Renewable energy finance options
Renewable energy infrastructure is expensive, however as it will last years, if not decades, it can dramatically reduce the cost of electricity if it is well planned, utilised, and maintained. It is therefore the cost of the electricity p/kWh over the long term that is all important.
MaxGen has flexibility as to how you finance the renewable solution, providing the most cost effective solution on the market. Self financing capex is the cheapest, then using asset finance, followed by a PPA with zero indexation, and a fixed interest rate. All of these finance solutions means that other than the O&M, the p/kWh remains the same all the way through!
Call MaxGen to discuss zero indexation PPAs with a fixed interest rate, or capex (with or without finance) with an O&M contract.
Reduce your businesses energy cost in the short and long term.
Energy finance definitions
These are some of the different types of finance available. Each has their pros and cons, and so the circumstances of each business is critical in deciding which is the best financial structure.
•Asset finance – On balance sheet (can access Annual Investment Allowance). Finance secured against physical assets that remain in the ownership of the finance firm until the payment is fully paid. Examples are Hire Purchase, and Equipment Lease
•Project finance – Finance for a specific project within a Special Purpose Vehicle, including capital, deployment, and maintenance
•Grant funding – State sponsored funding won for specific objectives. These objectives might include technological and commercial integration, R&D, environmental, and productivity increases.
•ESCo - Energy Saving Company – Finance is raised on the projected savings of an energy project. A co-owned company is set up, owned by the finance firm, and the bankable off-taker. Once the asset is paid for, the ESCo is dissolved
•PPA – Power Purchase Agreement – Finance organised by a third party with the bankable (with a good credit risk) off-taker contractually obliged to pay a minimum amount, and the PPA provider obliged to provide a minimum amount of electricity. The payments can be index linked.
MaxGen works with a finance house with zero indexation at 8% interest on deals from 7 - 15 years
Capex - For capex, or hire purchase agreement. This is on balance sheet.
This enables a fully joined up renewable strategy, where businesses can build infrastructure that can reduce, and stabilise energy cost and carbon, as well as enabling employees to reduce their travel cost and carbon. Wind and solar, with zero fuel required, and low maintenance costs, is ideal for a capex purchase.
For solar, and wind, where the maintenance costs are relatively low and predictable, this is a chance for businesses to make an investment, that will fix their energy costs for the lifetime of the solar or wind assets. Therefore rooftop solar, if done at scale costs some £700,000 per MW, and would provide an electricity price of about 8 p/kWh, with only minor rises for the inflation of the maintenance costs, for the lifetime of the solar.