How to finance energy upgrades in a business? A comparison of financing models

Financing for an energy upgrade should be selected to fit the investment, not the other way round. The same project may make sense with own funds, a loan, preferential financing or an ESCO model — depending on CAPEX, how quickly savings are generated, the certainty of the outcome, the company’s financial position and whether the result can be measured reliably.

In practice, financing energy efficiency projects is therefore not simply about finding the cheapest capital. You also need to compare the cost of financing, the impact on liquidity, the investment schedule, the risk that expected savings will not be achieved and the conditions attached to any support.

A grant, premium, Polish white certificates or another support mechanism may improve project economics, but they should not replace technical and financial analysis. The safest sequence is the reverse: first determine what is worth upgrading and what result is realistic, then calculate a conservative scenario, and only then select the source of capital and any available support.

In brief

• Own funds offer the greatest freedom and simplicity, but they tie up cash that may be needed for operations or other investments.
• Conventional debt financing spreads CAPEX over time and protects liquidity, but the company must be able to service the debt even if savings turn out lower than forecast.
• Preferential repayable financing can significantly reduce the cost of capital, extend the repayment period or combine a loan with a partial grant, but it is always linked to a specific region, beneficiary group, technology and programme conditions.
• Grants and premiums reduce the effective cost of a project, but often do not finance the first invoices. You need to check payment rules, eligible costs, the required outcome and the point from which the investment may be started.
• Polish white certificates are an additional economic mechanism linked to final energy savings in Poland. They are neither a conventional grant nor a guaranteed advance on CAPEX, and they require the correct sequence of actions before work starts.
• ESCO / EPC is particularly relevant where the outcome can be measured and verified and the company wants to contractually link part of the remuneration and risk to the achieved result.
• Financing from savings is not a single financial product. It is a way of structuring cash flows so that post-upgrade savings cover all or part of the financing cost.

Investment first, source of funding second

The question “how should we finance it?” should only be asked after answering “what exactly are we upgrading, why, and what result should it deliver?”. Otherwise, a company may choose a programme offering attractive support for an investment that is technically oversized, delivers little benefit or is economically inferior to another option.

At a minimum, comparing financing models requires:

• the technical scope of the project,
• a realistic CAPEX including ineligible costs and a contingency,
• a forecast of energy and cost savings,
• information on when savings will begin after commissioning,
• an assessment of the durability and certainty of the outcome,
• a conservative scenario,
• a method for measuring and verifying the result,
• a schedule for decisions, orders and implementation.

From an auditor’s perspective, a good starting point is to compare the investment without public support. If the project is technically and financially viable on its own, a grant, preferential loan or Polish white certificates improve its resilience. If the project only makes sense with the maximum possible support, the risk of making the schedule dependent on a programme is much higher.

Comparison of financing models for energy upgrades

Key conclusion: financing models should not be compared solely by interest rate or percentage of support. You need to compare their full impact on liquidity, risk, implementation time and control over the project.

What really determines the choice of financing?

1. CAPEX and the actual financing gap

The investment cost alone does not determine whether a company should use debt. What matters is CAPEX in relation to available cash, current cash flows and other planned investments.

For one company, a medium-sized upgrade may be easy to fund from its own resources; for another, the same expenditure may reduce working capital below a safe level. Conversely, a large project can be a good candidate for long-term financing if the company has stable cash flows and the asset will generate savings for many years.

In publicly supported projects, total CAPEX also needs to be separated from eligible costs. VAT, documentation, additional works, part of the associated infrastructure or expenditure incurred outside the eligible period may require a different source of financing.

2. Timing of savings

Financing decisions should consider not only the simple payback period but also when savings actually appear. An upgrade may be technically complete but achieve its full effect only after commissioning, a heating season, control-system tuning or production stabilisation.

If repayments start immediately while savings build up gradually, the company may face a temporary liquidity gap despite sound overall project economics. Conversely, an excessively short financing period for a long-lived asset may unnecessarily increase annual debt service.

3. Certainty of the outcome

Not all savings can be forecast with the same confidence. The effect of replacing equipment operating under stable conditions may be easier to predict than savings that depend on production volume, outdoor temperature, product mix, operator behaviour or raw-material quality.

The financial model should therefore include at least an expected scenario and a conservative scenario. Financing is robust when the company remains able to meet its obligations even under the weaker savings scenario.

4. The company’s financing capacity and capital priorities

A good energy investment is not automatically the best use of equity. At the same time, a company may be financing a new production line, an acquisition, higher inventories, digitalisation or sales growth.

