Homer Alaska - Business

Story last updated at 4:36 PM on Wednesday, January 4, 2012

Grant opens door for cutting costs

Federal funds to help Kenai Peninsula small businesses improve their energy efficiency

BY Hal Spence
For the Homer News

Small business owners looking to save by increasing the energy efficiency of their buildings may qualify for help through a new federal grant.

A Homer-based nonprofit called Energy Efficiency and Renewable Energy Advocates was awarded a $92,000 U.S. Department of Agriculture Rural Business Enterprise grant in November.

An $89,500 grant last year allowed the nonprofit to perform 27 audits on Homer businesses. This year, 23 small businesses from across the Kenai Peninsula would be eligible. Three audits already have been done and two more are scheduled, leaving openings for another 18. The audits will be done by certified commercial energy auditor Bill Steyer.

Businesses that have the audits performed and then follow up by taking recommended energy-saving measures can save between 30 and 50 percent on their energy bills, said Taz Tally of Energy Efficiency and Renewable Energy Advocates.

"There are two parts to managing an effective energy audit program," Tally said. "The first is identifying and qualifying a business and getting the audit done. The second part is the businesses taking that information and doing something to improve their energy efficiency. That takes time, energy and effort."

But having an audit done is one thing. Finding the money to retrofit buildings afterwards is another. The cost could strap some small business owners.

Fortunately, there is help available through the USDA's Rural Energy for America Project, or REAP.

Christina Whiting, who may be familiar to many Homer residents through her work on the annual Shorebird Festival, advises audited businesses how to successfully apply for REAP grants, which can pay as much as 25 percent of the cost of an energy upgrade. Tally said the REAP grant process is extensive, but well worth the effort.

Depending on other factors, businesses also may be eligible for tax rebates as well, he said, but Tally makes no guarantees. He encourages business owners to work with their accountants.

Typically, an energy audit will recommend a list of prioritized measures. Not all businesses will opt to do everything at once, however. For instance, a list may suggest 10 things to be done, but five may be worth doing immediately, thus giving a business owner the best return on investment, Tally said.

An energy audit done last year on the Driftwood Inn in Homer led owner Adrienne Sweeney to take several steps to improve the energy efficiency of the historic building, including replacing an aging and inefficient boiler system. Sweeney said she was a bit overwhelmed at first, but that Tally, Steyer and Whiting made it simple.

"They were absolutely wonderful to work with," she said. "They walked me through it step by step, explained my options."

Sweeney is not yet finished making improvements, and does not yet have year-end numbers, but she said that based on numbers through November, it appears she may realize savings between 30 and 32 percent.

"It's huge," she said. "I hope to be able to do the windows next and some insulating on pipes. I'm doing the improvements in bite-sized pieces."

Sweeney also owns AJ's Steakhouse across the street from the Driftwood Inn. She plans on doing an energy audit on that building in February.

Kate Mitchell, owner of Nomar on Pioneer Avenue, also had an energy audit done last year. A bit reluctant to consider government grants, she said it took a bit of convincing by Tally before she saw the advantage in having one done. Now, she said, she is pleased.

"We're in the process," she said. "We did the front of the building — insulation, new windows. Some were little things (such as unplugging an old and energy-hungry Coca Cola machine). The biggy is the energy efficient lighting in the back that we will do sometime this winter."

Mitchell acknowledged dragging her feet on replacing a furnace. She'd like to wait until natural gas is available, but may not be able to wait that long and still be eligible for reimbursement, she said.

"Where it was most helpful was in identifying areas where you could make savings and prioritizing what would give you the most savings," she said.

A commercial energy audit outside the grant program would typically cost between $2,000 and $2,500 depending upon square-footage, equipment energy needs, and the like. As one might expect, a small retail shop will have fewer energy needs than a restaurant with ovens, refrigeration units and air conditioning.

Under the USDA grant program, however, business owners do not pay for the audit. Steyer is paid a set amount per audit directly out of the USDA Rural Business Enterprise Grant. Owners are responsible for any subsequent efficiency upgrades, but those can be reduced by the REAP grants.

The energy audit process begins with qualifying a business; "Weeding out the serious from those just kicking tires," as Tally puts it.

To ensure a client is serious and likely to consider taking post-audit energy-savings measures, they are asked to make a $250 down payment on the audit. If they apply for and get a REAP grant, they get the $250 back, Tally said.

"We also ask businesses if they are willing and able to invest at least $6,000 in energy upgrades," Tally said. That's because the REAP grant sets a reimbursement floor at $1,500, a quarter of $6,000.

To qualify based on USDA criteria, a business must have fewer than 50 employees, earn a gross income of less than $1 million annually, and the owner or owners must have title to the building.

Energy audits also can be applied in the fishing industry. Qualifying fishermen may be able to upgrade refrigerators, lighting, generators and the like. Engines, however, do not come under the program, Tally said.

Tally plans an energy efficiency workshop in Homer at the Homer Chamber of Commerce on March 13.

For more information, email Tally at taxtally@me.com and put "Energy Audit" in the subject line.

Hal Spence is a freelance writer who lives in Homer.