What went on at EMEX?
The real buzz were questions on many visitors’ lips – Could 2015 be the year that the energy efficiency market changes? Could finance for energy efficient projects be securitised to reduce financing costs dramatically? Could the volume of transactions reach the point where it’s a recognised asset class in its own right?
Certainly excitement and momentum is building from the property sector. The Investor Confidence Project has started to work with interested parties including European financial institutions, project managers and other stakeholders to develop industry standardisation to reduce transaction costs.
However, even though the UK and European markets have a very long way to go to reach the maturity of the US market, significant deals are being done. These include investors funding CHP, LED lighting, biomass boilers etc. All the aforementioned will have an immediate positive impact on cashflow and can be currently financed through service contracts which don’t appear on your balance sheet. Unlike operating leases where with proposed changes to accountancy standards this is likely to change.
Other changes I heard people at Emex discussing were how commercial buildings efficiency is becoming a concern of tenants. It’s rumoured that energy performance has been one of the reasons why the Lloyd’s insurance market could move out of the iconic ‘inside-out building’. Property experts believe Ping Ang the owners of the iconic Grade I listed building could struggle to find another tenant for the London landmark with Lloyd’s believed to be considering moving to the ‘Gotham City’ skyscraper on 40 Leadenhall Street, which received planning permission recently.
These developments might further increase the importance of ESOS surveys, not just at the management but at board level and become a key concern of shareholders who have invested in commercial property.
ESOS can be a catalyst enabling you to attract the external financing that often is essential to developing substantial change to your estate, with an immediate positive impact on cash flow. A shortage of assessors and no capital investment, however, is delaying ESOS surveys and this could be detrimental.
ESOS and Potential Opportunities
The Energy Services Opportunity Scheme (ESOS) has been recently introduced into statute. Compliance will be mandatory for over 7,000 business within the UK. Due to the volume of organisations that will have to comply with the legislation early adoption is expedient, due to the limited number of organizations that can produce the surveys and the volume of work.
Recently saw the first full week that surveys could be completed. ESOS offers an opportunity to implement demonstrable energy savings and importantly reduce operating costs, increase profitability if the potential of ESOS surveys are maximised.
B&W have been working with financial institutions, suppliers and manufactures to produce a tailored package of energy saving measures that reduce operating costs, have a positive impact on cash flow and if needed can be financed by our finance partners.