For local businesses, energy efficiency is an effective method of reducing overhead costs, but the upfront capital needed for improvements can be challenging to find.
That’s one reason the City of Minneapolis established the Minneapolis Energy Efficiency Business Loan & Grant Program, which was made possible through Energy Efficiency and Conservation Block Grant (EECBG) funding from the U.S. Department of Energy as part of the American Recovery and Reinvestment Act.
To administer the program, Minneapolis partnered with the Center for Energy and Environment (CEE), a nonprofit organization that promotes energy efficiency to strengthen the economy while improving the environment. Their expertise in helping businesses and nonprofits to operate more efficiently and reduce overhead costs made them an ideal partner for the program.
The program was designed so that eligible Minneapolis businesses could work with CEE to secure funding for energy improvement projects, such as lighting technology upgrades, envelope air sealing, insulation of doors, HVAC controls upgrades, refrigeration controls upgrades, and refrigeration equipment replacement.
Two types of funding were available — businesses could either apply for a grant which would cover 20% of the project cost up to $5,000 after any utility rebates had been applied, or businesses considering more costly improvements could apply for a zero-interest loan of up to $75,000, with a maximum loan term of 10 years. Both Reidy’s Market and Eureka Recycling, profiled below, took advantage of the loan option.
Reidy’s Market
The first business to take advantage of the program was Reidy’s Market, a small grocer on 42nd Avenue in the Longfellow neighborhood. Terry Reidy, who has owned Reidy’s Market for over 37 years, understood the value of cost-effective energy efficiency improvements. Reidy was one the first business owners to participate in the Food Service Energy Leadership Program, an assistance program for small businesses in the food-service industry in Minneapolis and White Bear Lake (the program ended in the spring of 2013). He had also explored potential projects through the Center for Energy and Environment’s One-Stop Efficiency Shop.
The Energy Efficiency Business Loan & Grant Program helped Reidy by providing access to funds that could help pay for projects that had a high potential for energy savings, but also had higher initial costs—a common barrier for small businesses.
Reidy’s Market received just over $8,100 through the loan program. Reidy worked with electrical contractors at Cedar Creek Energy to identify the projects that had the highest potential energy and cost savings, but that would also provide the quickest return on his investment. Cedar Creek suggested that a lighting retrofit would be a good option after identifying that the Market was using inefficient lighting in its reach-in glass door coolers. Within the coolers, there were a total of 30 six-foot T12 fluorescent light fixtures, which do not operate well in cold temperatures as it takes more time for the bulbs to start up, and more heat is needed in order to generate the same amount of light compared to room temperature. Using the loan money, Reidy’s replaced all of its cooler fixtures with highly efficient LED bulbs. Combined, the original light fixtures consumed over 25,000 kWh annually. The new LED fixtures reduced that to under 3,000kWh per year.
Reidy’s also targeted the overhead lighting in its retail space. While the overhead lighting fixtures already utilized T8 fluorescent bulbs (as opposed to less efficient T12 bulbs), they were set in magnetic ballasts. Switching to more efficient electronic ballasts would be a relatively simple improvement, and would result in additional energy savings. Reidy’s used the loan money to retrofit 34 light fixtures with electronic ballasts and replaced all 60W eight-foot bulbs with 28W four-foot bulbs. These improvements reduced the energy consumed by overhead lighting by more than 50%.
Reidy is pleased with the results. All together, the improvements are saving Reidy’s Market an estimated $2,500 in energy costs annually. He will also end up paying back substantially less than the $8,100 he borrowed thanks to over $4,000 in rebates from Xcel Energy (about $3,000 of these rebates were for the LED retrofits).
In addition to the cost savings and the reduction in environmental impact, the new energy efficient fixtures provide a better quality of light. They also need to be replaced less often, and they handle the cooler temperatures better, providing a more consistent lighting option. The new electronic ballasts, in addition to using less energy, do not hum or cause flickering like typical magnetic ballasts. The project is expected to pay for itself by 2014.
Eureka Recycling
While the loan program was primarily utilized by businesses within the food sector, one recipient highlighted its usefulness within larger commercial properties. Eureka Recycling, a non-profit organization specializing in zero-waste, received $8,200 through the program. Eureka is perhaps most well-known for its $9 million annual recycling operations, and was looking to make energy efficiency improvements to its facility in Northeast Minneapolis, which includes a material recovery facility (MRF) that processes close to 50,000 tons of material per year, an office building, and a large warehouse space.
