How many smart grid programs would get a better foothold in the marketplace if their business justifications were based on full life cycle economic benefits, instead of their having to pass more difficult shorter-term payback criteria? This was the question that came to mind when seeing a great announcement recently about an area closely linked to smarter grid initiatives—energy performance contracting. The announcement concerned a new law enacted in Michigan that is expected to make energy performance contracts in that state more commonplace and affordable, according to Johnson Controls.
Account executives at Johnson Controls had worked closely with state legislators to make the new law, which will boost energy efficiency across the state, a reality.
Energy performance contracts help pay for energy efficiency improvements, which are then paid back through annual energy and operational savings.
Under the law, effective Aug. 17, local governments – which include cities, counties, townships and village councils and governing bodies – can enter into a financing arrangement known as a Tax-Exempt Lease Purchase (TELP). TELPs are not considered debt for local governments, making energy performance contracts more attractive.
A longtime proponent of energy efficiency, Michigan Governor Rick Snyder agreed that the new law and TELP funding will provide a significant boost to energy efficiency projects throughout the state. Local governments can begin taking advantage of the new financing plans when the law takes effect.
“These bills provide another avenue for local governments to modernize and boost energy efficiency in their facilities,” Snyder said. “This is a win-win for communities and for Michigan’s energy future.”
Johnson Controls has implemented thousands of energy performance contracts since the early 1980’s, including some of the more notable performance contracting projects for the State of Michigan and local government facilities in Michigan and elsewhere. The above enhancements are expected to greatly increase the success of this program.