Finance, Grants and ESCOs
Finance support for low carbon development
Financial support and grants available for low carbon development are constantly changing. Regen SW maintains a dedicated webpage on Finance here
Energy Service Companies (ESCOs)
ESCOs are essentially financial and legal vehicles for delivering centralised heat and/or electricity to a number of users. They can take many forms, and the market is a complex one, as it is in its early stages. ESCOs can actually bring revenue to projects in return for having the right to sell heat and/or power to a development. The capital contribution is dependent on a number of factors including the ESCO's business model, electricity production quantum, whether ROCs are available, and the price of any fuel streams required. It is crucial for ESCOs that appropriate commercial terms can be agreed, that reflect the level of risk that they are being asked to manage and the value that they will obtain from the project. Savings in energy costs are usually used to pay back the capital investment of the project over a five- to twenty-year period, or reinvested into the building to allow for capital upgrades.
Commercial ESCO companies are generally interested in schemes of over 300 residential units, but large heat demands from industrial units can reduce this number. Community ESCos can be of any scale but care should be taken to ensure than the ongoing maintenance and management costs are manageable. Concerns over captive market issues and monopolies created by ESCOs can be allayed through careful design of performance criteria and step-in clauses if the criteria are not met. Creating community ownership can also mitigate this issue.
Community ESCOs have wider benefits. Providing an element of community ownership and responsibility for the community's low-carbon asset can increase awareness of sustainability issues and have positive effects on wider lifestyle sustainability issues.
Below is a (not exhaustive) list of ESCO providers:
