The Midwest is a hot spot for Clean Energy Funds, and an ice cream business is among the beneficiaries.
The scoop? So-called Clean Energy Funds, or CEFs, from sources including monthly surcharges on utility bills, have helped pay for energy efficiency and other improvements at places like Pierre’s Ice Cream Co., which opened a new, 35,000-square-foot factory in Cleveland almost a year ago.
Pierre’s used a state grant as part of a project that’s allowed the company to spend less money on the electricity needed to make its tasty treat — and keep the final product at an optimal temperature of minus 20 degrees when it’s stored in an on-site distribution center.
“The beauty of having all of this installed is that as we can increase volume, we will not be consuming more energy,” said Shelley Roth, president of Pierre’s Ice Cream Co.
“We’re hoping to see a savings of anywhere between 15 to 25 percent (on electricity costs).”
There are numerous other examples of states using CEFs for energy efficiency and renewable energy projects in the U.S. But Ohio is among a number of states working to change the recipe for funding projects. Ohio’s version of the CEF was called the Advanced Energy Fund, or AEF. Pierre’s received money for its upgrades through an Ohio program supported by the AEF and federal funding.
The Ohio experience
Ohio’s Advanced Energy Fund was in place for a decade, until legislation that allowed for a 9-cent monthly surcharge on utility bills expired in December 2010, said Chad Smith, deputy chief of the Office of Energy at the Ohio Department of Development.
The state estimates that 120 companies are saving a total of $13 million in annual electricity and natural gas costs due to improvements supported by the Advanced Energy Fund.
Since the expiration, Ohio has restructured its remaining program dollars into an Energy Loan Fund, using payments from previous Advanced Energy Fund investments and supplemental federal funding.
“It was successful,” Smith said of the former AEF program. “One of the things we saw, however, was that the demand (for grants) exceeded the supply. So we ended up looking toward financing that could be sustainable, into the future.”
Under the state’s new Energy Loan Fund, money given to companies for efficiency improvements will be recycled, Smith said. Eligible projects include upgrades like insulation, lighting, heating and cooling systems, renewable-energy projects and improved production processes.
“The projects that we do will be repaid with a financing program,” he said. “The funds will come back into the program, and they can be loaned out again and again.”
The program is structured so companies can design a schedule that uses savings from reduced energy costs to pay back the loan, in 15 years or less and at an interest rate below prime, Smith said.
The Energy Loan Fund, with about $10 million per year available, received 60 pre-applications after its December launch. After a round of evaluations, 47 companies have enrolled in the program, said Penny Martin, communications specialist at the Ohio Department of Development. The surcharge collected a similar annual amount for AEF grants, via a 9-cent monthly fee on all investor-owned utility bills.
Christina O’Keeffe, assistant deputy chief at the Ohio energy office, said the Energy Loan Fund seems to fill a gap in the marketplace.
“Some of our customers cannot get loans from commercial banks because there’s not an understanding of the technology involved,” O’Keeffe said. “When we look, we’re looking at estimated energy savings from a project, and using that as a source to repay the loan.”