When debt is used, the project and the company’s financial position need to be assessed together. A bank or other financier evaluates the company’s ability to repay the obligation, not just the stated return on one upgrade. In practice, debt limits, covenants, security and the ability to maintain a reserve for unforeseen expenditure also matter.

5. Ability to measure savings

The more a payment, write-off or fee depends on the achieved result, the more important a reliable baseline becomes.

Before the upgrade, determine:

• what exactly will be measured,
• which baseline period is representative,
• which variables affect consumption independently of the investment,
• how the result will be adjusted for production, weather, operating hours or changes in product mix,
• who is responsible for the data and its quality,
• how differences in interpretation will be resolved.

With own funds, weak measurement mainly makes it harder to assess the investment. Under EPC, ESCO or an instrument linked to achieved savings, it may become a contractual issue or a condition for receiving part of the support.

6. Schedule and the point at which a commitment is made

For some instruments, the order of actions has legal or programme implications. A company should therefore not sign an order first and only then check whether the project qualifies for Polish white certificates or a specific call for support.

The financing schedule should show at least:

1. the date of the audit or analysis,
2. the application date,
3. the earliest permitted date for starting work,
4. the date on which financing is signed,
5. payments to contractors,
6. any reimbursement or repayment of part of the principal,
7. the point from which savings improve the company’s cash flow.

Own funds – maximum flexibility, but capital has a cost

Financing from the company’s own cash is the simplest option operationally. The company does not have to wait for a credit decision or adapt the entire project to a financier’s schedule. It is also easier to make technical changes during implementation.

This does not mean, however, that own funds are free. Cash allocated to an upgrade cannot finance operations or other projects at the same time. It is therefore worth calculating the opportunity cost and the minimum liquidity buffer the company wants to retain.

Own funds are particularly logical when CAPEX is relatively low, the result is fast and predictable, and the cost of arranging more complex financing would be disproportionate to the benefit. For larger investments, a mixed approach — part cash and part debt — often works better.

Conventional debt financing – when liquidity and a predictable schedule matter

An investment loan, other loan or lease makes it possible to spread the cost of an upgrade over time. This may be rational even when the company has sufficient cash.

Comparing offers should cover more than the interest rate. Also relevant are:

• commissions and fees,
• security,
• grace period,
• repayment period,
• variable or fixed interest rate,
• early repayment terms,
• required own contribution,
• drawdown schedule,
• the possibility of financing ineligible costs.

The key test is to compare debt service with conservative, rather than maximum, savings. If repayments are safe only at an ideal production level and with the full effect from the first month, the financing structure is too tight.

Preferential repayable financing – cheaper capital in exchange for programme conditions

Preferential repayable instruments may offer a lower interest rate, a longer repayment period, a grace period or a grant used to repay part of the principal. Their advantage is that they can finance an investment with sound economics that would place too much strain on company cash flows under commercial financing.

They are not, however, a universal “cheap loan for every upgrade”. Conditions depend on the region, company size, type of investment, required savings and documentation.

Current example in Poland as at 19 August 2026: BGK offers an Energy Efficiency Loan for Businesses in the Małopolskie Voivodeship for micro and small enterprises. Product parameters include financing of up to PLN 3 million, an interest rate of 1% per year, a repayment period of up to 15 years and a grace period of up to 12 months. The grant used to repay part of the principal is not automatically 20%: the official rules provide 10% of the individual loan amount where the investment is expected to deliver at least 40% primary energy savings, plus a further 10% where the investment consists of building thermal modernisation; the total grant may not exceed 20% of the loan amount. On 23 July 2026, BGK announced an additional PLN 45 million allocation for this instrument.

This example clearly shows why preferential financing should be checked after the project location, company status and investment scope have been established. An instrument that is attractive for a micro-enterprise in one Polish voivodeship is not automatically available to a large industrial plant in another region.

Grants and premiums – part of the financing structure, not the starting point

A grant can materially improve the profitability of an upgrade, but the mere availability of a programme should not determine the technology selected. First confirm the need for the investment and its expected outcome; only then check whether an active instrument can reduce the effective project cost.

The form of support also matters. A “grant” may mean reimbursement, a premium used to repay part of a loan principal, a grant paid after project completion, or a mechanism conditional on the achieved result. In each of these cases, the company may still need its own contribution and bridge financing.

What was current in Poland as at 19 August 2026?