With so many varieties of space uses and equipment, identifying the most cost-effective improvements was a challenging task. Eureka began with an energy audit of its entire facility, working with consultants at GDS Associates. Several opportunities for energy savings were identified, ranging from minor HVAC maintenance and insulation recommendations to replacing motors and a power factor correction unit in the MRF. The challenge for Denise Karney, the Facilities Manager for Eureka, was analyzing the recommendations and deciding which improvements would result in substantial savings at a payback term that made for a worthy investment.
Karney says that “you have to educate yourself along the way” in order to make the best decisions. When looking for proposals for these types of energy efficiency improvements, she recommends that businesses “always check with another electrician or technical consultant that you trust for a second opinion. Also, check with other small businesses that have had similar improvements to make sure that they are really seeing the proposed savings of their projects.”
Ultimately, Eureka identified lighting retrofits in its warehouse space as a great opportunity for energy savings. Eureka’s warehouse was primarily using metal halide bulbs for its overhead lighting, a somewhat outdated and inefficient lighting source that’s common in old warehouses and industrial buildings. By replacing metal halide bulbs with T8 fluorescent fixtures, Eureka expected to significantly increase the energy efficiency of its warehouse space.
The loan that Eureka receiving from the City of Minneapolis took some of the risk out of the project by providing interest-free, upfront capital. Karney also planned ahead by working with Bavolak Electric—the company she contracted for the install—as well as lighting specialist Mike Holder at the Center for Energy and Environment (CEE) to identify project costs. A key component of the lighting system analysis provided by CEE was the identification of rebates available through their One-Stop Efficiency Shop (offered through a partnership with Eureka’s electricity provider, Xcel Energy). The rebates, which came to a total of over $6,400, substantially increased the projects’ cost-effectiveness.
Once the project costs were identified, it additional planning to implement the installation. Karney says, “You have to tailor the proposals to meet the needs of your organization.” The warehouse space was quite large and had multiple uses, each with a different type of lighting (including 400W metal halides, 100W metal halides, and 75W incandescent). To address this, the space was divided into six separate areas to help with the layout design for the new fluorescent fixtures. This also allowed Karney to work with contractors to adjust the proposal to each space’s individual needs.
Eureka also wanted to ensure that the original metal halide bulbs, which contain mercury, were responsibly recycled or reused where possible in alignment with its zero-waste mission. Staff also decided that the new fluorescent fixtures should contain motion sensors so that the lights would only turn on when people were using the space, resulting in greater energy savings. There was concern, however, that animals such as birds and rodents (which are common in recycling facilities) would constantly trigger the motion sensors. Karney addressed this by working with installers to adjust the sensitivity of the sensors for optimal function in the space.
Overall, Eureka replaced 144 light bulbs, most of which were expensive and inefficient 400W metal halide bulbs. These were replaced with 32W or 25W T8 fluorescent bulbs, the majority of which included motion sensors. The improvements are expected to save an estimated 24,000 kWh annually, or about $2,700 per year.
In addition to the energy and cost savings, Eureka Recycling is pleased with the additional social benefits, including improved safety in the warehouse. Before the retrofit, an employee typically had to walk through darkness in order to turn on the lights for entire sections of the warehouse. Now, the lights automatically come on only in the areas where people are working. Not only are the new lights brighter, making objects in the warehouse more visible, but replacing the light bulbs, which requires using a lift, now needs to be done much less frequently, saving time and money for the organization.
Project Profile – Reidy’s:
Location: City of Minneapolis, Hennepin County
Type of Technology: LED lighting installation in coolers; replacement of magnetic ballasts with electronic ballasts; retrofit of overhead lighting
Project Cost: $8,100 loan from Business Loan Program; due to Xcel’s lighting rebates, Reidy’s will end up paying back approximately half the cost of the loan
Funding: $8,100 loan; $4,000 in Xcel Energy rebates
Energy & Cost Savings: $2,500 annually in energy costs; 22,000 kWh per year in energy saved from lighting retrofits in coolers
Community Benefits: Better quality of light for customers and employees; less maintenance time/costs replacing light fixtures due to more efficient and longer-lasting bulbs
Project Profile – Eureka Recycling:
Location: City of Minneapolis, Hennepin County
Type of Technology: Lighting retrofit and motion sensor installation in warehouse
Project Cost: $8,200 loan from Business Loan Program;
Funding: $8,200 loan; $6,400 in Xcel Energy rebates
Energy & Cost Savings: 24,000 kWh annually; about $2,700 per year in energy costs
Community Benefits: Better quality of light for employees, increasing safety of work; less maintenance time/costs replacing light fixtures due to more efficient and longer-lasting bulbs
About the Local Government Energy Action Series:
This effort tells the stories of Minnesota municipalities, counties, and schools and the tangible results of their energy-saving efforts to inspire others to take their own actions.
