Project Financing Cheat Sheet

What projects can be financed?

Most types of energy projects can be nanced, from $10,000 lighting projects to multi-million dollar deep retrots. Both efciency and generation (e.g. wind, solar) projects are eligible for nancing. Projects can be single measures or bundled together by measures and/or facilities.

What is financing?

Financing (sometimes referred to as 3rd party nancing) is a way to fund your energy projects, if there is not budget or available cash to self-fund the project. The good news is that there are more nancing options than ever before; the bad news is that nding 3rd party nancing can be difcult and time-consuming. And, explaining nancing options to project decision makers (such as CFOs) can be challenging for energy and facility professionals.

What are the main ways to finance?

Commercial loan
Sometimes called traditional debt commercial loans are non-energy-specic lines of credit extended to the business. More like a loan than a lease, capital leases have xed terms and monthly payments with $0 down. While there is a buyout at the end, its usually a nominal amount, like $1. Many lease providers let soft costs (engineering, etc.) be funded through the lease. Tax-exempt alternative to cash purchase or municipal bond available to municipal/government entities. More of a traditional lease structure with xed payments, minimal/no upfront costs and end-of-lease purchase, return or re-lease options. Preferred by some because payments can be made from operating budget which can remain off-balnce sheet (vs. capital budget). Relatively new nancing vehicle where the funds are secured through a property tax lien on the building. Payments are made through property taxes. Lien stays with the building when/if building ownership changes that is, building is guarantor, not the building owner. Ideal for deep retrots on buildings where building owners may not have access to commercial loans or other nancing Only available in regions with active PACE programs. Financing solutions where energy efciency is outsourced to 3rd party where 3rd party owns and maintains efciency equipment (like a chiller). Building owner agrees to pay 3rd party based on realized energy savings. ESAs are used by ESCOs, an option popular in the public sector Similar to an ESA, a PPA provider owns and maintains generation equipment (such as solar panels) and the building owner agrees to purchase energy from the PPA provider at an agreed rate (typically below market rates.)

Capital lease

Municipal lease

Operating lease

PACE (Property Assessed Clean Energy

ESA/MESA (Energy Service Agreements / Managed Energy Service Agreements) PPA (Power Purchase Agreement)

How does it work?

Similar to securing nancing for big purchases like homes, you have to prepare your application and nd the right lender and nancing vehicle. (Most lenders specialize in one of the listed options above.) What types of information do they need? Examples include: 12 months of utility data to establish baseline Project data (detailed scope, costs) Project benchmarks Company nancial information Cash ow model & other nancial analysis

Need help?
Dont have time or background in nance to apply for nancing? Noesis can help. Noesis project specialists can be your project back ofce and work with you to get the nancing thats right for you. Email nance@noesis.com or call 512.684.8446 x130 for more information

Project Financing Cheat Sheet

Energy Efficiency (HVAC, lights, etc.) Distributed Generation (solar, wind, etc.)
Capital Lease (Options listed above) + Operating Lease (Options listed above) + PPA + PACE

General Guidelines for Selecting the best Vehicle for your Project

< $100K

Capital Lease (Options listed above) + Operating Lease (Options listed above) + ESA / MESA + PACE

$100K-$500K > $500K Do you have PACE in your region? Are you a municipal / government entity?

+ Municipal Lease

+ Municipal Lease

Whats the difference?

Off balance sheet means that the project asset and liability are not listed on the companys balance sheet, such as an operating lease where payments are made from the operating budget and the equipment is effectively rented, not owned by the building owner. For some building owners/CFOs, this is important for various reasons (such as affecting lending ratios). Its not important that you understand why someone prefers on-balance sheet versus off-balance sheet; its only important that you understand which nancing options fall into which category. Project asset and liability must be listed on the companys balance sheet when using on-balance sheet nancing. For example, a loan to purchase equipment would be a liability (the loan obligation) and the asset (the equipment) are added to the balance sheet. Many building owners/CFOs will have a preference; you should know what that is so you can bring suitable options to the table.

Off-balance sheet

On-balance sheet

No reason to go it alone - Noesis Pro Project Services is here to help.

Do you know the two primary reasons energy projects dont get funded? No available funds / not budgeted Lack of condence in savings estimates Noesis Pro Project Services helps you overcome those two roadblocks and get more projects approved and funded. How? Our project specialists work with you to deliver: Independent, standards-based verication of all energy and nancial baselines & forecast 3rd party nancing options that are right for your project Any assistance you need to help pitch your projects Want more info? Call 512.684.8446 x130 or email nance@noesis.com to get connected to a Noesis project specialist and discuss your project(s).