The best ideas in banking are often greener than its stock-and-trade currency. So it is at central Iowa’s Peoples Bank, where “clean and green” are on display from rooftop to parking lot, thanks to a recent investment to convert the nine-bank subsidiary of Green Circle Investments to 100 percent solar energy.
The project was conceived shortly after the bank’s 2017 acquisition, with study and construction completed in 2018.
“We’re already offsetting 100 percent [of electricity costs] in some of our locations,” explained John P. Rigler III, president and COO of the $335 million bank, based in Clive. As of May, all of Peoples’ Bank locations that had solar installations were offsetting between 40 percent and 100 percent of their electricity costs.
Rigler, who until December 2018 owned State Bank in New Hampton, Iowa, had experience using solar energy. State Bank had installed solar panels on its Janesville location roughly seven years ago, he said. In the span of less than a decade, the cost of a solar installation has “dropped by around 70 percent,” he added.
The bank wants to be a good steward of the environment, Rigler explained. The approach fits the bank’s brand and pairs well in an area where customers’ lives and livelihoods are impacted by the weather, he added. “We feel this is our small way of contributing to a ‘clean and green’ future — which will be our motto soon.”
The bank worked with 1 Solar Source of Ankeny, Iowa, for the installation.
The process began with an analysis of 12 to 24 months’ of electricity bills. An onsite evaluation of electrical services and roof space followed. One of the bank’s nine branches didn’t have sufficient roof space to install panels or adjacent real estate to build a ground array.
A proposal by 1 Solar Source provided management with system pricing, shared incentives, cash flow projections and warranties, which allowed management to determine if the investment made sense.
“In Peoples Bank’s case, they anticipated savings from day one of their installation,” said Todd Miller, president of 1 Solar Source.
Peoples Bank isn’t the first Iowa bank to invest in solar energy. Miller was referred to Rigler by South Story Bank in Huxley, where he’d recently completed a solar installation. Miller said he’s been busy working with other banks: “I anticipate many will follow suit.”
The eight Peoples Bank offices with solar installations operate in markets served by three different power companies, complicating the electricity pricing formulas.
Three locations are served by MidAmerican Energy, which has the same kilowatt pricing for the first hour as for the last hour. With MidAmerican, the bank tries to get as close to 100 percent production as possible. “With MidAmerican, we can net meter, which means we get 100 percent of our over production back to us when we start using the electricity,” Rigler said. In essence, Peoples can “bank” power for use during cloudy days.
“Alliant Energy does not allow net metering,” Rigler explained; therefore exceeding production beyond 100 percent in the Alliant market — selling energy to Alliant at wholesale so Alliant could sell it back to Peoples and its neighbors at retail, did not make sense. In that case, “over production is just expensive capital that’s not earning any sort of return,” Rigler said.
The bank expects to recover its investment costs by the end of 2024 with some locations recouping costs in just three years. “We don’t count it as payback because the savings dropped to the bottom line,” Rigler said. “We look at the internal rate of return … accretive to earnings and accretive to shareholder equity.”
An additional benefit of the solar investment has emerged at three of Peoples Bank locations, where the bank installed car charging stations powered by solar. In order to use the stations, customers sign up for a PB Sun Pass, good for a free year of car charging.
The service is available only to bank customers. “We have already opened up new accounts for people who have wanted to charge their cars at our banks,” Rigler said. “We like the idea of allowing people to drive on sunshine.”
While the move to solar energy helps keep the bank’s operating costs low and more predictable, the bank feels it also gives them an edge within its market. “We feel long-term it helps us build brand equity, differentiates us from our competition, and keeps us top of mind with customers who share the same values we do,” Rigler said.
“We feel we’re conveying our corporate values and doing right by our customers, and at the end of the day, it pencils out,” Rigler said, adding that the investment was “something that made good business sense and even better environmental sense.”