Financing

Q: My family has run a restaurant for about five years. When we bought the place, we upgraded to energy-efficient lights with good results on lower electric bills. Now we're ready to pay a modest amount for another energy-efficient upgrade. What would you say is the best next step?

Dan: You're wise to be making efficient upgrades; energy demands in food service facilities are roughly 2.5 times more per square foot than in most commercial buildings. Your best next step depends on a number of factors, including the age of your equipment and your budget. Generally, the top opportunities for energy savings in food-service operations are lighting, refrigeration, food preparation, and ventilation. I suggest addressing refrigeration next.

An outside-air economizer reduces refrigeration system run time by introducing outdoor air to the walk-in cooler when outside temperatures are colder than the interior of the refrigerated box. This unit can be installed on most existing and new coolers and can include an evaporator fan/door heater control. These humidity-based controls limit operation of door heaters to periods of high relative humidity and can save between $40-100 per door per year. Note: I don't recommend the economizer if you keep unpackaged items in your cooler, as they can become dry.

Paul: If you're ready to upgrade your refrigeration, Efficiency Vermont can work with you and your contractor to investigate the most cost-effective approaches for your particular operation and budget. We can help determine if financial incentives are available and calculate whether or not such options as financing or leasing would be the most beneficial to your bottom line.

Dan: While you're looking into your next energy efficiency investment, there are simple steps you can take today to lower the energy use of equipment you already have. For example, if you turn off lights in unoccupied areas or install occupancy sensors, you may reduce yearly costs by as much as $110 in a typical dining area. Set refrigerator temperatures no lower than required by the health code. This can reduce your yearly costs by $110-170 for a 1,000 cubic-foot dairy cooler with the temperature increased from 33F to 38F. Significant savings can also be obtained by choosing energy-efficient food preparation and dishwashing equipment.

Paul: The most cost-effective time to invest in energy-efficient equipment is when your existing units need to be replaced due to failure or when they've reached the end of their useful lives. Look for energy-saving ENERGY STAR^® qualified models.

Dan: A couple of other tips:If you have a wall canopy exhaust system with fan controls, push your appliances as far back against the wall as possible. By moving appliances back 12 inches under a 10-foot hood system, you can save $50-60 annually. You can also install a low-flow pre-rinse dishwashing spray valve and you'll save hundreds, annually, for each hour of daily spray time.

Paul: Depending upon the actions taken and the technologies involved, the total savings potential from more efficient equipment can be from 10 to 30 percent. That good news is true industry-wide, whether in a large institutional kitchen, a small sandwich shop or your family's restaurant.

Q: As a small business owner, money is always on my mind, especially after filing my taxes. I know I can save money on my energy bills by making my business more efficient, but the upfront costs are a big obstacle. How can I make energy efficiency work on my limited budget?
JNH - Middlebury, VT

A:
Paul: This is a pretty common question among small business owners. Fortunately, there are a number of financial incentives that can ease the initial costs of investing in energy-efficient equipment. Regardless of the type of business you own - from a farm to an auto repair center to a woodworking shop to a retail store - there are likely common, simple and low-cost upgrades you can implement yourself. Lighting, heating and cooling improvements are usually the easiest places to start because the upfront costs are typically minimal, and you'll see immediate and long-term energy savings.

Dan: Whether you're looking to upgrade what you currently have, install new equipment, retrofit your existing space or build a new facility, there are financial incentives available. Depending on the project, you can receive anywhere from $15 for each lighting fixture you install to well over $1,000 for selected heating, cooling and electrical equipment, including air economizers and transformers.

Paul: For larger projects, depending on the projected electrical savings and cost of the project, Efficiency Vermont can work with you to establish a plan for implementing the energy efficiency measures and develop a customized financial incentive package specific to your needs.

Dan: A great example is a convenience store we recently worked with in Grand Isle County. The business owner had a limited cash flow and was hesitant to invest in energy efficiency. We met with him, assessed his needs and mapped out a plan to conduct the upgrades in phases. First, we outfitted the store with highly efficient lighting, and a few months later we helped him revamp his refrigeration system. In each phase of the process the business owner received financial incentives, which made the project very affordable. On top of that, the long-term savings he's going to see on his electric bill are projected at $7,000 a year!

Paul: Business owners may also be eligible for tax incentives on certain energy-efficient upgrades completed between January 2006 and December 2008 through the federal Energy Policy Act (EPAct). These tax deductions are available to owners of private commercial buildings and designers of public commercial buildings that meet certain criteria. More details are available at www.energytaxincentives.org.

Dan: I'd also recommend visiting the Efficiency Vermont Rebate Center at www.efficiencyvermont.com, to see what financial incentives are available for your business.

Q: I'd like to find ways to improve the energy efficiency of my business, but I own a nightclub next to a ski area and my cash flow is seasonal. Because of this, financing and any large investments are major challenges. Can you suggest any options that would help make energy efficiency work for me?
-AC, Killington

A:
Paul:
I understand your concerns. But did you know that for a seasonal business like yours, financing can actually be a very valuable tool? In some cases it can result in positive net cash flow from day one-leaving you with more cash in-hand than before, and an immediate payback on your investment.

Dan:
Paul's got a point. In fact, often energy efficiency investments pay for themselves in just a few years. And financing allows you to let the energy savings pay for the project without having to make a large up-front capital investment.

Paul:
For a seasonal business with a varying cash flow such as yours, financing with a seasonal leasing plan is a great option.

Here's how it works: You simply let the leasing company know which months you prefer to make payments and which months you prefer to make a reduced payment or no payment at all. The leasing company will then tailor the lease to fit your needs. For example, you may not want to make lease payments during the summer months when customers aren't lining up to get into the club.

Efficiency Vermont has business partners that offer seasonal leasing plans. You can find out more about them by visiting our business resource center at www.efficiencyvermont.com or by calling us at 1-800-921-5990.

Dan:
As far as efficiency opportunities go, one of the most cost-effective things you can invest in is energy-efficient lighting, such as high performance T8s, compact fluorescent lamps, or track lighting that uses Halogen Infrared or Metal Halide technology. It pays off up front as well as down the line. And, if you install a significant amount of lighting equipment you could be eligible for hundreds, if not thousands, of dollars in rebates. Visit our online rebate center for more details.

And, since you run a tourist-oriented business, it's worth mentioning that switching to energy-efficient lighting gives you a great opportunity to appeal to a wider clientele by marketing yourself in a positive way.