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Wineries are turning to sustainable investments

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California is one of the largest wine regions in the world, accounting for over 80% of the wine grown in the United States. The state’s huge wine industry is also engaged in efforts to reduce its environmental impact and improve sustainability amid prolonged drought, wildfires and rising energy costs.

Few regions understand the importance of water conservation and renewable energy better than Southern California. In the Temecula Valley, where the sun shines an average of 276 days a year, wineries are increasingly focusing on harnessing solar energy and using water more efficiently.

Robert Renzoni Vineyards is one of the region’s leaders in sustainability. Robert is always looking for ways to run the business more efficiently, whether that means using water conservation techniques or employing an environmentally friendly method of growing grapes that harnesses the power of the sun.

“We are about to be labeled as the very first and only 100% solar-powered winery in Southern California history,” Robert said. “As soon as the county lets us flip the switch, we’ll be tagged, which is pretty cool. We were also the first cellar-containing rainwater harvesting tank in Southern California history.

When it rains in the cellar, the water is piped underground and into storage tanks connected to pumps. Robert’s team can then recirculate this precious water through irrigation systems around the vineyard. In a county that averages about 12 inches of rain a year, this vineyard makes the most of every drop.

Although the process of conserving solar energy and water is expensive, many wine business owners like Robert see them as smart long-term investments to reduce the cost of energy and water. in the future.

Financing a more sustainable future

Instead of purchasing solar panels or other assets outright, some winery operators choose to lease these sustainability-related items. By doing so, many are able to reduce upfront capital requirements while preserving working capital. As operating costs rise, renting items like solar panels, equipment, or even wine barrels can help their business stay competitive while preserving cash.

Mary Spry is Vice President – Relationship Manager at American AgCredit, where she helps winery operators secure the right financing for sustainable investments. She says the leasing program is an attractive option for homeowners looking to preserve cash while investing in solar panels, equipment and wine barrels.

“Becoming a more sustainable business can be an expensive adventure, especially in the beginning,” said Mary. “Wineries have been impacted for the past two years by COVID and wildfires. Cash is king right now. If they can preserve their cash, while growing their business sustainably, that’s where we can help them strike the right balance with leasing.

With rising energy costs, solar power is a smart approach to help cut costs and reduce greenhouse gas emissions. However, the solar power installation process can take upwards of a year and a half, which means business owners have more time to wait before realizing these savings.

“Installing solar power can be time consuming and expensive, so leasing has been a big plus for borrowers by not having upfront project costs while they wait for approval. necessary to operate from PG&E,” said Mary. “We bear all financing costs during construction. »

Investing in the next generation

Many wineries in California remain family-owned, even though the industry has grown rapidly in recent decades. One such family business is Chappellet Vineyard in Napa County, where the second generation of family owners led the business through a period of growth and innovation, while continuing to craft exceptional wines.

Cyril Chappellet is CEO and President of the family winery that for more than 50 years has helped make Pritchard Hill one of California’s most revered wine sites. He guided the company through a period of investing in sustainability initiatives, including solar panels and wine barrels.

“The leasing program has helped us in two different areas of our business,” Cyril said. “One is our barrels, which we would rent for 3-4 years because that’s the period we use them. So basically we would pay for them as we use them. In the solar project that we rented with American AgCredit, we had the same situation but over a longer period.

Looking to the future, Cyril said investing in sustainable energy and renting wine barrels has added value to the winery today and will continue to benefit the family for years to come.

“Friends ask me, ‘What the hell are you doing putting all that solar power up there?’ So we do it for two reasons. The first is that it makes economic sense. The other reason is that it’s the right thing to do. It’s really great for the next generation.