Renewable Energy Districts

Establishing a Renewable Energy District (RED) allows a city, housing authority, campus, or developer to build an energy infrastructure for the community while providing very high energy savings at the lowest cost. REDs bring in financing that allows building and home owners to pay for energy conservation and new energy technology from their energy savings (rather than spending capital funds), and uses the “profits” from a city’s energy assets to provide solutions that address major financial problems.

A RED also helps communities fund other needs and continue energy efficiency projects and green job development without further federal or state funds.

What is a RED?

A RED can encompass a housing complex, neighborhood, a few downtown buildings, a commercial area, college campus, business or industrial campus, or an entire community. AEG is also involved in district planning on military bases. In a RED, a city or township sets up a public-private partnership (the RED) that first provides businesses and homes with an option to use geothermal for heating, cooling and hot water, in a program that makes geothermal less costly than standard HVAC. In some cities an appropriate partnership may already exist. A college, corporate campus, or private developer may not need to set up a public-private partnership.

The RED usually begins by building a geothermal infrastructure – one building at a time. The underground geothermal infrastructure connects over time, as is practical, and this provides a tremendous economy of scale in the long run. The building or home owner only needs to finance its own interior HVAC equipment, and receives the available tax credits and rebates. The RED becomes an energy provider for all homes, businesses and public buildings that sign on by billing for the use of the geothermal infrastructure monthly, like traditional electric or gas utilities. Unlike electric or gas utilities though, a RED has the ability for residents, building owners and public buildings to connect to the geothermal system at any time. As most standard HVAC systems last about 20 years, 5% of all buildings are, or should be, changing out their HVAC systems each year. With geothermal, hot water is a by-product in the summer and is very inexpensive in the winter.

Since geothermal HVAC/hot water offers the highest overall energy savings and ROI, it’s the basis for being able to pay back the financing through energy savings. Financing is generally set up to include an energy audit, weatherization, energy efficient lighting and even green roofs, to cut down the HVAC load before geothermal is installed. New energy technologies, such as solar PV, wind, and co-generation can be added then, based on each building’s needs. Financing is generally expected to be available at low interest rates (2% to 5%), though this is easier to do in some areas more than others.

What Are the Advantages of A RED?

• Costs – Reduction in energy costs for residents, building owners & municipalities.
• Sustainable – Environmentally responsible as it uses renewable energy.
• Financially Responsible – Costs are paid for over time through energy and maintenance savings. Tax Credits, Tax Deductions, Rebates, Grants and other subsidies (such as Accelerated Depreciation) are available.
• Local Jobs – Good paying local jobs are created for the community, using funds that used to be spent on power from coal, oil and gas, generally bought from outside the area.
• Future Costs – Stabilization of future energy costs.