Hartford Business Journal

23 HARTFORDBUSINESS.COM | NOVEMBER 29, 2021 FOCUS: ENERGY Expert's Corner By Lee D. Hoffman W ith apologies to John Steinbeck, Connecticut's rising energy prices are making this the winter of Connecticut's discontent. While other costs in the supply chain have been increasing for some time, Connecticut's energy costs have remained relatively stable. That is about to change, however, with recent price increases announced by both Eversource and The United Illuminating Co. (UI). Starting Jan. 1, 2022, electricity costs are expected to rise dramatically, with Eversource customers seeing a projected average increase of 21%, and UI customers seeing a projected average increase of 10.4%. Natural gas customers are not expected to fare any better, with Eversource telling its customers to expect an average increase of 14% starting in the new year. While none of this is good news for Connecticut businesses, there are a few programs that could blunt increased energy prices. Many businesses took advantage of energy efficiency programs that lowered energy use and costs when they first came out several years ago. Some businesses avoided these programs fearing that it would take too long to recoup the costs of the projects. With prices on the upswing, it pays to revisit Connecticut's energy programs. Growing your own energy In the face of infrastructure issues associated with storms and the rising cost of electricity, there are incentives for companies to "get off the grid" and generate their own power, particularly renewable power. Both Eversource and UI have net metering programs for customers who generate their own electricity from renewable sources, such as solar. The electricity used by the facility will be netted against the power generated at the facility. If the energy project generates more electricity than the facility uses in a month, that excess energy is "banked" for up to one year. At the end of the annual period, if excess generation is still banked, the company receives a payment from the utility. There are incentives available for renewable energy programs, including zero and low interest loans to pay for the up-front costs associated with such projects. In addition, Connecticut approved incentives for electricity battery storage this summer, making energy projects with intermittent resources like solar energy even more attractive. Commercial and industrial customers of Eversource and UI can receive upfront incentives of up to 50% for the development of battery storage systems. The program is scheduled to begin Jan. 1, 2022, the same time energy costs will be increasing. Charging electric vehicles While electric vehicles (EVs) currently make up a small part of Connecticut's automobile fleet, that number is expected to rise dramatically over the next few years. The automobile industry is developing dozens of new electric vehicle models, and all of those electric cars are going to need somewhere to charge. In July, Connecticut regulators approved a plan to incentivize EV charging stations and infrastructure. The recently passed federal infrastructure package provides Connecticut with an additional $53 million to bolster EV charging stations and infrastructure, making now the ideal time to consider EV charging stations. Connecticut regulators are now working with the state's utilities to develop an EV charging incentive plan for both residential and commercial chargers. For apartment buildings and public destinations, the state will provide incentives of up to 50% of the cost of the chargers and up to the entire amount of the make-ready work for the installation, provided that at least two chargers are being installed. Workplaces can obtain the same incentives if they install at least four chargers. Up to $20,000 is available in incentives per site, but that number doubles for charging sites located in "underserved communities." Energy efficiency programs provide ROI If charging stations or renewable energy projects are too ambitious, energy efficiency programs can be a good way to lower energy costs quickly, with a minimum of up-front investment. Both UI and Eversource offer incentive programs for businesses that want to upgrade outdated, less efficient equipment, including building controls, refrigeration units and controls, heating and cooling equipment, and lighting systems. Incentives are also available for energy audits and assessments. Companies seeking to replace this equipment may be eligible for financial incentives of up to 40% of the installed costs and financing at zero or low interest rates. Many of these projects have a return on investment that is measured in months, not years, which can be especially valuable when energy costs are on the rise. Lee D. Hoffman is chair of the environmental, energy and telecommunications practice at law firm Pullman & Comley. CT businesses have tools to fight rising energy costs Lee D. Hoffman needs While larger institutions such as colleges and hospitals may be able to shoulder costs associated with energy upgrades, or secure financing for those projects, not all building owners have immediate access to the necessary capital. The Commercial Property Assessed Clean Energy, or C-PACE, program, administered by the Connecticut Green Bank, is designed to fill in that gap. C-PACE uses borrowed capital to pay for energy efficiency or renewable energy projects. The money is repaid over time via a voluntary tax assessment, which allows for long- term financing and the transfer of payments to future owners if the property changes hands. Mackey Dykes, vice president of financing programs at the Green Bank, said C-PACE enables more modest borrowers to complete the same energy overhauls as larger organizations, including the replacement of inefficient boilers and installation of LED lights and solar panels. Participants include landlords, industrial companies, nonprofit organizations and retailers. "For larger institutions, access to capital is easier," Dykes said. "What C-PACE does is unlock financing for businesses that wouldn't have had that access, or wouldn't have completed an energy project because it wouldn't have made financial sense." The program is attractive, he added, because projected savings must, as a condition of C-PACE rules, exceed the cost of a project. For that reason, the Green Bank is able to draw in private lenders, and C-PACE funding comes mostly from private investment. About three years ago, the program expanded to include financing for new construction that includes energy-saving features. That initiative has taken time to catch on, Dykes said, but the Green Bank is now in discussions with numerous developers interested in joining the program. "There's growing interest," he said. "In the real estate community, introducing new financing tools takes a while. But as awareness grows, we're seeing a lot more interest in the programs." One of the latest beneficiaries of the Green Bank's financing assistance is Mystic Aquarium, which just recently announced a $2.5 million investment in energy efficiency improvements. The aquarium has already replaced energy-monitoring equipment, lights, pumps and controls in its buildings and habitats, and will now install solar panels on its roofs and upgrade HVAC systems throughout its campus. The overhaul is expected to reduce total energy use at Mystic Aquarium by 650,000 kilowatt-hours annually, saving the institution over $85,000 in energy costs each year, or approximately $1.3 million over the lifetime of the new equipment. Savings are expected to rise to $115,000 annually once the solar power system comes online, according to Senior Vice President for Facilities and Capital Projects Keith Sorensen, who said the investment is the largest energy- centered undertaking for the aquarium to date. The project was made possible through incentives from Eversource Energy and Green Bank financing. "This is definitely showing the way forward in terms of how a large, public venue can complete these projects and reduce its carbon footprint," Sorenson said of the three- way collaboration. Looking forward, Sorensen said the aquarium wants to add more solar power resources and explore technologies such as heat pumps, renewable natural gas, fuel cells, battery storage and geothermal power. "We're going to continue these efforts into 2022 and beyond," he said. "We're going to take a look at every technology and see if it makes sense for us." Mackey Dykes

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