A recent study concluded that industrial users are the highest users of electricity and water, a fact known by those of us in the PACE Houston market. PACE can enable industrial users to do the very capital projects that are needed to reduce their consumption and reduce their operating costs. This is the backdrop to today's seminar put on by the Texas PACE Authority and the Texas Industry of the Future organization.
Texas House Representative Jim Keffer of District 60, as both an industrial manufacturing business owner and a State Representative, introduced the first TPA Industrial Seminar.
Representative Keffer highlighted the traditional maxim that return on investment is everything. Jonathon Blackburn of the Texas PACE Authority noted that industrial entities typically rank capital projects by ROI, resulting in many additional worthy projects not being done due to of a lack of sufficient capital. PACE Houston can address this issue for area concerns.
PACE financing actually eliminates a property owner’s need to make any capital investment – so ranking capital projects by ROI becomes less of an issue – since with 100% PACE energy financing there is no investment. With PACE, the industrial entity has the ability to do all capital project improvements that reduce operating expenses in an amount sufficient to cover the annual PACE assessments. This ratio of savings to investment calculation is called the property's SIR, or Savings to Investment Ratio. Even more important than the project's SIR is the traditional Net Present Value calculation which includes a time value of money aspect and enables the financial manager to utilize their own long term cost-of-capital rate, which may differ from the lender's rate.
While the same general rules apply to manufacturing, industrial operations and office buildings - the project must demonstrate the capacity to reduce electricity or water demand or onsite generation - industrial projects are special due to the magnitude of the potential net savings. Jonathon Blackburn of the Texas PACE Authority highlighted the following potential PACE Industrial projects.
Potential PACE Industrial Projects
- High efficiency chillers, boilers, and furnaces
- Combustion and burner upgrades
- Heat recovery equipment
- Mechanical system modernization
- Industrial energy system sensors and controls
- High efficiency lighting
- Building enclosure/envelope improvements
- More efficient manufacturing process equipment
- Waste water onsite reuse systems
- Water conservation equipment
- Systems to capture, treat and use other on-site sources of water
- Condensate, rainwater, reverse osmosis reject water
Onsite Generation and Resiliency
- Combined Heat and Power
- Energy Storage
- Fuel switching
Interested Industrial or Manufacturing entities may contact Tim Crockett at 713-530-7922.