEDUCTION?
Building eligibility includes, but is not limited to, the following types of buildings:
• Apartments/dormitories (at least four stories)
• Parking garages
• Industrial warehouses
• NOTE: Buildings owned by non-profit entities are not eligible.
With Property Assessed Clean Energy (PACE) finance, the capital costs of energy efficiency and renewable energy are an investment, not a cost. Key benefits of PACE finance include:
- PACE funds 100% of eligible energy project costs by adding those costs to the building's property tax bill.
-The eligibility threshold is low - the project must generate just 1 watt of energy savings.
- PACE enables deep retrofit projects because it allows financing terms up to 30 years.
- PACE eliminates the issue of split incentives that often derail many energy projects (e.g., between landlords who own and maintain a building, and tenants who pay the energy bills)
- PACE financing is attached to a building through a tax assessment; it’s not attached to an individual or business. Therefore, it transfers seamlessly and automatically from one owner to the next.
- PACE doesn’t require any loan agreements or any financial covenants. No recourse and no guarantees required.