Renewables Finance

Renewable energy equipment can be expensive, but there are ways of spreading the cost

With a government pledge to reduce carbon emissions, many businesses are now looking into ways of reducing their carbon footprint. Purchasing renewable energy equipment can be costly, however, there are options for you to spread this cost over time, making such a project much more affordable.

When it comes to renewables finance, there is not a one size fits all option. Depending on what you are looking to purchase, how much this will cost, and also your company’s ability to repay, will determine which option is most appropriate. The most popular ways of purchasing renewables equipment are:

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• Hire purchase – This allows you to purchase the equipment you need now, while spreading the cost over a set period of time. At the end of the agreed term, you have the option to purchase the asset outright, which is particularly beneficial if the piece of machinery or equipment has a solid resale value. As you will be classed as the owner of the item in question, you may be able to claim capital allowance, and you will also be able to offset the interest and associated fees against your pre-tax profits.
• Lease agreement – Unlike with a hire purchase agreement, with a finance lease you will not be classed as the owner of the asset. Instead you will pay rent for the sole use of the chosen piece of equipment, and after the lease period has expired, you can then choose to continue to use the equipment buy entering into another agreement, exchange the asset for a newer version, or return the asset to the company and end the agreement completely.