Financing

Every business owner faces “build it” or “buy it” decisions. Several variables factor into these decisions, including: the relative cost-benefit of owning, leasing or outsourcing; technology challenges or risks; compatibility with core areas of expertise, etc. Too often business owners wind up making decisions because they are not aware of the alternatives or they feel trapped and under the gun to make a decision.

Everyone recognizes the benefits of outsourcing:

  • Avoidance of capital investment;
  • Access to broader and deeper technical expertise;
  • Ability to leverage buying power; and
  • Maintenance of core business focus.

So even if you can find a reliable outsourcing partner , one that will have your interests at heart on a 24 by 7 basis, the question still remains, where will the money come from?

Most manufacturers have a simple payback expectation of two to three years, implying compounded expected internal rates of returns (IRR’s) of 33 to 50% (nominally). The end result is often a capital constrained environment where viable projects cannot be financed with internal means.

Following the steps of its project screening process , IEA can help develop your project so that it can withstand the rigors of external financing. Once these hurdles are cleared, IEA can arrange for the necessary equity and debt resources to finance your project, typically with return expectations below those cited above.

In circumstances where IEA owns the assets, those assets along with operating costs are rolled into a single fee (i.e., service agreement) that hits the expense line on the income statement and the capital or operating lease issues with resulting balance sheet impact are avoided.

If your business already owns energy related infrastructure there are two options to consider:

  • Sell the assets to IEA and enter into a service arrangement (described above) while freeing up cash for capital investment within the core business or
  • Continue ownership, but have IEA provide asset management services to operate and maintain the assets for you.

Contact one of our experts at IEA to discuss the benefits of a service or outsourcing arrangement for your energy project.

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