A critical part of the SESPCo model revolves around funding projects that save energy and money. At the heart of funding are Green & Ethical funders that are prepared for long term returns in order to achieve Carbon Reductions.
9d Worked with customers to deliver energy savings to larger organisations. The programme enabled companies to access capital funding for lareg energy saving projects. The funds, accessed when saving could be variefied, where paid back from savings in energy bills. 9d still introduces customers to funding partners.
More about SESPCo...
SESPCo (Shared Energy Savings Programme) is a business model that provides a solution for public and private organisations that wish to reduce energy demand and carbon emissions without the upfront capital cost, allowing your organisation to start making energy savings from day.
9D Energy's extensive knowledge and experience, coupled with established funding relationships, enable us to plan, manage and fund energy efficiency and carbon reduction schemes across the UK. Whether your project is large or small , retrofit or new build, requires insulation, heating or renewable technologies, we have a delivery and funding solution to meet your needs.
LED Lighting Refits
Air Source Heat Pumps
Ground Source Heat Pumps
Other Proven Energy Saving Devices
The hurdle for the public sector is lack of funds for capital expenditure to invest and implement energy saving programmes as the capital required for a school/ academy /college to install low carbon technologies can be in excess of £500,000.
With reduced or frozen budgets the energy saving opportunities are often identified but cannot be implemented.
Fossil Fuel prices are increasing relentlessly and so the client is caught in a vicious circle of increasing prices for energy and ageing equipment requiring expensive maintenance and repair costs.
The financial directors in the private sector, whilst recognising the benefits of energy savings, do not wish to enter into long term agreements (more than 3 years which do not achieve a return on investment (ROI) in this period). As the returns do not meet financial criteria, this leaves many managers frustrated with the inability to deliver energy efficiency schemes.
SESPCo is attractive as the business model is ‘off balance sheet’ and therefore does not increase the liabilities of the company and also provides a solution for finance directors and ‘sustainability or energy’ managers. This is a win-win for all concerned.
Whilst the initial focus is on reducing energy demand the positive result is a substantial reduction in carbon emissions on a permanent basis so benefitting the environment.
SESPCo Funding- The Solution
Through access to institutional green funds whose Fund holders are prepared to take a long-term view and receive initial investment back over a period of 10-20 years.
The advantage of SESPCo model is that it is not a financial agreement. Normally companies and the public sector are offered loans for capital expenditure in the form of asset finance, rental leases, etc. when attempting to raise funds for equipment to reduce their energy costs and carbon emissions.
SESPCo uses ‘green funds’ who retain ownership of assets.
In the case of Biomass and Solar PV recouping the cost of the investment from the RHI and Feed In Tariffs (FIT) tariffs, this model eliminates the need for any re-payments or finance agreements between the fund and the client.
The advantage for the client is that generation of energy from Solar PV is normally provided free of charge to the premises.
Savings from the conversion to Biomass from fossil fuels is 100% retained by the client.
LED technology is well established and reduces energy demand and carbon emissions by on average 65%.
These schemes result in substantial savings. Which allows repayment to the fund of its initial investment at the same time sharing the benefits from day one with the client.
In all cases the fund will be responsible for the maintenance, warranties and servicing of the equipment during the life cycle of the agreement. The client is not entering into a loan agreement and so for corporate clients this is ‘off balance sheet’.
For public sector clients there is no procurement or tendering process as the asset remains the ownership of the Special Project Vehicle (SPV – a company set up specifically to run the agreement). The client has to allow access to the equipment for the Fund for servicing, maintenance and parts replacement.
Our Funders have an investment criteria which depends on the following key factors:
• Financial credit worthiness of the client as the Fund only receives investment from long term operation of the equipment, therefore they need to feel confident that the client will be operational for at least a 10 year period.
• The minimum level of energy costs where the SESPCo funding model is feasible normally needs to be in excess of £35,000 of combined utility bills.
• The results of the surveys will determine the feasibility of the installation and which technologies to use.
• The return on investment based on capital expenditure costs will need to meet certain bench marks designated by the Fund as part of the qualification criteria.
All buildings have individual characteristics and the scale of the upgrade to the building cannot be confirmed until the survey and eligibility has been established.