Key
attributes of an effective lease-financing strategy include:
Low-Overall Cost – takes
into account both the cost of capital and the cost to procure
it; both of which affect the rate at which the cost of an
energy project is recovered through the savings generated
by decreases in energy expenditures.
Close Alignment of the Source
and Use of Funds – matches
the maturity of the financing vehicle utilized to the project’s
payback period which permits the lease obligation to be repaid
within the useful life of the asset, and facilitates concise
measurements of both a project’s cost-effectiveness
and the rate of return achieved.
Lessens Financial Exposure to
Unplanned Events – helps
to minimize the impact of common risk events which can negatively
impact the economics of large scale energy projects, by directing
capital expenditures through a centralized disbursement vehicle
which helps to preserve financial flexibility while affording
greater control of a project’s budget.
Ease of Access – conforms or adapts
to existing procurement methodology, requiring only intra-organization
authority to procure the needed capital; can be consummated
in less time and with fewer resources than conventional financing
methods; and minimizes the tasks associated with the ongoing
administration of the capitalization aspect of a project.
Enhanced
Project Management – keeps
operating costs at manageable levels via a predictable, periodic
payment structure that minimizes or defers a project’s
initial payment obligations until: (a) sufficient energy-cost
savings are realized; or (b) in the case of income producing
energy projects, sufficient revenue is built up.
Negligible
Impact on Debt Levels – allows
for multi-year budgeting without creating a multi-year obligation
by relegating the periodic payment obligations to the current
year’s budget, regardless of the term of the lease-financing
contract. |
