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Financing Programme for Energy Efficiency Projects

Objective


Overview
Under the current economic climate, it may be difficult to allocate capital for energy efficiency projects due to competing uses of capital. The Singapore Economic Development Board (EDB) is piloting the Energy Efficiency Financing Programme whereby a third-party financier provides companies with upfront capital to implement energy efficiency projects, and the energy savings are shared between the various stakeholders. This programme aims to encourage owners and operators of existing industrial and manufacturing facilities to implement projects in energy efficient equipment or technologies.

The potential benefits of the programme include an off-balance sheet solution, where no investment is required on the part of the companies, but still allows companies to enjoy part of the energy savings. The financing provided can potentially cover equipment, labour, installation costs, as well as the cost of measurement and verification of the energy savings resulting from energy-efficiency projects implemented.

Partner Information
The Singapore Economic Development Board (EDB) has selected Sustainable Development Capital (Asia) Limited (SDCL Asia) to administer the programme. More information on SDCL Asia's Programme can be found below.

Enquiries
For enquiries, please contact:

1. Mr. Joash Seng (EDB)
    [email protected]
    DID: 6832 6443

SDCL's Asia Programme


Who is SDCL?
Sustainable Development Capital LLP (SDCL) is a multi-disciplinary financial and investment advisory firm, specialising on financing for environmental and social infrastructure assets and services. Founded in 2007, it has offices in London, Dublin, Hong Kong, Singapore and New York. It has advised on the creation of several infrastructure and private equity investment vehicles and funds. It focuses on initiatives that provide long-term value, increased efficiency and superior risk-adjusted returns through scalable business models that positively impact the environment and society.

SDCL’s professionals are drawn from a variety of backgrounds including finance, engineering, environmental markets and law. Together they identify the challenges and opportunities in sustainable investing and design innovative solutions through a blend of skills. This vision has created a unique working culture through a shared enthusiasm for making a difference. SDCL is a member of the United Nations Environment Programme Finance Initiative and is authorised and regulated in the UK by the Financial Conduct Authority.

SDCL Asia signed an agreement with EDB to establish the Energy Efficiency Financing Pilot Programme of up to SGD 200m for the industrial and manufacturing sector in Singapore.

Benefits of working with SDCL

SDCL Asia is a one-stop solution provider which aims to bring together capital and technology to develop and implement turnkey solutions that enable companies to reduce their energy consumption and operating costs while meeting sustainability goals. These are the key benefits to companies:


  • No upfront investment for the Host:
    • SDCL Asia can provide up to 100% upfront capital investment to finance the project.
  • Enduring Operating Cost Savings:
    • Energy cost reductions represent a compelling and immediately addressable opportunity to reduce operating costs for companies.
  • Asset Upgrade and Value Uplift:
    • Energy efficiency projects can result in new systems being installed, reduced maintenance and breakdown costs and improvements in operating standards and asset values.
  • Carbon Emissions Reductions:
    • Compliance with building regulations and contribution to sustainability and corporate social responsibility agenda.
  • Highest Performance Standards:
    • SDCL Asia only works with best-in-class energy services providers, with equipment and technology that is commercially proven and with warranties and guarantees as to the performance of contractors and suppliers.
  • Savings Cover the Investment Cost:
    • Where expected financial savings are greater that the costs, the investment returns can be based on a share of actual measured and verified savings achieved.
  • Risk Transfer:
    • Service payment only starts when the equipment is fully installed and commissioned. As a result, the Host transfers all the procurement and construction risks to SDCL Asia.
  • Flexible Service Payment:
    • SDCL Asia offers a number of flexible options for the service payment. These include shared savings, progressive payment, buy-out clause etc. SDCL Asia aims to tailor the service payment that suits the Host’s business requirements.
  • Collateral or Guarantee Requirement:
    • Subject to a credit risk assessment, SDCL Asia aims to provide the funding for the project without any collateral or corporate/directors guarantee from the Host.

Assistance provided by SDCL Asia

  • SDCL Asia will provide up to 100% upfront capital investment to finance the project. This includes:
    • Equipment
    • Labour
    • Installation
    • Annual operating cost (if required)
    • Regular measurement and verification costs (if required)
    • All three levels of Energy Assessment cost (if required)

Eligibility Criteria required by SDCL Asia

  • Company:
    • Must be a Singapore-registered owner or operator of an industrial facility in the manufacturing sector in Singapore.
  • Project:
    • Must involve installation and use of energy efficient equipment or technologies with a proven track record of energy savings in an industrial facility.
    • Must result in measurable and verifiable energy savings.
  • Investment Criteria:
    • Sector: industrial or manufacturing sector
    • Project size: SGD 0.5 – 40 million (projects of smaller values can be considered on a case-by-case basis)
    • Simple payback period: less than 7 years (projects with simple payback beyond 7 years can be considered on a case-by-case basis)

Ownership of the Asset


SDCL Asia will own the asset during the contract period. The asset will be transferred to the Host at the end of the contract period for a token value.

How SDCL Asia's financing model differs from a typical loan (i.e. debt financing)

SDCL Asia offers a competitive and flexible rate to the Host. Our business model is based on ‘project life cycle’ costs, where funding is provided for projects that have the shortest payback and meet the Host’s requirement (e.g. space available on-site) rather than selecting the lowest initial capital investment.

Unlike a typical loan where the Host will take on all the implementation risks, and where repayment starts as soon as the loan is drawn down to pay for the equipment, SDCL Asia assists the Host in project development together with customised payment plans such that service payment only starts after the completion of installation and commission of the project.

Finally, at the request of the Host, SDCL Asia will work with the Host’s auditor to seek an off-balance sheet treatment.

Measurement and Verification


A key component to sustaining energy efficiency savings is to ensure adequate measurement and verification (M&V) protocols are in place prior to installation and applied thereafter in accordance with agreed protocols to measure the savings. SDCL Asia will ensure that these measurement and verification protocols and related savings calculation methodologies are transparent and follow sound engineering practices that are clearly articulated in the contract as the basis for the Hosts to make their payment to SDCL Asia. Each project will be subject to on-going M&V performed by the energy services company (ESCO) or a third party accredited provider.

Case Study

Find out more about the case study here (PDF file, 2,075KB).

Contact SDCL Asia


Please click here (PDF file, 994KB) for more information.

For application and enquiries, please contact:

1. Peter Lau, Director
[email protected]
Tel: +65 8232 2753

2. Kim Dek Yeo, Business Development Manager
[email protected]
Tel: +65 8231 7160

 
 
Last Updated on : 21 December 2017
© 2012 National Environment Agency