Finance scheme bridges the credit gap

Energy prices in the UK are 10% higher than those in Germany, according to figures from manufacturers’ association the EEF.

This cost gap, it adds, could increase to 15% by 2013, inevitably curbing UK industrial companies’ competitiveness - making it all the more important to invest in energy efficiency

But initial capital outlay can often deter businesses from investing energy efficient equipment, particularly in the current economic climate when budgets are being squeezed

Financing remains an obstacle. Constricted access to traditional finance is well evidenced as the Bank of England continuing to report difficult credit conditions in the market.

To address this issue and enable companies to invest in energy-efficient technologies despite tight credit conditions, the Carbon Trust and Siemens Financial Services Limited (SFS) have recently initiated the Energy Efficiency Financing scheme (EEF).

The flexible terms of the financing enable businesses to pay for their energy efficient equipment through affordable monthly payments, which are designed to match - and be offset by - the average monthly savings on energy bills, explains Darren Riva, head of green financing at the Carbon Trust.

Advisors from the Carbon Trust team offer independent advice for businesses to help them decide where to effectively focus their investment.

“In some cases, energy cost savings more than offset monthly payments, allowing the end customer to be cash positive from day one,” said Riva.

Many sorts of equipment energy-efficient equipment - motors and drives, solar PV, biomass, refrigeration, boilers, ground/air source heat pumps, among them - can be funded by the scheme.

“A double advantage can be gained from energy-efficient upgrades: in addition to energy savings, newer equipment can also deliver increased manufacturing throughput and productivity gains over the technology it replaces,” continued Riva.

Energy-efficient technology suppliers can apply to become a recognised supplier of the scheme, which will allow them to integrate the financing offer into their overall sales propositions.

This, said Riva, removes the obstacle of large up-front capital investment for customers, and helps suppliers to close more deals as efforts can be focussed on providing the optimum solution, rather than being constrained by capital budget restrictions.

Among the companies to have used the EEF scheme to date is Talbott’s Biomass Energy Systems Ltd, a manufacturer of biomass and wood waste energy equipment. It has over 4,500 operating installations with clients ranging from independent woodworkers or large furniture manufacturers to country estate owners and leisure complexes.

With its easy application process and fast credit decisions, the scheme, reports Talbott’s, can enable suppliers to close more deals, provide better value for customers and enhance their own own cash flow.

“The Energy Efficiency Financing Scheme is an essential part of our toolkit, which enables us to provide a complete turn-key solution for our customers,” says Amy Fielding, commercial director at Talbott’s.

According to Fielding, the savings resulting from investment in biomass and wood waste energy solutions are substantial in comparison to the amount that customers have to pay each month.

“Customers have suffered due to the recessionary bite, but we are now seeing a growing number of companies slowly but surely turning around their businesses, with many of them taking an increased interest in investing in energy-efficient equipment thanks to flexible funding solutions such as the EEF scheme,” she reports.