Saint Meinrad Archabbey’s Path to 59% Reduction in Energy Costs

When people think of installing the latest energy innovations, the types of facilities may be ones like cutting-edge universities, office buildings for the tech sector, or other pillars of modern and sustainable industries. But in reality, the types of organizations that can stand to benefit the most from energy upgrades are those that have persisted in their space for many, many years. One shining example is the energy modernization project at Saint Meinrad Archabbey, a 170-year-old Benedictine monastery in rural Indiana.

In March 2024, Saint Meinrad kicked off phase two of an energy modernization project with partner Veregy, an NAESCO-accredited energy service company (ESCO). This is the second phase of a Guaranteed Energy Savings Performance Contract (GESPC), expanding upon phase one upgrades, which were completed in 2022. Upon phase two completion, Saint Meinrad will generate enough on-site electricity to reduce purchased electricity by 59% and natural gas consumption by 32%.

The Sustainable Spirit of Saint Meinrad

Saint Meinrad’s establishment dates back to the 1850s, and the mission remains the same today as it did a century and a half ago: to operate as “a thriving community of Catholic, Benedictine monks who pray, work, and live together.” The facilities that comprise Saint Meinrad grew from simply a small farmhouse at origin into today, encompassing a 700,000-square-foot campus that serves to teach and mold individuals for priesthood and educate those ultimately pursuing graduate theology programs.

From the beginning, Saint Meinrad and its leaders aimed to be as self-sufficient as possible. Members were accustomed to growing their own crops, engaging in any necessary construction, and creating their own construction materials, from cutting timber to performing foundry and metalwork and producing their own bricks. This self-sufficient lifestyle also applies to the facility operations with their own on-site facilities team composed of licensed operators responsible for the campus’s building infrastructure and the community’s wastewater treatment facility. Such commitment to self-sustainability serves as a valuable testament to the spirit of those who have lived in and run the facility all these years; they have always made things work in whatever way was necessary.

The core tenets of those leading the Archabbey lent themselves perfectly to eventually adopting modern-day clean energy technology thanks to an inherent desire to reduce any negative impacts on the Earth while minimizing utility costs.

Leveraging Guaranteed Energy Savings Performance Contracting to Advance Clean Energy on Campus

In 2015, Saint Meinrad completed a small-scale geothermal energy project. After early success in utilizing a renewable energy source, discussions on the future of modernizing the aging infrastructure began. Monastery leadership was interested in solar energy and learned about Veregy through their local community. Veregy came on-site and took a comprehensive approach, completing a facilities audit and providing several opportunities, in addition to solar, for Saint Meinrad to consider.

During the project development phase, Veregy highlighted how a GESPC could, and ultimately would, bring them guaranteed savings. That contracting vehicle was previously unexplored by Saint Meinrad, but leadership quickly latched onto it. A GESPC is a contractual agreement between a building owner and an energy service company (ESCO). In such an agreement, the ESCO develops, designs, and builds the project, financially guaranteeing that energy efficiency improvements will generate energy savings sufficient to pay for the project over a specified period. If the savings fall short of the guaranteed amount, the ESCO is required to reimburse the building owner for the shortfall. This type of contract allows organizations to implement energy efficiency upgrades with little to no upfront capital investment, as the future energy savings typically cover the costs. Saint Meinrad Archabbey’s Treasurer and Business Manager, Lisa Castlebury, stated,

The GESPC was split into two phases, both creating tremendously positive results.

Phase 1 financed $3.8 million of upgrades for a 15.6-year GESPC contract term that guarantees an annual savings of $243,000 between energy consumption reductions and overall operational savings:

– 6,701 lighting fixtures updated to LEDs

– 1,180 kilowatts (kW) of solar panels installed that would generate 1.7 million kilowatt-hours (kWh) per year

For phase two of the project Saint Meinrad partnered with financer, D.A. Davidson & Co. who provided a $16,000,000 funding package.

Phase 2 financing $15.2 million of upgrades for a 14.6-year GESPC contract term that guarantees annual energy and operational savings of $1.0 million:

– Installation of a central geothermal plant and chillers

– 704 kW of solar for 1.0 million kWh per year

Phase two financing will close and be funded on Earth Day, April 22^nd, underscoring Saint Meinrad’s commitment to combatting climate change, promoting environmental stewardship, and creating a more sustainable future for generations to come.

The yearly cost savings generated by the diverse conservation and renewable energy initiatives will be put towards Saint Meinrad’s Green Revolving Fund aimed at setting aside funds for future green initiatives.

Benefiting from Investment Tax Credits

When Veregy was in phase two project development, it was amidst early reports that the Inflation Reduction Act (IRA) and its investment tax credits (ITCs) were poised to be passed into law soon, which would serve as a value multiplier for the energy upgrades. Because the project included renewable energy, it qualified for a clean energy tax credit, a financial win that they may have unintentionally missed out if they weren’t working with partners like Veregy and D.A. Davidson & Co. As defined by the Department of the Treasury:

“The Inflation Reduction Act modifies and extends the clean energy Investment Tax Credit to provide up to a 30% credit for qualifying investments in wind, solar, energy storage, and other renewable energy projects.”

Veregy dug into the specifics of the IRA to further unlock an additional 10% bonus tax credit (on top of the 30%) the federal government offers when these installations include materials produced in the United States.

Since the guidance from the US Treasury and the Internal Revenue Service is still being finalized it was incumbent that D.A. Davidson & Co. structure the financing in a manner that provides Saint Meinrad the flexibility to reduce debt as funding under the IRA is received by Saint Meinrad while at the same time providing a predictable fixed-rate long-term funding package.

Project Impact

Saint Meinrad reports that upgrades from phase one have reduced utility costs, which helped them weather rising energy costs (rates increased 20% in the past year alone). As phase two kicks off, Saint Meinrad officials highlighted how excited the community is for the project, the means to positively impact their operating budget to promote self-sufficiency, and the ability to continue to do what’s best for the community and the wider planet.

Recognizing the value Veregy provided, Saint Meinrad advises other facility leaders interested in a facilities or energy infrastructure upgrade project to seek out partners that they can work with for the long haul. As Saint Meinrad’s Director of Facilities, Mark Hoffman, stated,

Veregy continues to play that role for Saint Meinrad, staying on contract after construction is complete to manage the ongoing maintenance and monitoring. Hoffman reiterated the key importance of an institution like theirs leading the way in energy modernization and environmental stewardship:

“The world’s need for environmental sustainability is increasing. Implementing strategies to assist in sustainability and reduce our impact on the Earth are important for institutions. Our hope is that we can be a source of inspiration for others to be good stewards of the land and the resources we have been blessed with.”

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