The Energy Efficient Equipment (E3) Loan Program administered by Great River Energy is seeing an uptick in activity as businesses work to overcome challenges related to workforce shortages, inflationary interest rates, and increased shipping and material costs.
One recent example is Midstate Plastics Corporation, a thermoforming and injection molded plastics manufacturer based in the northern Minnesota town of Remer. For nearly three decades, Midstate Plastics has manufactured high-quality, American-made products for major retailers and Fortune 500 companies, including the Chill Stop’r™ air conditioner cover, Easy Slide shelf liner and Pro-Paint’r™ paint sundry series.
To compete in a global market, Midstate Plastics uses the latest technology available to fill large orders efficiently while developing new products and remaining responsive to customer needs. When it came time to modernize a production line and replace outdated machinery, Midstate Plastics reached out to Lake Country Power (LCP), one of Great River Energy’s member-owner cooperatives, to see what resources it had to offer.
The E3 Loan Program is available to commercial and industrial businesses served by Great River Energy’s all-requirements member-owner cooperatives for projects that demonstrate energy efficiency over standard or baseline energy consumption.
“Great River Energy and our member-owners are always seeking new ways to help the businesses we serve use electricity in smart and efficient ways,” said Great River Energy Economic Development Services Manager Tom Lambrecht. “There is remarkable innovation happening among Minnesota’s cooperative members, and we are thrilled to support their growth.”
The E3 program may also be used for equipment that will generate new energy sales for the participating distribution cooperative or projects that utilize technology to achieve energy savings through increased productivity.
LCP Key Accounts and Business Development Manager Dan Cooper worked closely with Alan Rajdl, owner of Midstate Plastics, to assess the project. Together with Great River Energy and, the team was able to identify 192,771 kilowatt-hours (kWh) per year in potential energy savings associated with the new equipment the company planned to install, based on its ability to produce more products per kWh consumed vs. the old equipment.
The value of this conservation improvement and estimated new energy sales qualified the project for a zero-percent interest rate under the E3 Loan Program guidelines, and LCP moved quickly to secure a pass-through loan on behalf of Midstate Plastics for approximately half the cost of a new Sencorp 2500 Series Thermoformer production line.
“Lake Country Power uses the E3 Loan Program to support projects that will increase energy sales while simultaneously generating a per-unit reduction in energy consumption, creating a real win-win situation for us and our member-businesses,” Cooper said. “We are excited to play a role in supporting Midstate Plastics and we are proud to have them as a member of the cooperative.”
The reduced debt service associated with this zero-percent interest loan allowed Midstate Plastics to complete the project on time and invest more capital back into its business. More importantly, this investment in new state-of-the-art technology will help to ensure the competitiveness and longevity of this critical regional employer, retaining more than 30 living-wage jobs in Cass County.
Loans fulfill a need for member businesses
In the years since Great River Energy first introduced its E3 Loan Program, Minnesota’s economic development community has come to recognize the need to support manufacturers investing in new automation equipment as part of a comprehensive business retention and expansion strategy — even if these projects do not create any new jobs in the near-term.
At the end of 2022, the Minnesota Department of Employment and Economic Development (DEED) launched the Automation Loan Participation Program, offering companion loans intended to fill gap financing needs for businesses purchasing machinery, equipment, or software to increase productivity and automation.
Under this program, loans of up to $500,000 are available at 1% interest on a five- to seven-year term. Eligible borrowers include manufacturing, distribution, technology and warehousing businesses located in Minnesota with fewer than 500 employees.
DEED’s Automation Participation Program loans need to be made in conjunction with private financing in an amount at least equal to the DEED loan, positioning Great River Energy’s E3 Loan Program as a cost-effective source for the required matching funds. Combining these programs can provide greater support for automation technology investments and ensure for the competitiveness and longevity of Minnesota’s manufacturing businesses for many years to come.
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