How to fund your next energy sustainability project
Earlier this year, when the bushfires were ravaging much of Australia, many retailer businesses vowed to make sustainability a long-term business goal, but unfortunately, since the coronavirus epidemic, it may now be the last thing on the agenda.
It might be a challenging economic climate right now, but there are several ways businesses can get financial help for upcoming projects, from government grants to energy certificate schemes.
Leverage existing energy assets to generate new revenue streams
There are new opportunities available where not only can businesses save money and improve energy efficiency, they can actually leverage their existing assets to generate revenue.
One way is through participating in demand response programs. By adopting load flexibility strategies on HVAC and refrigeration equipment, businesses can reduce their amount of energy and better manage the times that energy is used.
“With the installation of smart devices on HVAC and refrigeration systems, businesses can now automatically adjust their energy use at specific times,” explains Darren Clarke, Head of Strategic Clients at ERM Power.
Strategic use of HVAC and refrigeration systems now allows businesses to take advantage of demand management opportunities and make use of lower energy tariff options. By automatically controlling HVAC use at peak times, additional revenue can be earned.
“We understand customer comfort levels, reliability of products and food safety are fundamentally important to retail businesses. With smart technology, we can now manage the process in curtailing how much energy they use in a way that doesn’t affect customer comfort levels and product safety,” says Clarke.
“It’s a new and exciting way to support businesses in not only deriving additional value from these assets, but also creating new revenue streams that can potentially cater for reinvestment in other energy efficiency projects.”
Power purchase agreements (PPAs)
PPAs provide a unique way to reduce the level of energy purchased from the grid, reduce emissions and avoid any upfront capital investment.
PPAs allow large businesses to buy electricity directly from the generation source, rather than the electricity grid. Generation sources can be large, such as wind or solar farms, or small, such as a solar PV system. They can be located onsite, or elsewhere and entered into directly with the owner of the generator or via a retailer.
In such uncertain and volatile times, entering into a PPA can be an ideal option for businesses seeking more stability in energy expenditure and [missing word?] environmental benefits, without the upfront capital investment in renewable energy generation.
“PPAs provide a long-term hedge against the risk of fluctuating energy prices. They can give greater certainty in relation to the price of electricity generated from the generation source for the life of the contract. Longer-term PPA options in particular are valuable in a volatile energy market, “ explains Clarke.
Finance options give customers an opportunity to turn planned energy-related capex into an operational expenditure by using rent-to-own finance for energy projects. With no upfront capital costs, businesses can implement energy solutions straight away and make easy payments over time.
“Many retail businesses have tightened their belt with regard to capital expenditure and discretionary spend in recent months. It is important that energy businesses provide flexible financing arrangements that are aligned to customer needs. The ability to invest in projects via on-bill financing is a great alternative to capital intensive investments,” advises Clarke.
“ERM Power’s on-bill finance option allows our customers to access finance for energy projects, with repayments included on their energy invoices.”
Environmental certificate schemes
If your business is undertaking an energy efficiency project, certificate schemes can significantly help in offsetting costs and accelerating paybacks.
Certificates can be created for the amount of electricity they produce or the emissions reductions resulting from the initiative. The value of certificates can then be offset (via various commercial arrangements) against the cost of the project.
“It’s always worth having the conversation with an energy advisor to assess your energy and financial objectives and identify the certificate schemes that your project may be eligible for,” says Clarke.
“Your energy advisor can also help you better understand the value of your energy or emissions savings upfront while you are building a business case for the project.”
There are constant updates and improvements in government funding programs in efficiency and sustainability, so it’s worth continuing to explore options that your business could potentially leverage.
Details of the various federal and state government grants and funding programs are available on the Australian Government’s Department of Industry, Science, Energy and Resources website.
Whether you’re starting your energy journey or you’re five years down the track, contact Darren Clarke, Head of Strategic Clients at ERM Power on 0427 166 527 or email firstname.lastname@example.org to find out how we can best help you achieve your energy goals.
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