With the fall out of the Hayne Royal Commission, it is easy to poke fun at bankers in an era where finance brokers are increasing their market share (> 17.5% of all equipment finance is completed by brokers) and funding sources are spread across a larger pool of funds.
Whilst light bulbs have never been an asset class of interest to a banker until recent times, energy efficient assets are a hot topic in the current market due to green energy subsidies that cover (but not limited to):
- commercial and industrial solar solutions including bulk energy storage
- Energy efficient assets ranging from LEDS to water pumps
- Electric cars (Tesla’s) through to electric earth moving equipment
Strong wholesale funding from CEFC (Clean Energy Finance Corp.) provides heavy discounts for main stream funders seeking to deploy capital into energy efficient assets.
All business owners are seeking replacement assets that drive greater returns over the expected useful life cycle of the assets. We have seen this first hand with clients shifting to hybrid vehicles saving 50% of fuel costs from the past 12 month expense line. Take a further 0.70% off the standard funding rate as a green asset and the savings over 5 years start to stack up.
Not every “Green Asset” makes financial sense due to the initial outlay, however technological advancement is having a massive impact on efficiency of assets like batteries, PV solar panels, electric cars and lighting. Business cases are now starting to make sense for CFO/Accountants that handle the purse strings due to decreased capital costs, greater efficiencies and shorter pay backs.
Add to that local, state and federal grants for commercial transactions and we are starting to see a change in market acceptance to green assets.
Author – Matt Corkin Head of Broker Atlas Equipment Finance