This guide will inform you about the advantages and disadvantages of funding for small scale CHP units
This infographic introduces the funding options for small scale CHP units and will offer guidance to help choose the most appropriate source of finance.
A good choice of funding option may affect the overall installation economics, particularly influencing the payback period.
In many cases, the choice of funding option will be driven by the state of the organisation's balance sheet and the tax position.
Money matters – but where could it be sourced from ?
Organisation's own resources
- Greater control and flexibility of operation
- Potentially attractive tax treatment
- Need to commit resources which might be better employed on alternative investments
Access to capital
Organisations have a further choice under this option of whether to use cash held internally (where available) or make use of debt, either from a traditional bank or a newer 'peer-to-peer' lending source
Partner or contractual counterparty's resources
- No need to commit own resources
- Predictable flow of costs, energy savings and carbon emissions savings for term of contract
- May be less flexible in situations where the business/energy strategy is liable to change in future
Make sure that your organisation's choice of CHP scheme in terms of
- Funding type
is consistent with underlying business and energy strategy.