PROJECT FINANCE

Problem:

ACME ISD in Texas wants to convert all of its campuses to LED but currently has an un-balanced M&O budget and declining fund balance, thus is not comfortable spending CAPEX to generate energy savings

Solution:

‘Project Finance’

Assumptions:

  • Acme ISD’s fully burdened electricity (“E”) costs per year = $100

  • Annual lighting costs embedded in overall “E” costs = $35

  • Reduction in “E” costs after LED conversion = $22 (63% reduction)

  • Acme ISD’s NEW fully burdened “E” costs per year = $78 ($100-22)

What Does ‘Project Finance’ Mean?

✔ Aquila brings a ‘municipal loan’ for the cost of the project

✔ 3-5% interest rate (parallels bond issuance rate)

✔ 5-year amortization

✔ No pre-payment penalty after Y1

✔ Customized payment schedule – i.e., monthly, quarterly, annually in arrears, etc.

⮞ Acme ISD uses ~70%of the energy savings to pay ‘P&I’ annually back on the loan

⮞ Project gets done and benefits reaped

⮞ We guarantee project will be ‘cash-flow positive’ – i.e., after using 80% of savings to pay ‘P&I’ there will be a balance each year for ACME ISD to enjoy

What Acme ISD must understand if they do nothing

Project gets executed and benefits reaped:

*ACME ISD is technically already paying the ‘P&I’ in their existing utility costs if they choose to do nothing by borrowing the money at ~4% it allows for:

  • A 20-year facility upgrade to take place that will require 0 maintenance in that time frame

  • $7 of existing ‘electricity costs’ to free up that can go against the unbalanced M&O budget

  • Potentially, multiple maintenance personnel vacancies now do not need to be hired

Help Us, Help You

Interested in seeing how we can unlock substantial energy savings with minimal cost of your time?
Send us an email at info@aquilaenv.com
or give us a call 817-953-3171