A growing number of energy financing options are now available with the stated goal of encouraging businesses to implement energy efficiency upgrades. These options remove the most common barrier to becoming energy efficient, the initial up front cost or capital investment!
Many companies have avoided energy upgrades because of the lack of capital to pay for the improvements as well as the length of time need for a return-on-investment (ROI).
When energy renovations show up as a large expense on a company’s Profit and Loss statement, or debt on their balance sheet, projects often get left on the drawing board. A large expense can negatively affect a company’s cash flow and if the expense doesn’t show a short-term return on investment, it also becomes harder to justify to shareholders and stakeholders.
Many of the new energy efficiency financing programs mandate guaranteed positive cash flows in order for projects to qualify. To be more precise the total project cost must be paid for out of the energy savings. When the proper finance options, rebates and tax incentives are incorporated into efficiency projects it often creates the situation where doing nothing becomes more costly than taking action.