Political turmoil in several Middle Eastern petroleum-producing nations has only increased the uncertainty about energy supplies and consequent price volatility worldwide.

Naturally, this factor has fanned the drive for increased energy efficiency and cost controls by businesses in Kitsap County and throughout the country.

Many companies in this environment are taking a new look at equipment leasing as a strategy to bring energy efficiency retrofits — such as energy-saving lighting, and HVAC systems — within reach.

The benefits of leasing energy-efficient equipment can be significant for almost any business. This may be particularly true of large energy users such as hospitals, schools, manufacturing and retail complexes, government entities and office complexes and other commercial facilities.

Also, as the leasing industry has adapted to evolving market conditions, the equipment for nearly any kind of energy-efficiency upgrade can be leased.

For building owners, leasing — also known as equipment financing — can make the difference in whether an energy efficiency retrofit project is financially feasible. The cost of energy may fluctuate to some degree in the short term, but no one expects sustained reductions over time. Therefore the incentive to undertake these improvements will simply grow along with spiraling energy costs.

Among the significant financial and operational benefits that leasing energy-efficiency retrofit systems bring to building owners is the ability to conserve cash for other improvements to your core business, because leases don’t require a large down payment.

Equipment leasing can conserve capital for other uses such as enhancing process or production systems, expanding inventory or increasing staff, all initiatives that can directly enhance a firm’s competitiveness.

In addition, leasing facilitates cash management, a crucial competitive advantage. If you lease energy-efficiency retrofit systems and equipment, you can typically match lease payments to your energy savings and reduced maintenance costs. As a result, many such projects are cash-flow neutral; some are actually cash-flow positive.

As energy-efficiency technology has advanced in the constant search for savings, leasing has taken on new importance, becoming a key facilitator in the widening adoption of these technologies. Advanced energy-saving lighting, heating, ventilation and air conditioning systems can be expensive, and such emerging technologies as geothermal heat-pumps, small wind generating systems and photovoltaic or hot water solar systems may seem daunting innovations to many business owners.

However, to reiterate, all can be leased today, and the “soft costs” associated with adopting them can be folded into the lease. These include installation, which often equals half of the total price tag, and operator training.

Let’s look at a few of the specific advantages of leasing, and examine how leasing can be an efficient win-win option for enhancing energy efficiency in your facility.

Perhaps the most powerful aspect of equipment leasing for energy retrofit projects is the positive cash flow such projects can produce. Consider an office complex, for example, that seeks to install a lighting retrofit system to save on energy costs. If the price tag totals $150,000, the owner may not be able to accommodate the added building costs of purchasing retrofit equipment in the complex’s budget. However, leasing could bring the project within reach. With typical projected annual energy savings of $57,000 and leasing costs of $56,700 annually for three years or $44,300 annually for four years, the project would produce a positive cash flow, right from the outset and on through the life of the lease.

A lease often does not have a down-payment, so a lease is equivalent to 100 percent financing. This provision also serves to protect cash reserves for companies to direct toward improving aspects of their core businesses and enhancing their competitiveness.

Leases are often very flexible, allowing for additions or upgrades to equipment — to keep up and take advantage of evolving technology and efficiency improvements.

Leasing companies and banks both provide equipment leasing services. However, rates — and therefore one’s choice of how to proceed — may differ depending on one’s previous banking relationship.

It’s also important to understand the terms of the lease agreement clearly. For example, what purchase options are available at the end of the lease? Once installed and in ongoing use, leased equipment becomes not only part of the enterprise’s operating budget but also of its day-to-day operations.

It’s important to understand the responsibility under the lease in such important areas as taxes, insurance and maintenance. Business owners should be certain to talk to their advisors to see if leasing benefits the company’s unique situation.

It’s not often that businesses have the opportunity to implement “green” initiatives in a way that is either cash-flow neutral or positive. Leasing is a unique opportunity to help the community where one’s business operates to thrive by reducing its carbon footprint.