Answers to Key Questions on ENGIE’s New Financing Program for Efficiency Projects
Nearly 200 people registered to attend the recent national webinar on ENGIE Advantage – the new financing program of ENGIE Resources designed to support the energy efficiency measures of large commercial and industrial customers. The event gave an insightful explanation of the solution, which offers an attractive financing option to companies that might not have capital immediately available for efficiency projects.
ENGIE Advantage delivers an easy, seamless way for energy users to fund energy reduction strategies through existing retail supply agreements. It integrates the electricity supply and billing expertise of ENGIE Resources with the comprehensive capabilities of energy services contractors.
Key features of ENGIE Advantage, which is available to all qualified commercial and industrial customers of ENGIE Resources, include:
- Opportunity to improve bottom line performance and achieve sustainability goals while offsetting the required capital investment – no upfront capital or deposit necessary
- Financing for efficiency projects of any size and scale with payback periods of up to seven years
- Ability to finance multiple projects and sites through a single payment plan
- Project financing invoiced on monthly electricity bills, making payments clear and predictable
- Contract addendum available to add financing to current electricity agreements, with no waiting until the contract ends for upgrades to begin
- A wide range of turnkey energy services, including conservation, cogeneration (combined heat and power), and water efficiency projects
- Expertise in utility incentives, tax benefits, and applicable grant funding
General Program Questions
What is the minimum financing contract ENGIE will accept through the program?
In general, project investments have ranged from $500,000 to $1 million. However, there is no qualifying minimum/maximum investment at this time.
How many mils are added to the supply price for financing?
Financing is not integrated into the supply price. Instead, it is clearly labeled as a separate line item on the bill.
How do you ensure that net monthly savings from usage reductions offset the monthly ENGIE Advantage charge? Are you able to guarantee savings during the months when the customer is paying the ENGIE Advantage charge?
The estimated reduction in usage and resulting savings come from an engineering and economic analysis, which serves as the basis of any adjustments to the energy supply agreement. Once that analysis is conducted, the customer reviews those calculations as well as the project cash flow and financing before making an investment decision. At that time, a mutually acceptable plan is put in place and carried out as construction is completed.
If a customer is currently under contract with another supplier, will ENGIE enter into an agreement with that customer today to finance a future project when they are able to become a customer of ENGIE Resources? For example, if I have a client who is under contract with another supplier until June 2021, would ENGIE be willing to enter into an agreement with them today to begin financing of a project that would start in July 2021, when ENGIE can begin supplying their electricity?
Currently, we are financing future project activity beginning within one year or sooner. For this particular example, which falls within that time frame of a year, we would begin developing the efficiency plan and executing the project. The new supply agreement in July 2021 would be executed in coordination with that effort.
If a customer’s contract with ENGIE Resources is for two years, but their agreement through ENGIE Advantage is for three years, does their energy rate change after the two years of the supply agreement have passed?
For customers entering an ENGIE Advantage agreement, ENGIE Resources would work to extend their existing supply contract so that it is within the same efficiency project and financing time frame. And, yes, the rate may change in the agreement that extends an existing contract.
How are rates negotiated in supply agreements when those agreements are extended to support financings through ENGIE Advantage?
Of course, pricing levels are subject to change with any new supply agreement, including those serving to extend a contract. However, it is possible that even at a higher rate, energy costs could decrease as consumption levels are reduced and charges drop.
Is it possible for a project in a regulated market to be bundled into a supply contract in a deregulated market?
What is the impact on the supply contract if the energy savings reach a level that is outside of the swing ban?
New and extended supply agreements associated with energy efficiency projects include a revised load analysis. If there are significant changes in bandwidth, a mutual amendment may be made to the supply contract.
What is the accounting treatment of ENGIE Advantage financings?
From a strategic view, ENGIE Advantage budgets monthly expenses very directly. Potential interest and depreciation deductions are dependent on the accounting practices of the customer’s financial advisor.
Do you guarantee 100 percent of the savings?
The estimated reduction in usage and savings is based on an engineering and economic analysis and is an approximation.
Do energy service contractors take a percentage of the utility rebates?
No, contractors do not take a percentage of the utility rebates. Contractors act on customers’ behalf via the assignment of incentive(s), but as part of the economic analysis, Contractors incorporate all available utility subsidies to deliver the best possible solution to the customer, and lowest possible project cost.