Energy Services Agreement for business
An Energy Services Agreement (ESA) is where an energy services company (ESCO) project manages the installation of energy efficient equipment for a business. In some cases, they can guarantee savings from the equipment.
The business pays monthly instalments to the energy services company or a bank, to pay off the equipment over the agreement period.
Suitable for businesses that:
- have high energy related costs
- own or have a long-term tenancy of their site
- are considering numerous energy-saving projects
- want to outsource the design, implementation and verification of the energy savings.
Details
Project size: More than $100,000
You own the equipment
The service provider maintains the equipment for the first 12 months
Contract length
- 4–15-year contract
- 3–9-month agreement period
You can claim tax on equipment depreciation
On the balance sheet
Additional benefits
- No upfront capital or security is possible
- Depending on your contract the service provider could guarantee savings
- The service provider will manage the project
- Savings often exceed the loan repayments
How to apply: Contact an energy service company (ESCO) or contact us.
How it works
- Find an energy service company (ESCO).
- The energy company gets funding from a bank or financier, who pays for your energy efficiency upgrade.
- You make monthly payments to the energy company or the financier.
- If you don’t get the savings you were expecting, the energy company will pay the shortfall.
- At the end of the agreement, you’ll own the equipment.
Your business’ creditworthiness may have an impact on finance availability and rates offered.
We advise you to always seek advice from your accountant and legal representative when entering financial agreements.
Get a discount for your energy saving project
The Victorian Government offers businesses a discount on energy saving products that are installed by accredited Victorian Energy Upgrade providers. Check which energy saving products are registered for a discount.
The Clean Energy Finance Corporation is currently facilitating discounted financing for energy efficiency and renewable energy equipment upgrades through some of the major banks and financiers.
We advise you to always seek advice from your accountant and legal representative when entering financial agreements.
Visit the Victorian Energy Saver for a list of simple tips to save energy in your business.
Want to know more? Get in touch with:
Sustainability Victoria's finance team who can help you through this process.
Correct as at November 2019
Disclaimer: The information provided in this document is general advice only. It does not take into account your particular needs or objectives and does not constitute legal or accounting advice. Accordingly, any comments or statements made are not a recommendation that a particular course of action is suitable for you and you need to seek your own legal, tax and accounting advice in relation to your specific circumstances.