California is one of the world’s largest wine regions, representing more than 80 percent of the wine grown in the United States. The state’s massive wine industry is also engaged in efforts to lower its environmental impact and improve sustainability amid a prolonged drought, wildfires and rising energy costs.
Few regions better understand the importance of water conservation and renewable energy than Southern California. In Temecula Valley, where the sun shines an average of 276 days of the year, wineries are increasingly focused on harnessing solar energy and using water more efficiently.
Robert Renzoni Vineyards is one of the region’s leaders on sustainability. Robert is always searching for ways to operate the business more efficiently, whether that’s using water conservation techniques or employing an environmentally friendly method of growing grapes that draws on the power of the sun.
“We are about to be labeled the very first and only 100 percent solar powered winery in the history of Southern California,” said Robert. “As soon as the county lets us flip on the switch, we will be labeled, which is pretty cool. We also have been the first rainwater harvesting tank holding winery in the history of Southern California.”
When it rains at the winery, water is funneled underground and into storage tanks that are hooked up to pumps. Robert’s team can then recirculate this valuable water through irrigation systems around the vineyard. In a county that averages about 12 inches of rain per year, this vineyard is making the most of each drop.
While the process of bringing on solar and water conservation is expensive, many wine business owners like Robert see them as smart long-term investments to lower the cost of energy and water in the future.
Financing a More Sustainable Future
Instead of buying solar panels or other assets directly, some wine business operators choose to lease these sustainability-related items. In doing so, many are able to lower upfront capital requirements while preserving working capital. As operating costs increase, leasing items like solar panels, equipment or even wine barrels can help their business stay competitive while preserving cash on hand.
Mary Spry is Vice President – Relationship Manager at American AgCredit, where she helps wine business operators get the right financing for sustainability investments. She points to the leasing program as a strong option for owners who are looking to preserve cash while investing in solar panels, equipment and wine barrels.
“Becoming a more sustainable business can be a costly adventure, especially at the beginning,” said Mary. “Wineries have been impacted the last two years by COVID and wildfires. Cash is king right now. If they can preserve cash, but still grow their business in a sustainable way, that’s where we can help them find the right balance with leasing.”
With energy costs on the rise, solar power is a smart approach to help lower costs and reduce greenhouse gas emissions. However, the process of bringing on solar energy can take more than a year and a half, which means business owners have a longer period to wait before they realize those savings.
“Putting in solar can be time consuming and costly, so leasing has been a great benefit to borrowers by not having upfront project costs while they await the necessary permission to operate from PG&E,” said Mary. “We handle all financing costs during the course of construction.”
Investing in the Next Generation
Many wineries in California remain in family ownership, even as the industry has grown rapidly over the last few decades. One such family business is Chappellet Vineyard in Napa County, where the second generation of family ownership has steered the company into a period of growth and innovation, while continuing to craft exceptional wines.
Cyril Chappellet is chief executive and chairman of the family wine business, which over 50 years has helped establish Pritchard Hill as one of California’s most revered winegrowing locations. He has guided the company in a period of investing in sustainability initiatives, including solar panels and wine barrels.
“The leasing program has helped us out in two different areas of our business,” said Cyril. “One is our barrels, which we would lease for 3-4 years because that’s the timeframe that we use them. So essentially, we would pay for them as we use them. In the solar project that we leased with American AgCredit, we had the same situation but over a longer period of time.”
As he looks ahead, Cyril said the investment in sustainable energy and wine barrel leasing has added value to the winery today and will continue to benefit the family for years to come.
“Friends ask me, ‘What in the world are you doing putting all this solar power up there?’ So, we do it for two reasons. One is that economically it makes sense. The other reason is that it’s the right thing to do. It’s really great for the next generation.”
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