Expert blog – January 4, 2024
StartGreen has been managing the BespaarGarant Fund since last June. Entrepreneurs who want to make their business premises more sustainable can turn to the fund for financing. Noura Hzami, Investment Analyst at Energiefonds Overijssel, explains in this blog how StartGreen contributes to the success of the BespaarGarant Fund.
Lack of financial capacity
Many entrepreneurs want to make their business premises more sustainable but lack the financial capacity and cannot obtain a bank loan. Since January 1, 2023, owners of offices of 100 square meters or more are even legally required to achieve an energy label C or lower. This means their building may use a maximum of 225 kWh per m2 per year of fossil energy. If they do not take sustainability measures, the fine can be as high as 81,000 euros. Additionally, the appraisal value of their property drops significantly with an energy label D or worse.
Other and smaller entrepreneurs also want to become more sustainable; partly because they want to contribute to the energy transition, but also to achieve lower energy bills. However, many entrepreneurs are currently working too hard to keep their heads above water; they are struggling with staff shortages and/or still have to repay NOW grants. It is quite logical that sustainability is not at the top of their priority list.
Social objective
To help these specific entrepreneurs become more sustainable, five industry organizations—VNO-NCW, MKB-Nederland, Techniek Nederland, Bouwend Nederland, and NVDE—joined forces and established the BespaarGarant Foundation. The Foundation serves a social purpose: to make as much commercial and social real estate as possible more sustainable. To remove practical and financial barriers, the foundation offers a total package: from identifying possibilities to insight into energy savings and costs. Some entrepreneurs can finance the recommended sustainability measures themselves. If not, they can turn to the BespaarGarant Fund.
Off-balance sheet financing
This fund, financed by the Ministry of the Interior and Kingdom Relations and the National Green Fund, offers so-called ‘off-balance sheet financing’. Many entrepreneurs have insufficient credit capacity for sustainability. Due to the off-balance sheet structure of this financing, they do not have to use their company’s credit capacity, but can record it as an expense on their profit and loss account. Because in practice, that is often where the bottleneck lies.
Repayment is based on the volume of energy savings the entrepreneur achieves with the sustainability measures. The energy bill decreases, and the entrepreneur uses these savings to repay the sustainability measures. After repayment, energy costs are also structurally lower.
Years of benefit
The BespaarGarant Foundation provides the savings service; the owner of the sustainable business pays back per saved kilowatt-hour and can deduct the investment from taxes. Not every company can save the same amount, but in fact, every entrepreneur can qualify for this. For example, we are currently working on an application for a dry cleaner and see that it can certainly pay off for small entrepreneurs. By combining solar panels on the roof with an indoor battery, this entrepreneur aims to minimize the gas consumption of the washing machines.
Currently, many entrepreneurs are still leaving money on the table because they are unaware of the long-term benefits. Sustainability measures lead to lower energy costs. So even after you have recouped your investment, you will continue to benefit from those measures for years. However, entrepreneurs often do not look further than two or three years ahead, while the economic lifespan of savings measures can sometimes be up to 30 years. The industry associations behind the BespaarGarant Foundation actively communicate this to their members. And in turn, we share the story at all forums where we are present.
Perfectly suited
To manage the fund, the foundation chose StartGreen from three parties because we have the capacity and know-how. Fit Our Future handles account management; they are, as it were, the field service. We are the ‘back office’: we perform the risk assessment and ensure that investment criteria are met. Erhan (Yildiz, Investment Director Transition Fund – ed.) and I deliver the financing applications; the investment committee evaluates them. Nienke Rijpstra, Investment Director of Energiefonds Overijssel, sits on the investment committee alongside Cees Vletter of Vopak Ventures.
The BespaarGarant Fund is perfectly suited to StartGreen: we are working on sustainability here and serving a social purpose. We also assess financial risks daily. It is therefore completely logical for StartGreen to do this. Another advantage of StartGreen is that internal cross-pollination is possible here. Other StartGreen funds also carry out sustainability projects. Customers who cannot turn to one of these funds may be able to be financed by BespaarGarant due to the unique nature of this financing instrument.
We have been managing the fund since June and have so far mainly been busy setting up the structure and processes. We have developed a model to determine the discount rate. In addition, we have created investment templates so that we have a blueprint for all applications and can approach risks systematically. This makes it easier for the investment committee to evaluate applications. Some items are simple checkboxes that must be checked, while others require more research.
Energy advice
The first applications are currently coming in. There is a well-filled pipeline of applications in the preliminary stage at the foundation itself, but they have not all reached us yet. Before they come to us, the entrepreneur must have independent energy advice. Advisors visit to see if the intended measures are realistic given the situation, size, and location of the building, so that the intended savings can actually be achieved. Such advice costs money. Sometimes local subsidy pots can be used for this. For example, there are subsidies for heat pumps and solar panels. If these are available, we naturally include them in the business case, as they shorten the payback period. Subsidies do not cover everything, but they are a nice bonus. After that, quotes must be requested from contractors for the sustainability measures.
If you, as an entrepreneur, know how you want to become more sustainable, have energy advice regarding the savings, and know that you want to finance the sustainability measures through the BespaarGarant Fund, then the application comes to us. We want to approve a first application as soon as possible and then push forward. This is expected to happen early this year.
