Environmental Upgrade Finance (EUF) is a commercial finance product that enables a financier to lend money to a building owner to purchase energy efficiency equipment. The financier secures the loan through the council’s charge on the land and repayment are made through your council rates. EUF supports projects that result in an environmental saving and can be passed on to tenants via council rates.
EUF allows energy efficiency and renewable energy projects to be undertaken without a business requiring up-front capital or using existing business assets as security. The obligation to pay becomes a charge on the land repayable through council rates.
Realising savings now
Businesses that use EUF for their energy efficiency projects can realise immediate cash flow benefits. Energy Efficiency projects can result in higher energy savings than financing costs.
Tax and accounting
As the building owner owns the asset, you may be able to claim depreciation of the asset and the debt may be deductable at the company tax rate. For a tenant, EUF finance does not appear on your business’s balance sheet. Seek specific tax and accounting advise for your particular situation.
Where the tenant agrees to make payments it bears economic risks and the building owner bears technical risk as the owner of the equipment. If a building is sold, the EUA can be transferred to the purchaser.
Better Building Finance administer the EUF on behalf of councils – a list of councils is provided on the Better Building Finance website. Better Building Finance is owned and managed by the City of Melbourne’s Sustainable Melbourne Fund. Better Building Finance has developed a range of detailed information sheets, case studies, sample council documentation, list of financiers and contractors which understand the benefits and requirements of EUF.
Select financiers have developed EUF products which specifically targets the energy efficiency needs of manufacturers and commercial property owners. A list is available on the Better Building Finance webpage below.
Visit http://www.betterbuildingfinance.com.au for more information on available councils and lenders.
Businesses can also receive a discount on energy efficient products that are installed by accredited Victorian Energy Upgrade (VEU) providers. A list of these products and providers can be found on the ESI website.
Visit https://www.victorianenergysaver.vic.gov.au/victorian-energy-upgrades/savings-for-businesses for more information.
Correct as at January 2018.
Level 28, Urban Workshop,
50 Lonsdale Street, Melbourne VIC 3000
Phone (03) 8626 8700
Published by Sustainability Victoria.
Sustainable Finance – Environmental Upgrade Finance
© Sustainability Victoria January 2018
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.
This information is true and correct as of January 2018
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