Funding Renewable Energy Investments
Investments in ground source energy have a higher initial capital costs than fossil fuel technologies.
However, they benefit from both lower annual running costs and substantial annual government grants: the Renewable Heat Incentive.
This means that the initial capital cost can be financed by loans that can be repaid from the annual savings.
Releasing pressure on Capital Budgets
Many project managers find that once a project is fully costed, it may cost more than the allocated budget.
This can lead to a "Value Engineering" exercise which tends to compromise quality in order to reign back to a fixed budget: this is unsatisfactory for all parties, including the environment.
Fully Funded Projects
Luckily there is an alternative: ICAX can facilitate a loan from third parties to enable the investment to be made using loan financing. This is available when the annual running cost, including grants, is negative and contributions can be made to the capital cost over, say, seven years.
The advantage is that this will fix your future costs for a set repayment schedule, which can be less than the annual costs that you would have paid for burning fossil fuels.
It will also release pressure on your cashflow – and even allow the cost of heating and cooling plant to be outside the budgeted cost of a new building.
Operating Leases compliant with FRS 102
Larger ground source energy systems that qualify for the Non-Domestic RHI may also be financed by an operating lease – off-balance sheet finance.
This is particularly relevant to schools which may not otherwise be able to finance investments in ground source energy, even if they can show a payback period within eight years. With the benefit of an operating lease schools may be able to invest in ICAX systems with positive cash flow from year one – a zero payback period.
Funded options allow investment in Renewable Energy systems with a good payback
Please email us on
or give us a ring on 020 7253 2240
if you would like to explore the loan funding option shown above, or alternative financing options.
We are happy to help clients work up a robust business case to help support the investment and unlock finance. We understand that each project will bring its own particular needs.