ISS also has the capability to operate as an ESCo. We can offer energy saving contracts such as guaranteed and shared savings, where we effectively lease an energy efficiency project to our longer term customers.
This means that there are no upfront requirements for CAPEX. The assets can be paid for gradually out of the OPEX budget, but with an energy project, usually the savings will be more than the repayment cost resulting in revenue for the customer.
ISS would undertake an energy survey and assess the savings associated with a project. We then calculate the term and repayments necessary such that the monthly benefits outweigh the monthly costs of the scheduled repayments, ensuring a positive cash flow. Hence, our customer receives an income immediately. They pay gradually in instalments, retaining liquidity in their organisation and enabling them to undertake additional projects because they’ve spread their costs. At the end of the term, once ISS Technical Services have been repaid – the title of the equipment is passed to the customer and all the savings going forward belong to them.
In the UK there are also tax advantages in that the client receives 100% tax allowances on each lease repayment. So each payment can be offset against corporation tax (typically 25%, so generates 25% savings on each payment). Additionally, with a lease, the assets don’t depreciate on the client’s balance sheet. Hence, leasing can be a more cost efficient way of acquiring equipment.