|Exploring different models used to finance EPC Projects
EES provider is company that provides wide variety of services and works regarding energy efficiency. As part of larger business group, EES provider coordinates other companies under business group to deliver integrated energy efficiency services to their clients. This includes companies that manufacture electronic equipment and develop custom made software solutions.
In the last few years EES provider mostly provided engineering services and provision of works in energy efficiency to its clients but with new acquisitions made by business group focus spread to EPC projects as well.
EES provider was interested in exploring different models that can be used to finance EPC projects oppose to traditional loans. They wanted to have different financial solutions for project realisation so they could be flexible and best fit the needs of their clients. From non-recourse project finance, leasing solutions, standard loans to potential refinancing options.
REGEA approached EES provider with offer to help them find and explore different finance solutions. Trough series of meetings between REGEA representative and representative of EES provider and discussions on different financial models that would be of interest to EES provider and their clients, a model of operating leasing of integrated solar plants emerged as being something that could be attractive to potential clients. This was something that REGEA has helped financial institutions to identify as a financial product that could be needed on EES market in Croatia. REGEA has acted as an intermediary and matchmaker in this case and has helped EES provider to organise meeting with high level management of Financial institution to explore potential for future cooperation.
EES provider and Financial institution held business meetings regarding possible cooperation and have agreed that there is potential and will for further cooperation and that they will test attractiveness of this models on some pilot case in future.
Models for financing and refinancing EES projects based on different types of leases have emerged as potential alternative refinancing solutions. As PV plants are assets that can be object of lease these models can be applicable in some cases where client is willing to implement instalment of integral PV plants but would like for that to be financed by third party in order to record these investments as operating costs. In such cases where client would like to protect itself from fluctuations of price for electric energy by paying fixed price during longer time period (fixed price for energy delivered by PV plant up to 10 years that corresponds to lease payment) trough EPC/PPA type of contract, operating lease can provide a model that enables EES providers to finance this operation either by leasing PV plant from leasing company or by providing operating and maintenance services to client/leasing company in cases where client enters lease agreement with leasing company.
Refinancing concept and tools developed under REFINE are useful for certain type of EES projects but as market evolves and new contractual agreements come in to play there are other alternative financing and refinancing concepts that emerge. In future, there should be interest in developing alternative financing and refinancing concepts that could help further uptake of EES projects.
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