Reducing energy costs is a major consideration for many businesses and government entities because lower energy costs translates into improved profitability and cash flow, and investments in sustainability can add significant value to assets, a topic explored in a recent article for MountainWest Capital Network's Utah Deal Flow.
In fact, studies show that sustainable technologies such as infrastructure control systems, building envelopes and solar power can reduce utility bills by 50 percent or more. In some cases, sustainable construction isn’t even an option – it’s a mandate.
However, the initial investment required for sustainability projects is sometimes a deal-breaker. Often, businesses that are interested in energy efficient upgrades, retrofits or projects are unsure how to pay for it.
How to pay for energy efficiency upgrades
Fortunately, there are several practical and attractive equipment financing options that make it easy to expedite renewable energy initiatives and help preserve business capital. Because financing allows businesses to break down large sustainability equipment acquisitions into monthly payments, companies can use the equipment now and pay for it over time.
Other benefits of financing sustainability projects include increased cash flow, potential tax benefits, the ability to avoid large down payments, and increased flexibility and control. In addition, qualified applicants can often bundle engineering, development, installation and equipment costs into one, predictable monthly payment.
Take these steps for sustainable projects
Businesses that are interested in undergoing a sustainability project but are unsure where to begin should consider these steps:
1Pick the right partners
Qualified engineering firms, equipment vendors and financial partners can help identify the best energy-efficiency and renewable opportunities and can help analyze relative costs and savings of each.
2Start with your business objective
Before beginning, make sure the project and financing strategy align with the business’ overarching goals.
3Lead with a pilot
Start small. If the objective is to replace all fluorescent lights with LEDs, beginning with one floor of a building allows businesses to measure the results and adjust for optimal savings.
Sufficient metering and tracking processes prove whether or not the initiative is achieving the projected savings and reduction of energy usage
5Leverage the results
The goal is to keep the yearly debt lower than the cost of the annual energy bill savings. Work with an experienced finance partner to create a customized lending strategy.
6Optimize the ROI
Grants, rebates and federal tax incentives can reduce the capital expenditure and accelerate the return on investment for sustainability and efficiency initiatives. Be sure to inquire about all of these options for maximum return.
Once the project gets the green light, work with a finance partner to create a comprehensive strategy that aligns with the business goals and maximizes incentives.
Wondering what questions to ask before embarking on an energy efficiency initiative? Find them here: