INVEEST: investing in low-carbon solutions through industrial leasing

  • Project newsX

29 January 2021

Industrial Leasing: what if you had the option to invest in energy efficient projects?

Leasing has been growing steadily over the past twenty years. It has become a common solution for cars and phones as well as in the construction sector. The historical reason for this success is of course the absence of equipment maintenance costs. Until recently, leasing was not positively viewed by industrialists, who are used to investing in their equipment through their own funds and amortizing it over several years.

“Our projects had always been 100% CAPEX-funded through the use of CEE,” says Jonathan Scherrer, head of new works and energy at AkzoNobel Powder Coating.

Why such a change?

There are many reasons for this: new strategy, aging equipment, reindustrialization… These reasons have led manufacturers to rethink their equipment fleet with, alas, increased budgetary constraints. In this context, leasing has stemmed as an interesting financing method.  

Concrete advantages for companies

Leasing offers a more precise control over your budget. For example, thanks to preliminary studies, you may estimate the duration of equipment rental and the monthly cost it entails, in advance. In addition, leasing positively impacts your balance sheet: monthly payments are considered as expenses whereas a purchase will appear as a debt. It is also possible to negotiate equipment maintenance in your leasing contract. This means that you will no longer have to worry about the depreciation of your equipment nor a possible failure of the system that would cause a signifiant rise in your budget.

Leasing is an ideal way to grow while limiting investment risks. But leasing is also a good way to launch your energy transition peacefully. A new and more modern equipment will always prove more energy efficient and pollute less. Renting this kind of equipment will help you reduce your energy bills as well as your carbon emissions. In addition, since leasing will positively impact your budget, you will have the opportunity to reinvest your savings in your production line. This virtuous circle will help you anticipate market and regulatory changes and remain competitive.

How to not get lost with the amount of offers available?

Leasing was not necessarily the first choice of Jonathan Scherrer:

“We were not familiar with these financing mechanisms. Training became a necessity in this context…”

Leasing can seem complicated at first sight, even tricky sometimes, especially when it comes to choosing the option that suits you best. Energy efficiency service companies (SS2E) usually offer 3 options:

  • leasing: the company uses the equipment and pays a rent in exchange. At the end of the contract period, the company can buy the equipment for a price defined in advance.
  • financial leasing: the company uses the equipment and pays a rent in exchange. However, it cannot buy the equipment at the end of the contract period.
  • operating leases: it includes a service and maintenance component, such as the subcontracting of low value-added administrative tasks (orders, invoices, etc.).

Jonathan Scherrer decided to attend the INVEEST training course to get a better understanding of the topic. He was able to build a contract that was beneficial to his company:

“We had been thinking about new energy efficiencient projects with high payback such as site relamping for several years. INVEEST’s support allowed us to define the best financing solution to launch this project”.

Follow INVEEST’s training course

Leasing allows your company to grow without  heavily investing. On the other hand, it requires an understanding of how leasing works. And that is precisely what INVEEST offers throughout its training course.

The INVEEST training course is available here.