It makes a lot of financial sense to upgrade your buildings with energy-efficient technologies and systems. They reduce your utility costs over the short and long term, improve your environmental footprint, and help with attracting and retaining tenants. However, as with any capital expenditure or equipment upgrade, there can be significant upfront costs. Even when you plan for these types of projects, you might not have access to the necessary funds to cover all the expenses.
That’s where external sources of financing can help with bridging the gap between planning and reality. There are different options to consider when financing energy-efficiency projects, each with their own benefits and drawbacks. It’s best to understand your options before investing in the next big building upgrade. Government incentives Government incentives are available in some jurisdictions, and can also be blended with private financing. You can apply for government incentives to fund a portion of your energy efficiency capital expenditures. Many utilities offer incentives to cover different aspects of your project, such as performing the energy audit, purchasing equipment and materials (e.g., LED bulbs, low-flow toilets), and doing the actual work. Contact your local distribution company to determine what incentives are available. “There are government grants and incentives available for most energy-efficient projects and technologies,” said John Robinson, Partner, R.H. Shergold and Associates. “Make sure to apply for funding before starting any project to determine if you qualify. I would recommend that you get independent 30 | jan uary 2017
advice from third-party companies or peers to find the best options when developing an overall energy plan.” The only real downside to some government incentives for your energy-efficient projects stems from the guidelines and limitations associated with qualifying for those incentives. The government programs focus on energy savings achieved (such as kilowatt-hours saved) rather than your return on investment. As a result, there can be times when you are a good fit for the new technology, but a poor candidate for the incentive. For example, there are great government incentives for cogeneration projects, but other energy-efficient technologies might provide shorter ROI. Debt financing Banks and other financial lending institutions have traditionally served as the first option for building owners who want to fund their capital projects, including energy-efficient upgrades and technologies. Basically, you would take out a loan to finance your purchases, and pay off the principal and interest over an agreed upon period.