Loans and leases for office energy efficiency

Several financing models can help businesses obtain upfront capital for energy savings that can be paid back over time, linked to the cost savings from energy efficiency.

Energy Performance Contracting

Energy Performance Contracting or EPC is a model whereby decisions about which products and equipment to replace are outsourced to a third party who delivers a range of solutions and guarantees the resulting savings (assuming that usage remains equal). This model avoids the need for upfront capital and in-house technical expertise.  Energy Performance Contracting is well suited to businesses with low internal capacity to identify, prioritise and/or implement upgrade projects. A contractor is typically and Energy Services Company (ESCO) who can evaluate energy use, identify energy saving opportunities, provide engineering design and technical solutions for upgrades, manage the project from design to installation to monitoring, facilitate financing if required, train staff and provide ongoing maintenance services.

Typically for an EPC many small efficiency actions will add up to the total saving. It does not require involvement of building owner or any upfront investment and can be combined with operational leasing products or carbon abatement certificate creation under the NSW or Victorian certificate schemes. To investigate further or look for an ESCO, see the Energy Efficiency Council best practice guide.

Environmental Upgrade Agreements

Environmental Upgrade Agreements are a three-way arrangement where property owners enter into an agreement with councils and finance providers to fund environmental upgrade works for existing buildings. Environmental Upgrade Agreements allow for upfront access to capital with repayments made via a council rates charge on the property. These are then chargeable back to office tenants via outgoings where the charge is smaller than or equal to savings the tenant will make in energy savings.

This finance mechanism is available within the following cities:

The EUA financiers are Sustainable Melbourne Fund and Low Carbon Australia.

Environmental Upgrade Agreements are also under consideration by Wollongong City Council and Penrith City Council.

Operational finance or equipment leasing

Office and base building equipment can become quickly outdated as technologies advance and is generally superseded by more cost-effective and efficient options. Utilising a finance mechanism for equipment leasing reduces the risk of directly investing in an asset and removes the need for upfront investment capital, fast-tracking the potential to improve your business operations. The mechanism uses operational capital and provides flexible leasing arrangements and ensures both property owners and tenants can benefit from substantial energy cost savings sooner. At the end of the lease term, the equipment, plant or lighting can be purchased for a residual, replaced or removed.

Leasing provides the flexibility to upgrade equipment over time as technology improves. It is suitable for large and small projects plus a wide range of equipment upgrades including HVAC, and removes the residual value risk of the asset for lessee. The vendors currently offering these mechanisms are Low Carbon Australia (via EnergySmart Finance), Allleasing, Macquarie Group, NAB and Origin Energy.

Vendor Summaries

The following vendors provide one or more leasing and finance solutions:

 


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Financing your project

Undertaking energy efficient upgrades or installing renewable energy makes good business sense and helps offset rising electricity and gas prices. Choosing the right finance for projects can sometimes be challenging. This guide will help you understand the different financial options available as well as step-by-step guidance in selecting the best finance for your business.

Energy efficiency certification scheme

This certification scheme offered by the Energy Efficiency Council certifies professionals that can lead comprehensive energy retrofits of commercial buildings. Certification helps building owners and managers find professionals they can trust and provides a benchmark for energy efficiency professionals.

Claiming Energy Savings Certificates ('Eskis')'

NSW businesses can improve the rate of return on investment for projects by claiming Energy Savings Certificates (aka 'Eskis') which are redeemable for cash based using NABERS ratings as evidence of savings.

Data centre energy audit subsidies

The NSW Energy Saver program is offering eligible businesses a 50% subsidy for Data Centre Energy audits when combined with a NABERS Data Centre rating to help businesses identify opportunities for improvement and cost savings.

Energy Smart Finance

This equipment leasing program by Low Carbon Australian allows businesses to invest energy efficient technology to future-proof against rising energy costs while reducing carbon emissions. It is operated through accredited vendors.

Sustainable Melbourne Fund

A fund for improving Melbourne buildings established by Melbourne City Council. The Fund provides up to 100% loan finance for building retrofit projects or for innovative technologies that deliver wider environmental benefits.

Grants and Assistance Finder

Commonwealth and State/Territory government grant programs available to support the investigation and implementation of energy efficiency projects. Be sure to check eligibility requirements and funding guideslines, which can differ significantly across programs and jurisdictions.

NSW Energy Saver Program

The Energy Saver program, by NSW Office of Environment and Heritage provides a single point of energy efficiency support for NSW businesses, helping organisations reduce energy consumption and costs. There are subsidies available for action plans and implementation.

CitySwitch NABERS Energy Grant program

Join CitySwitch and get financial assistance to help combat rising energy bills by assessing and managing your office energy use. Funding is offer for a limited time to assist businesses most capital cities with documenting their energy baseline.
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