On-bill financing

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On-bill financing

Choosing on-bill financing means the energy retailer installs equipment. This is repaid through a ‘repayment’ charge on energy bills. Once all payments are made, title for the equipment transfers to the customer.

At the moment only AGL and Origin Energy offer this form of financing, and it’s currently only available to medium to larger businesses. Over time energy retailers may offer on-bill financing to small businesses, but in the meantime, the following table is for medium to larger customers only.

 

Advantages and disadvantages of on bill financing

Option Description Advantages Disadvantages

UTILITY ON-BILL FINANCING

Currently only available to larger energy users via Origin and AGL – but other energy retailers may bring out their own version of this type of financing.

  • Energy retailer installs equipment. This is repaid through a ‘repayment’ charge on energy bills.

  • Once all payments are made, title for the equipment transfers to the customer

  • No or reduced up-front cost.

  • Interest component of repayments are tax deductible.

  • Payment via utility bill reduces risk of default, therefore lowering financing costs.

  • Typically have guaranteed savings.

  • Typically arranged through a provider who can identify and implement energy saving opportunities.

  • Generally ties customer to the energy retailer for the financing term, regardless of whether the retailer offers competitive energy rates.

  • Risk of energy being cut if customer defaults on the debt repayment

  • If energy savings are not guaranteed, customer bears technical risks.

  • Repayment liability is on the balance sheet.


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