Readers Of This Article, Check Out:
Electrical Preventive Maintenance ... Pay Now or Pay (More) Later - Sponsored Learning

On the Go? So Are Germs: InfoGraphic - Sponsored Learning

Firestone, click here...

Online Exclusive Column

Part 1: Financing Facility Retrofits: The Power of the Negawatt

Part 2: What is a Negawatt?


Financing Facility Retrofits: The Power of the Negawatt

By Bob Hinkle - May 2014 - Facility Maintenance Decisions Columnists


Most energy efficiency projects in institutional and commercial facilities leave a great deal of energy savings on the table. Why? The technical scope of a retrofit project is developed within the restrictive confines of a company's capital budgeting process.

But the energy efficiency market is rapidly evolving to include no-first-cost financing options that finally enable facilities to implement projects that not only have deeper energy savings with longer paybacks but also improve the bottom line and the sustainability of their operations.

Money matters

Capital constraints often become a roadblock to implementing energy efficiency projects in facilities. Most organizations use their own capital to fund projects, which forces retrofits to compete against investment opportunities in their core business. When pitted against investments that relate more to a company's core business, energy-efficiency projects are typically shelved, or they are limited to small, single measure upgrades with very short payback — in many cases, less than two or three years.

Other traditional options to finance an energy-efficiency retrofit, such as leases or loans, can burden a company's balance sheet and limit future borrowing capacity. And when an organization self-funds a retrofit or takes on traditional debt it retains all of the project performance risk.

Conversely, third-party financing options that fund 100 percent of a project's costs enable organizations to implement integrated retrofit projects that increase energy savings and achieve much-needed facility improvements without the performance risk and adverse impact to their balance sheet. Eliminating upfront project costs also eliminates restrictions imposed by internal capital budgeting processes, freeing managers to optimize their retrofits to include efficiency measures with longer payback periods.




Online Exclusive Column

Part 1: Financing Facility Retrofits: The Power of the Negawatt

Part 2: What is a Negawatt?


Comments


Browse Articles

On FacilitiesNet: retrofits, financial management, energy efficiency

FaciliyZone

Search for retrofits, financial management, energy efficiency articles on FacilityZone

Find us on Google+
3M Window Films
65 Crazy, Outrageous Occupant Complaints. Order your copy today >
QA Graphics


QUICK Sign-up - Membership Includes:

New Content and Magazine Article Updates
Educational Webcast Alerts
Building Products/Technology Notices
Complete Library of Reports, Webcasts, Salary and Exclusive Member Content



click here for more member info.