by Terri Adams, Division Director, Alabama Department of Economic and Community Affairs
Participation in an innovative financing program established for Alabama businesses by the Alabama Department of Economic and Community Affairs (ADECA) and funded through the DOE’s State Energy Program has nearly doubled over the past year as more companies discover that energy upgrades can help them become more efficient and competitive.
Since awarding the first loan in 2011, AlabamaSAVES has financed $32.6 million in loans for 56 businesses, including 23 new projects in the past year. To date, Alabama businesses have retrofitted 10.8 million square feet of space, saving more than $5 million in annual energy costs and approximately 71 million kilowatt-hours of energy. Five additional projects totaling $8.3 million have recently been approved and are expected to close in the coming weeks.
“The increase in loans across a wide range of industries shows that word is getting out that our AlabamaSAVES program is a valuable resource for businesses looking to increase their bottom line,” said ADECA Director Jim Byard Jr..
The program partners with private lenders to provide below-market-rate financing for the installation of energy-efficient fixtures and retrofits, renewable energy systems, and alternative fuel projects. Loans of $50,000 to $4 million are available to help Alabama commercial and industrial businesses and private nonprofit agencies finance energy-saving improvements. Interest rates for the loans are currently as low as 1%.
A variety of energy efficiency measures have been accomplished, with the most common being lighting and controls. Other projects have included HVAC replacement, insulation, variable frequency drives, compressed air, high efficiency production equipment, grid-tied solar PV systems, and compressed natural gas fueling infrastructure.
AlabamaSAVES projects are located in 27 Alabama counties and encompass a variety of businesses, including manufacturing facilities, office buildings, auto dealerships, grocery stores, hotels, and even a llama farm. These projects provide jobs for local contractors and help to make existing businesses more sustainable by reducing utility costs.
The program utilizes a pool of qualified service providers (contractors, product vendors, consultants, and engineers) to ensure quality. These service providers are familiar with the requirements of the program and can help facilitate the process for the loan applicant. To participate in projects funded by the program, service providers must document proof of proper qualifications and licenses and submit to ongoing reporting and quality assurance standards.
An excellent example of a business benefiting from the AlabamaSAVES program is the business that applied for the first loan in 2011 and later returned to finance additional projects: the Dixie Group’s yarn plant in Roanoke, Alabama, which manufactures a wide variety of carpets and rugs. Dixie officials say the initial $2.3 million loan enabled equipment upgrades and cost savings that increased the plant’s capacity, stimulated growth, and created jobs. The successful project and resulting benefits led the company to return to AlabamaSAVES financing for additional high-efficiency equipment to increase productivity even further.
“The AlabamaSAVES program has been an excellent partner in helping Dixie Group upgrade key production equipment and enhance overall efficiency in our Roanoke facility,” said Jon Faulkner of Dixie Group. “This is the second project we have financed through the program, and have found the process to be simple and straightforward.”
AlabamaSAVES is a hybrid program that provides both direct revolving loans and loan subsidies, and includes the option of a loan loss reserve in some cases. This hybrid structure provides the program with expanded impact while maintaining a measure of sustainability.
Abundant Power, a company that collaborates with states and municipalities to design, administer, and finance energy efficiency and renewable energy programs, designed the program and serves as the third-party administrator for AlabamaSAVES. Abundant Power has been instrumental in increasing the initial loan pool from $25 million to $65 million by forming partnerships with more than 20 banks and lenders. AlabamaSAVES enables the financial institutions to provide low-cost loans by subsidizing the interest rate on loans to businesses funding energy efficiency.
“AlabamaSAVES has continued to expand its footprint throughout the state utilizing public funds to subsidize the interest rates of our private lending partners,” said Shannon Smith, CEO of Abundant Power. “The program’s structure has provided the necessary capital to the marketplace ensuring Alabama businesses stay competitive, generate additional jobs, and diminish their reliance on fossil-fuel energy sources.”
For more information about AlabamaSAVES, go to www.alabamasaves.com.
Posted on: February 12th, 2015