If you have a construction project in mind, whether it is a new build development or a retrofit project, then you may have already found yourself wondering whether the building project is possible or not?
In the early stages of any development project, a feasibility study is essential to determine the viability of a project and are extremely useful in helping to determine the options available for you. Establishing if a project is really possible is perhaps one of the most common questions, we as consultants, are asked regularly. Other common questions are:
- What technologies are suitable?
- Are there any subsidies?
- How much will it cost?
- What is the payback on investment?
- How does the planning and construction process work?
Making a project viable
There are multiple incentives which are not well publicised that can make a huge difference as to whether a project is cost neutral or in most cases generate a return for the client. As the capex investment is such that it is often implemented into the yearly planned maintenance costs, we assist in linking up the incentives to limited capex outlay and maximise the return on investment for our clients.
Any finance director should be made aware of the following options:
Enhanced Capital allowance – The ECA scheme means that a business can invest in energy-saving plant or machinery that might otherwise be too expensive. The first-year allowances let businesses set 100% of the cost of the assets against taxable profits in a single tax year.
Domestic RHI – The Domestic Renewable Heat Incentive (RHI) is a government scheme intended for domestic applications
Non-Domestic RHI – The Non-Domestic Renewable Heat Incentive (RHI), also known as the Commercial RHI, deals mainly with commercial applications or ‘district’ heating schemes
Grants – A grant is a quantity of money for financial assistance that can be offered by the government, organisation, or person for a specific purpose. Unlike a loan, you do not have to pay back the money.
ECO Funding – The Energy Company Obligation (ECO) places legal obligations on the larger energy suppliers to deliver energy efficiency measures to domestic energy users. The amount of ECO funding awarded depends on the amount of lifetime savings per technology.
Alternative Funding Option
Utility contract – Revised utility rates incorporating a funding agreement of assets over a period of between 1-5 years, providing long term security against price increases whilst allowing implementation of energy saving measures.
Power Purchase Agreement (PPA)- this is specific funding which allows companies to install sustainable energy solutions with no up-front costs and with the added benefit of having the system fully maintained.
Private investment (Able to Buy) in which clients fund their own energy efficient solutions, allowing them to benefit from significant savings in energy costs.
Asset finance (Pay as you Save) whereby the technology is funded via asset finance, or commercial loans. With this option, the savings generated by the system pay off the initial outlay, typically within 5-7 years which may be assisted by government incentives.