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Financing your plans to reduce energy use

There are now a wide variety of interest free loans and grants for energy efficiency projects available for both business and the public sector. If necessary, we can help you access and apply for this funding.

Loans for business

The Carbon Trust are currently running an Energy-Efficiency Loans Scheme. Under this scheme, small or medium-sized businesses (SMBs) in England, and Scotland can borrow from £3,000 to £400,000, unsecured, at 0% interest. The definition of an SMB is a company that employs fewer than 250 full-time equivalent employees; has an annual turnover not exceeding £43m and/or an annual balance sheet total not exceeding £37m; and does not qualify for the Carbon Reduction Commitment [i.e. has an annual electricity spend of less that £500,000]). In Northern Ireland and Wales all enterprises (i.e. including those larger than SMB) could borrow from £3,000 to £400,000. In addition:

•	The enterprise need to have been trading for at least 12 months

•	Loans can be repaid over 4 years (as the scheme is designed for energy savings to cover repayments, the loan will effectively pay for itself)

•	Projects need to demonstrate energy savings in excess of the C02 threshold of 1.50 tCO2/£1000 of loan

•	Typical examples could include one or more of the following: power factor correction, air conditioning , compressed air fittings, boilers and heating controls, motors , boiler and hot water tank information, materials handling equipment , building insulation, heat recovery, process heating, lighting, process controls, pipe insulation, refrigeration, solar thermal systems, variable speed drives

Enhanced Capital Allowances

The Enhanced Capital Allowance (ECA) scheme is a key part of the Government’s programme to manage climate change. It provides businesses with enhanced tax relief for investments in equipment that meets published energy-saving criteria. 100 per cent first-year Enhanced Capital Allowances (ECA) allow the full cost of an investment in designated energy-saving plant and machinery to be written off against the taxable profits of the period in which the investment is made. The general rate of capital allowances for spending on plant and machinery is 20% a year on the reducing balance basis.

‘Pay as you Save’ asset finance

In some circumstances these grants and loans will not be available. Typically this happens when:

•	Grant funds have run out

•	A technology is not eligible for grant or loan funding.

•	The technology is appropriate, but has an ROI of longer than 4/5 years

•	Your organization is disqualified under the state aid (most companies in the transport sector, most companies producing, processing, or marketing agricultural or fisheries products, or for export-related activities)

To help organisations solve this problem, we have developed a ‘Pay as you Save’ asset finance programme. This allows you to install energy control systems at no upfront cost and structure the payments so they are always less than your energy savings. This generates real savings from day one and has a cash-positive impact on your finances.

The ‘Pay as you Save’ model works well when organisations don’t have the funds to invest in energy efficiency or can only use off-balance sheet finance for energy efficiency programmes.