Operators looking to create a renewables infrastructure have several options available to support the development and implementation of green energy projects.
Investing in hydrogen, gas and electric trucks carries many benefits over traditional diesel or gasoline powered vehicles. Business premises can also consider green energy projects, with solar panels, LED lighting, heat pumps and charging points becoming more popular as the move to zero emissions gathers momentum.
There are many benefits to businesses, including:
1. Stable Energy Costs: Unlike conventional fossil fuels, renewable energy sources aren’t subject to price volatility associated with geopolitical tensions or fluctuating global oil prices. This stability provides businesses with more predictable and manageable energy costs.
2. Tax Incentives and Credits: The government offers tax incentives, grants, and credits to businesses that invest in renewable energy technologies. These financial incentives can significantly offset the initial costs of adopting renewable energy solutions. For example, under current tax policy, any renewable energy acquisitions attract a 100% first year corporation tax write off. An asset costing £200,000 could result in a tax saving of £50,000 (based on the current main Corporation Tax rate of 25%).
3. Positive Environmental Impact: Using renewable energy helps reduce greenhouse gas emissions and dependence on fossil fuels, thus contributing to mitigating climate change and promoting environmental sustainability. Businesses can demonstrate their commitment to corporate social responsibility and sustainable practices. We’ve seen businesses win more orders due to these credentials. Some of our haulage clients have been approached by their clients asking them to adopt to their principals or risk losing the business.
4. Community Support: Businesses that invest in renewable energy can gain support and appreciation from the local community. Projects that benefit the environment and the community can enhance the company’s relationships with stakeholders.
5. Long-Term Sustainability: Renewable energy sources are inherently sustainable since they rely on naturally replenished resources. Businesses that use renewable energy can plan for a more stable and sustainable future with reduced reliance on finite fossil fuels.
There is much to think about for business owners, and they should carefully evaluate the terms, potential savings, payback periods and overall return on investment.
One of the most effective ways to finance these projects is through asset finance, providing operators with benefits such as:
- Preservation of Working Capital: Asset finance allows businesses to preserve their working capital by spreading the cost of purchasing hydrogen, gas and electric vehicles over time. Instead of making a large upfront payment, businesses can make regular payments, helping to maintain cash flow for other essential operations. Solar, LED, heat pumps and charging points can also be financed through asset finance.
- Access to State-of-the-Art Technology: These vehicles, especially in the commercial transportation sector, often come with advanced technology and features. Asset finance allows businesses to access the latest models without requiring a substantial upfront investment, ensuring they stay competitive and up-to-date with industry trends. The benefit of LED, heat pumps and solar is made over time so paying monthly matches savings against investment.
- Fixed Payments: Asset finance typically involves fixed monthly payments, which makes budgeting and financial planning more predictable. Businesses can better manage their expenses and avoid unexpected fluctuations in acquisition costs.
- Tax Benefits: Asset finance can also provide tax benefits. Businesses may be able to claim tax deductions for the interest paid on the financing, reducing their overall tax liability. Currently 100% first year tax allowances are available which is an attractive incentive.
- Early Access to Low Emissions Vehicles: As these vehicles become more popular, demand may outstrip supply, leading to waiting lists or delayed availability. Asset finance can help businesses secure these vehicles promptly, allowing them to benefit from reduced operating costs and environmental advantages sooner.
- Flexible Financing Options: Asset finance providers often offer various financing options, including lease agreements, hire purchase, and operating leases. This flexibility allows businesses to choose the financing option that best aligns with their financial needs and operational requirements.
Investment in new technology can be expensive as can be seen by the cost of low emission vehicles compared to their fossil fuel powered equivalents.
There’s also added complications as lenders look to lend against new technology – they don’t fully understand the technology yet and in the case of vehicles have no experience with the future residual values of these assets. In the short term this may impact with lenders looking for higher deposits and lower balloon payments. We’ve managed to combat this by using Government schemes like the Recovery Loan Scheme that protects the lender and allows them to be more adventurous in their lending criteria.
PMD Business Finance is aware of the challenges that face the haulage and transportation sector. With access to a huge panel of lenders, we can provide the right solution for businesses re-evaluating their fleet and assets for a more sustainable future.
To find out more about how we can support green energy projects, get in touch with us today.