Education, Feature, Industrial, Office

How a new energy contract can fund an LED upgrade

Young students in white coats in a school laboratory
Ireland’s eEnergy Group has bought the UK firm Renewable Solutions Lighting for £2.2 million in a bid to create the the biggest supplier of turnkey LED lighting installations funded by energy savings to the education sector.

A ESSEX-BASED firm has come up with a novel concept for funding an upgrade to LED lighting.

The Leerie Energy Fund links the award of an energy contract with the installation of low-energy lighting, with the ‘commission’ for the award of the account used to pay for the project.

Leerie decribes itself as ‘an energy reduction business’ focused on lighting. It negotiates energy contracts with suppliers on behalf of clients and then also designs, supplies and installs low-energy lighting.

‘A typical customer has traditional lighting technology at the moment but wants to upgrade to LED,’ says company founder Brendon Airey.

‘If they’re coming to the end of their energy contract with their current supplier for electricity and gas, we would look at their current consumption and we’d also look at the lighting consumption portion of their total bill. 

‘We then run some simple calculations and come up with an initial energy fund valuation, which is essentially what we think we can get from the energy supply is as a payment for helping them reduce their consumption. 

‘We calculate what we think the contract is worth to an energy provider in profit terms. And then we go back to the client’. 

This sum is paid as a lump sum by the energy company to Leerie as a form of commission even though Airey is keen to point out the firm is not an energy broker. 

Instead, he makes a compelling case to the supplier: ‘when we crunch all the numbers, it’s absolutely in their interest to agree to our proposal’.

He maintains that the energy suppliers maintain a ‘budget line’ for these type of transactions. 

This money is then used to pay for an installation of low-energy LED lighting. The Leerie Energy Fund even takes care of the procurement and installation of the luminaires and other equipment. 

‘There are three benefits to an end user. First of all, we’ll negotiate a better energy rate as prices are falling. So for instance, if they’re paying 15 pence per kilowatt hour they could be paying 12 pence tomorrow. With gas, if they’re paying 3 pence they could be paying 1.7 pence tomorrow. 

‘Second, they get free capex money in terms of the fund. 

‘Finally, when we do the work we’re actually reducing the actual kilowatt hours used’.

Airey points out that none of the traditional finance routes – government grants, ‘lighting-as-a-service’ deals, invest-to-save arrangements and Salix funding – is guaranteed. 

‘A finance package is going to have a payback. You’re going to have to pay the money back over a period of time whereas our [fund] doesn’t have to be paid back.’

Grants, he says, are generally not readily available ‘and you have to jump through so many hoops to get to them.

‘By the time you figure out that you’re not going to get the grant, you might be six months down the line’. 

Sometimes Leerie is approached by lighting suppliers, contractors or energy reduction firms who have already got projects priced.

‘They come to us to say “can you create a fund for us?” The answer is absolutely’. 

However he’s adamant that he won’t fund a project that’s been overvalued. They’ll put a value on the project and, if necessary, request a lighting supplier to lower his price to make the model work.

Airey says Leerie has completed 16 trials to prove the model and a further 20 projects are on the blocks. 

Typical projects include offices, schools, universities and industrial units, both retrofit and new build.

  • More info on the Leerie Energy Fund HERE.