Fuel switching replaces inefficient fuels with cleaner and economical alternatives, such as substituting coal or kerosene for natural gas. Complimented by modern equipment upgrades, fuel switching is a simple approach to reducing energy consumption and costs for end-users, while also curbing carbon emissions.
What is the market for fuel switching?
-Commercial applications: Economic applications for fuel switching include: air conditioning, refrigeration, co-generation and small power generation in the commercial and services sectors (e.g. offices, hotels, hospitals).
-Industrial applications: The flexibility and energy performance of gas is beneficial for processing industries to improve product quality, reduce waste and lower costs (e.g. glass, pharmaceuticals, food processing, electronics industries).
What are the benefits of financing fuel switching?
-Growing market: Rising energy prices and the drive for low carbon fuels are likely to make fuel switching increasingly desirable to end-users.
-Long term energy cost-savings: Projects often finance themselves over time.
-Performance improvements: Fuel switching can result in lower operational and maintenance costs for end-users.
-Simple paybacks: Typical loan paybacks are in the 2.5 to 4 year range, on average.
-Preferential treatment: National regulations, tariffs, or subsidies may support the switch to a cleaner fuel, thus improving the economics of fuel switching projects.
-Energy security: Under certain market conditions, fuel switching can enhance reliability of the energy supply.
-Environmental impact: Financing environmentally-friendly fuel switching can earn reputational capital with policy makers, investors and consumers due to the positive impact projects have on reducing carbon emissions.
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