From installing LED light bulbs to investing in new infrastructure, adopting green energy solutions is top of mind for many business owners in 2021. These upgrades are a smart way to improve operational efficiency—and cut future costs.
Environmental sustainability is a priority for consumers, too: a 2019 survey found that the majority of consumers respect companies and brands that adopt eco-friendly practices.
Consider these eco-friendly and energy-efficient upgrades that can provide big returns down the line—and some smart strategies for financing them.
Seemingly minor energy upgrades can make a big difference.
Installing smart thermostats is one of the easiest ways to improve energy efficiency. Many smart WiFi-enabled thermostats regulate automatically based on outside temperatures, allowing you to establish a schedule and lock in energy-saving temperatures when your office, business, or warehouse is unoccupied. Installation costs are minimal, temperature can be controlled from your smartphone, and you’ll see savings almost instantly—and throughout the year.
Switching light fixtures and bulbs to newer LED fixtures is another quick and easy way to reduce your monthly electric bill. Energy-saving light bulbs use significantly less energy than traditional incandescents, and last much longer, saving you on replacements. Adding smart timers to current lighting will help keep costs down, too.
Before you invest in any sort of upgrade, you’ll want to calculate the ROI, or return on investment, by comparing upfront costs to long-term savings. Initial costs include labor, installation, and materials. Depending on the size of your facility, lighting upgrades might present a significant upfront cost. LED upgrades on exterior lighting typically show a return on investment in one to two years, while interior lighting upgrades pay off in approximately five to seven years.
If you’re due to replace or repair an old HVAC unit, consider investing in a high-efficiency unit. You’ll cut down on energy waste and see significant returns over the long term. Though it may take about two and a half years to cover the initial costs of a new unit, a high-efficiency system is a worthwhile investment that will pay for itself in savings over time.
If you’re not ready for a complete HVAC upgrade, getting a tune-up before each heating and cooling season and cleaning or changing your HVAC filters on a regular basis can help reduce energy waste and improve system performance. The larger your business area, the greater your potential savings.
Depending on your location and industry, you may also be able to use solar energy to power your HVAC system, significantly lowering both electric costs and environmental impact. You can take advantage of the investment tax credit (ITC) to reduce solar panel installation costs by about 30%.
If you’re ready to go green, consider the following financing options:
Tax-exempt financing: Some green initiatives may qualify for tax-exempt financing. You can use these funds to rehab an existing structure or acquire new, more eco-friendly equipment that’s used in the manufacturing process, and get a lower interest rate than other types of financing.
Equipment financing loan: This is a low-interest way to finance the purchase of business-critical equipment—such as a new HVAC system—with the equipment serving as collateral so you don’t tie up working capital.
Working capital line of credit: This provides your business with working capital to sustain ongoing expenses. Though you can draw on the line of credit repeatedly, you’ll only pay interest on the outstanding balance.
If you’re ready to make an energy-efficient upgrade, you may want to consult a contractor who can help you find the best products and technicians in your location.
Next, talk to a First American Bank lender who can help you compare specific types of financing and make the best choice for your business. First American Bank has made major strides toward a greener future in many of our buildings, so you’ll be partnering with a lender who understands the importance of investing in smart energy solutions.
