Efficiency Financing Amid Uncertainty: Options for Retailers
With the onset of to the COVID-19 pandemic, the retail sector experienced significant drops in sales across the industry, seeing as much as a 25% reduction in sales from February to April of 2020 with clothing/accessory stores and department stores feeling the largest impact. In-person sales continue to be most directly impacted by the pandemic, and while online sales continue to increase, that growth has not substantially lessened the blow from the drop in productivity at brick-and-mortar retail locations.
With these impacts to operating budgets, Better Buildings retail partners have described the need to put some energy efficiency projects on hold until sales return to pre-pandemic levels. Meanwhile, the energy efficiency projects that have remained in the operating budget have been moving forward at a slower pace, thus delaying the expected cost savings attributed to those building improvements.
These trends have opened more opportunity for companies that traditionally finance energy efficiency projects internally to seek alternative financing options, such as Efficiency-as-a-Service (EaaS), to cover upfront costs of energy efficiency measures.
The Better Buildings Solution Center offers a comprehensive set of resources designed to help organizations find financing solutions for energy efficiency and renewable energy projects, with a range of resources that can support retailers of any size—from local or regional chain stores and smaller franchises, to larger national or global companies. For retailers facing budget constraints, these resources may provide alternative financing options to keep energy efficiency projects on track:
- The Better Buildings Financing Navigator portal provides information on specific financing methods, ways to connect with financing organizations, and a questionnaire to see which financing method best fits your organization’s needs.
- This factsheet explores the details of EaaS and Energy Service Performance Contracts (ESPCs), both of which could be suitable financing mechanisms for projects like HVAC and refrigeration system upgrades.
- Property assessed clean energy (PACE) may be available, depending on location, to finance projects that reduce operating expenses for retail companies. With the recent impacts from the pandemic, retailers may be able to unlock funding for projects that have already been completed.
- The Resilience Roadmap for Commercial Buildings provides information on how to quantify and articulate the financial business case for resilience improvements, which can help facilities staff gain buy-in from upper management for resilience and efficiency upgrades to retail buildings.
While the retail sector has experienced unprecedented challenges and uncertainty in the past year, there remains a multitude of financing for energy efficiency improvements by utilizing resources from the Better Buildings Initiative and its Financial Ally partners.