Energy Finance – Ride the Wave

Contractor installing solarpanels, COG Aggregation

Enormous opportunities for brokers to diversify and expand their offering

Australian businesses, small to large, are increasingly riding the “energy wave” in a bid to reduce their costs. And with lenders beginning to recognise the massive potential of this sector, mortgage brokers can also be the big winners, says largest asset finance provider, Platform Finance.

“Energy is the fastest growing sector in the finance space and there are enormous opportunities for brokers that want to expand their footprint,” explains Damian Mantini, Platform Finance’s Director Aggregation and Strategic Partnerships.

“We’re still in the early stages of the growth curve. For example, at present there’s only a 4-5 per cent penetration for commercial solar but we anticipate that in the next five years we’ll see that increase to 10-15 per cent, particularly with more and more businesses adopting a green vision for the future and seeking to become more independent of market power prices.”

Lenders are now also starting to realise the potential of the energy sector, although a number of the major banks will not lend for solar solutions.

“That’s where Platform Finance comes in,” says Mantini. “We currently have seven lenders on our panel who do offer energy finance, and we’re in discussion with considerably more. And being agile, we can provide lending solutions – from prime to lo-doc to specialty – to suit a wide range of requirements and borrower profiles.

“We’ve established solid alliances with these lenders to offer competitive finance solutions to up to 98 per cent of borrowers.”

Relationships are also what will help mortgage brokers diversify into the energy sector, Mantini says. “Mortgage brokers already have a rapport with their customers, so this is an easy next step. It’s all about incremental revenue. They can leverage their existing relationship and add value in a different way.”

There are four main sectors that businesses are looking to finance in the energy space:

  • Solar (photovoltaic) panels
  • Energy efficient lighting
  • Batteries
  • Newer, more efficient HVAC systems

The commercial solar wave

“We’ve already seen the domestic solar wave gather speed and now it’s the turn of businesses.  Australia is a sun-drenched country, so it makes sense that business owners take advantage of this natural resource and the various government rebates that are available,” explains Christopher Murray, Platform Finance’s Head of Vendor and Energy Finance.

“Germany, which is among the countries with the least sunshine hours in the world, is a great example of what can be achieved, now receiving a record-breaking 85% of electricity from renewables**. Solar power there has now become the cheapest mode of power generation*. It provides great return on investment, which is another huge incentive – for business owners, vendors and brokers.”

Platform Finance set up its specialist energy division to address the growing need for energy-related finance and is working closely with mortgage brokers to help them upskill in this sector. It’s providing education and training, webinars and collateral such as eDMs.

“We have tailored our energy division and taken a number of components from our wider lending model to apply to this burgeoning space,” adds Murray.

*The Fraunhofer ISE research institute