Project financing Project financing is another option for financing energy upgrades. It avoids the capital budgeting process and is funded from the operating budget. By being off-balance sheet, project financing requires no capital investment by the customer. Under this option the energy service provider monitors and verifies savings. This option is lower-risk financially because customer payments are based on the delivered performance results.
Project financing offers several benefits to the customer.
These benefits include lower operating costs and capital cost avoidance. Project financing gives customers the ability to focus on their core business. Project financing is not without its disadvantages, however. These include the possibility of higher implicit costs. Also, project financing is typically longer in term than lease financing.