ZEN Energy is proud to be involved in one of the first Business Upgrade Finance (BUF) projects in South Australia, providing ZEN Energy client YourDC with a 199kW solar energy solution that is cashflow positive from day one.
YourDC, a data centre in the northern Adelaide suburb of Edinburgh, is installing a 199kW solar array from ZEN Energy to generate 290-megawatt hours (MWhs) of clean renewable energy per year. The solution comprises 675 solar panels across the roof of the building, managed by 6 Fronius inverters.
ZEN Energy’s solar solution for YourDC is forecast to deliver electricity to the property at an effective cost of just over 4c per kWh over the life of the system, equating to a rate that is less than 25% of the site’s current grid electricity tariffs.
“This upgrade is cash flow positive from day one, it was an absolute no-brainer for us. Data centres are one of the highest consumers of power per square metre and sustainability is very important to us. This programme means that when the sun is shining our customers’ computers are running on solar.”
Scott Hicks, CEO, YourDC.
ZEN’s solution will also reduce the building’s greenhouse gas emissions by 3,728 tonnes over the life of the system, equivalent to taking more than 800 cars off the road.
What is BUF?
Building Upgrade Finance, or BUF for short, aims to benefit commercial building owners and tenants by removing common market barriers for environmental and heritage building upgrades, such as upfront capital expenditure, payback length, and cash flow management.
Eureka Environmental Upgrade Finance financed this first Building Upgrade Agreement in South Australia with YourDC in union with the City of Salisbury Council.
BUF is an agreement between a commercial building owner, the Council and a financer such as Eureka EUF. The financier provides long-term fixed rate finance to the building owner for approved environmental and heritage works which allows the building owner to offset the savings generated from the upgrades against the cost of the works. The Council has an administrative role collecting the charge via its rates process.
This enables owners to bring forward works that will significantly reduce the energy, water and waste usage of their buildings and to install power generation and battery storage to further manage and fix energy costs. This simple financing program spreads out the cost typically over a ten-year period, allowing the owner to use the utilities savings to repay the fixed rate loan. This removes the payback, cash flow and capital availability barriers for building owners.
“Building Upgrade Agreements help break down the financing barriers faced by commercial property owners and have already demonstrated their success in New South Wales and Victoria.”
Ian Learmonth, CEO, Clean Energy Finance Corporation.
Data centres are just one of the eligible commercial building types in addition to other sectors including industrial, manufacturing, agriculture, retail, hotels, and offices.
The legislation is State based so, with no financial risk to themselves, any Council can opt in to the program to encourage economic activity and improved sustainability credentials to meet their targets.
Before the availability of BUF, when a building owner upgraded a building it was usually the tenant that benefited from the reduced energy bills creating a split incentive. The BUF legislation changes this by allowing these savings to be recovered through the outgoings of the building provided that the tenant is in a no worse off position. If enough savings are produced, this mechanism could cover 100% of the cost of the upgrade including the finance costs. Tenants are also encouraging owners to improve their buildings using this mechanism rather than waiting for impending leases to expire, creating greater opportunities for tenant engagement and retention.
The key properties of BUF and other finance options for ZEN Energy solutions can also be read here on our website.
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