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Historically, finance has presented a significant challenge for energy- (and efficiency-) conscientious FM companies. (photo: Siemens Financial Services)
Historically, finance has presented a significant challenge for energy- (and efficiency-) conscientious FM companies.
21.09.2016, 10:27

Financing for Sustainable Buildings

Poor access to funding is a barrier FM companies seeking more energy-efficient solutions for clients must overcome, writes Siemens Financial Services UK's Energy Finance sales manager, Richard Baker.

Poor access to funding is a barrier FM companies seeking more energy-efficient solutions for clients must overcome, writes Siemens Financial Services UK's Energy Finance sales manager, Richard Baker.


Sustainability has become an important topic for many organisations. Growing government pressure is encouraging companies to move towards more sustainable operations. Increasing numbers of businesses are also recognising that advanced energy efficiency or renewable technologies have the potential to help them save money or even generate an additional revenue stream. Enhancing the energy efficiency of offices, warehouses, production sites and other commercial buildings can considerably reduce an organisation’s carbon footprint. Facilities Management (FM) services providers are therefore increasingly looking for financially viable ways to help their clients make the sustainability upgrade.

 

Richard Baker, Sales Manager, Siemens Financial Services UK Energy Finance.
Richard Baker, Sales Manager, Siemens Financial Services UK Energy Finance. © Siemens Financial Services UK Energy Finance
The lack of appropriate funding for sustainability solutions can be a significant challenge for FM companies looking to implement energy efficiency measures in premises on behalf of their customers.  According to the BIFM’s most recent Sustainability in Facilities Management Report, financial constraints ranked second (after physical constraints) as being a barrier to sustainability.[1]One solution is to work with a specialist financier familiar with the latest technology and experienced in the sector. 

 

The Energy Finance team at Siemens Financial Services (SFS) provides flexible and specialist financing solutions for energy efficiency or renewable technology investments via asset finance. Based on a reliable assessment of the benefits the new equipment can bring, a financing arrangement with SFS can offset the expected savings in energy costs and/or income from energy generation against regular payments. When a client commissions the implementation of sustainability measures in a building, the FM company can integrate SFS’s funding models for Energy Finance into its offer. In doing so, it leverages SFS’ knowledge and financing expertise to provide an appropriate Energy Finance solution for the end customer. The customer benefits from a financing solution that makes the investment zero net cost and can even be cash positive if the energy savings or additional income are greater than the financing payments.  The EF team at SFS therefore enables FM services providers to offer a sustainability solution that doesn’t compromise their customers’ liquidity.

 

Financing solutions like these are a welcome and needed funding resource as legislation continues to emphasise the importance of sustainability.  For example, the Energy Act 2018 is designed to prompt landlords to ensure their properties are energy efficient. The legislation requires that from the 1st April 2018 let properties have a minimum Energy Performance Certificate (EPC) rating of E.[2] Landlords of properties with a lower rating therefore have to improve the energy efficiency of these buildings, or face penalties.[3] Environmental taxes, reliefs and payment schemes also encourage businesses to operate in a more sustainable way.[4] The CRC Energy Efficiency Scheme, for instance, requires registered organisations to report energy usage and purchase allowances equal to the CO2 emissions generated.[5] In return, companies can claim capital allowances when they buy energy efficient, or low or zero-carbon technology for their business.[6]

 

As a result, sustainability requirements from clients are growing. FM companies are now under pressure to facilitate energy efficiency progress in buildings. Working with specialist financiers such as SFS, however, allows FM companies to go a step further and think more innovatively when discussing energy efficiency investments with their clients. For example, some network operators will pay a business an availability fee for making its high power battery available to stabilise the system prior to faults occurring.[7] These modern energy storage systems are designed to address fluctuations in energy supply and can be used by industrial companies to mitigate temporarily low power supply from renewable energy resources. A business wanting to invest in renewable technology may find that a considerable part of the overall cost can be offset by the income from a network operator’s frequency response service. Thanks to their market expertise, specialist financiers like SFS are well positioned to flex funding arrangements to include such additional revenue streams. This helps FM services providers and their clients gain a clear understanding of the Total Cost of Ownership (TCO), and effectively reduces the cost of the equipment.

 

Flexible and specialist asset financing solutions from Energy Finance experts  such as SFS help FM companies and their clients take advantage of sustainability opportunities. Improved liquidity, energy cost savings and potential new income streams all contribute to making a strong business case for investment in the sustainability of buildings. FM services providers who are able to include such a financing solution in their offer will likely be preferred suppliers for customers looking to improve the energy efficiency of their premises. In a business world that is becoming increasingly focused on sustainability issues, FM companies can find that the positive reputation gained from a green footprint to be a highly valuable asset in securing clients and winning new customers.



[1] BIFM, ‘Sustainability in Facilities Management Report 2015’, http://www.bifm.org.uk/bifm/knowledge/sustainabilityinfm/2015
[2] Residential Landlords Association (RLA), ‘Minimum energy efficiency standards’, http://www.rla.org.uk/landlord/guides/minimum-energy-efficiency-standards.shtml
[3] Ibid
[4] Gov.uk, ‘Environmental taxes, reliefs and schemes for businesses’, https://www.gov.uk/green-taxes-and-reliefs/overview
[5] Ibid
[6] Ibid
[7] the energyst, ‘National Grid plots superfast grid balancing service’, http://theenergyst.com/national-grid-plots-superfast-grid-balancing-service/ 

 

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