September 23, 2020
Site Selection & Utility Economic Development Incentives: Here’s What You Need to Know
Once you’ve narrowed your site search geographically and identified prospective properties that meet your needs, you may look for differentiators to help narrow your options further. Depending on your project, incentives could be the deal-maker or the deal-breaker. I’ve helped dozens of new and expanding companies explore and secure our Economic Development Rider (EDR) in Indiana. Here’s what works and what to avoid.
- Explore options early. Engage the utility economic development contact at your target sites early on to make sure the EDR is a fit for your or your client’s project. Most EDRs have fairly standard criteria, i.e. must add new jobs, electric load and capital investment. Some also require additional support from the state or local community in the form of a financial incentive. Know what the requirements are so you assess your opportunities effectively. Plus, bringing us into the conversation early will ensure your energy needs for the project can be met.
- Work with real numbers. Predicting the load for an expansion or new operation can be complicated math. If you have a bill from another similar facility, use that to analyze and estimate your potential costs and benefits of the EDR. Loop your facilities or operations teams into the conversation as they can help identify the incremental demand from new equipment and building systems. This will give you more accurate estimates.
- Act fast. We pride ourselves on the speed we help process EDR applications, which is generally within a week. A completed application, including the non-energy related information needed, speeds that process along.
- Tell your story effectively. If your project isn’t being competitively sought out by multiple locations, be proactive. Frame up the business case as to why or how the EDR will make your operation more competitive or viable for future growth or longevity.
Things to Avoid
- Don’t assume. Generally speaking, never assume there is capacity available to serve an operation based on the fact that there is an electric line at or near the property. Even at an existing building, service could have been scaled back after the previous tenant ceased operation.
- Know the requirements and how to meet them. Be sure to talk with the utility about how you or your client plans to meter usage. In most states, the EDR can only be applied to individual meters. Two or three separate meters cannot be added together to meet the program’s minimum demand.
- Don’t count your chickens before they hatch. Don’t assume that the estimate provided of the potential EDR savings is the exact amount you or your client will realize. The EDR credit is based on actual usage each month and will vary depending on the customer’s load profile, seasonality and natural fluctuations in production.
Indiana Incentive Highlights
With our AEP – Indiana Michigan Power incentive in Indiana, qualifying new and expanding businesses can receive a billing demand credit of up to $11.00 per kilowatt for five years. Customers can choose how they receive the EDR benefit from three options and are allowed a 12-month start-up period.
- New electrical load greater than 500 kW
- Expansion of load greater than 500 kW
- The business must add 10 additional FTE OR invest $1 million in capital improvements
- The project must be competitive
- The project must also receive support from local, state or workforce economic development agencies
Interested in a Different Location?
We offer incentives in nine states. In addition to Indiana, that includes Arkansas, Kentucky, Louisiana, Michigan, Oklahoma, Texas, Virginia and West Virginia. These change every year, and in some cases, expire once quotas are met. Check out the full list of available incentives or explore the other benefits of locating in our region.
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