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Guide to Internal Financing for Energy Efficiency in Retail

Guide to Internal Financing for Energy Efficiency in Retail Download the guide
Publication Date: 2016 Author: IMT, RILA Program Area:Finance & Real Estate

In an ideal world, every energy efficiency project with compelling financial returns could secure funding through a company’s standard project proposal process. However, retail finance teams have many strategic priorities to consider when allocating funds, and energy projects compete with other departments for limited resources. That means even a highly beneficial energy project can be rejected depending on requests from other business units. Even so, energy projects are unique because they provide several business benefits—including reduced operating expenses, improved budget forecasting, and increased brand value. Moreover, few other retail projects can take advantage of such a broad array of external incentives, rebates, and tax credits.

In addition to external financing opportunities (documented in this companion External Financing Guide), there are many innovative internal financing strategies designed to streamline project approvals and recycle energy cost savings, among other goals. These strategies can create a virtuous cycle of efficient operations. Because estimated cost savings from energy projects are easily quantifiable, especially in relation to other types of projects, energy projects are excellent candidates for internal financing approaches.

To help energy managers and finance professionals at retail companies understand internal financing approaches that can be used for energy projects, IMT and the Retail Industry Leaders Association (RILA), with support from the U.S. Department of Energy, have created this Guide to Internal Financing for Energy Efficiency in Retail. The guide details strategies for embedding environmentally conscious thinking into investment decision-making, establishing funds specifically for energy projects, and collaborating across departments to execute projects of all sizes. The guide was informed by existing research, case studies, and interviews with retail energy managers.