There is no single nationwide list of the “best grants” that is right for every company. The current picture in Poland is illustrated well by three different examples of support — not all of which are conventional non-repayable grants:

• FENG “Kredyt ekologiczny” (Ecological Credit) — the fourth call closed on 8 January 2026 and, according to the current BGK page, is under evaluation, so it is not an open call at present. Among other requirements, the call required at least a 30% reduction in primary energy consumption within the upgraded scope, while the minimum value of eligible expenditure was PLN 2 million.
• FEnIKS for medium-sized and large enterprises — the second Polish call for improving energy efficiency together with renewables closed on 13 March 2026. Support under this call took the form of a financial instrument rather than a straightforward grant paid towards CAPEX: it provided for a preferential loan from Cohesion Fund resources with the possibility of partial write-off — subject to exceptions defined by the programme, including for energy service providers acting for enterprises — and a market-rate loan from NFOŚiGW resources. As a rule, the two loans were to cover 100% of eligible costs in total; for project-finance projects, 85% of eligible costs and 15% own funds were provided for. This instrument should therefore be compared primarily with repayable or hybrid financing rather than presented as a conventional non-repayable grant. The call has closed and is not currently open.
• Non-repayable support programmes published by the Polish Energy Regulatory Office (URE) — in 2026, 36 obligated entities offer such programmes in Poland. Business customers may also use them, but the scope is narrower than in typical investment programmes: URE lists, among other measures, connection to a district heating network and replacement of space-heating or domestic-hot-water equipment with more efficient units. Conditions, geographical coverage and the application process need to be checked in the rules of the specific programme listed by URE.

The practical conclusion matters more than a list of programme names: the status of a call, beneficiary type, required energy outcome and payment method must be checked for the specific project on the date the decision is made.

Polish white certificates – additional value from energy savings, but not an advance on CAPEX

Polish white certificates, i.e. energy efficiency certificates under Poland’s system, confirm planned final energy savings resulting from a project. The value of the associated property rights can improve investment economics, but the mechanism should not be treated as a guaranteed grant available before equipment is purchased.

Under the currently applicable consolidated text of Poland’s Energy Efficiency Act, published in the Journal of Laws of 2025, item 711, the following rules are particularly important for project scheduling:

• an energy efficiency certificate is not available for a project whose planned energy savings are less than 10 toe on average per year;
• the application is submitted by an entity planning to start the works;
• commencement of works may include the start of construction works, the first legally binding commitment to order equipment, or another commitment that makes the project irreversible — whichever occurs first;
• if work started before the application was submitted, the Polish Act provides for refusal to provide information on the issued certificate;
• the President of the Polish Energy Regulatory Office (URE) issues the certificate within 45 days of the application being submitted, but this period should not be confused with the date on which cash is received by the company;
• after the project is completed, an audit confirming the achieved savings is not required if the planned savings do not exceed 100 toe on average per year; above that value, an additional stage confirming the outcome must be allowed for.

When combining Polish white certificates with other support, automatic cumulation should not be assumed. The Polish Act introduces separate restrictions concerning, among other things, the thermal-modernisation premium — with a statutory exception for specified low-emission projects — and investment aid where granting the certificate would cause the permitted level of State aid to be exceeded.

From a financing perspective, this means one thing: the potential value of Polish white certificates may be included as an additional inflow improving project economics, but the core CAPEX should have financing secured independently of the timing and final value of the property rights.

ESCO and EPC – when a company wants to link payment to results

ESCO is an energy-services model in which the provider may participate in the design, implementation, financing, operation and management of the project outcome. One possible contracting approach is EPC — energy performance contracting.

Directive (EU) 2023/1791 defines an EPC as a contractual arrangement between the beneficiary and the provider of an energy efficiency improvement measure, where the result is verified and monitored throughout the term of the contract and payment for the investment is linked to an agreed level of energy efficiency improvement or another agreed performance criterion.

The key caveat is that EPC does not prescribe one mandatory source of capital. A project may be financed by the client, the ESCO, a bank or another party — depending on the contract structure. “ESCO = an upgrade without own funds” is therefore an oversimplification that should be avoided.

A key part of the contract is M&V, or measurement and verification. The parties should agree the baseline and the method for adjusting the result for factors independent of the investment.

For example, a reduction in energy consumption after an upgrade cannot automatically be attributed to the technology if production volume changed significantly at the same time. A model is needed that can estimate how much energy the plant would have consumed under the actual operating conditions if the upgrade had not been implemented.

ESCO/EPC is particularly worth considering when:

• the project has higher CAPEX,
• the technical outcome can be identified clearly,
• the company wants to transfer part of the implementation or performance risk,
• data are available to build a reliable baseline,
• the company accepts a longer and more detailed contract.

Depending on the model, the contract price may include financing, design, management, measurement, guarantees and the assumption of some risks. The ESCO option should therefore be compared with the cost of implementing and financing the same technology independently, not with the cost of doing nothing.

Financing from savings – a cash-flow logic, not a separate product

The phrase “the investment pays for itself from savings” is attractive, but it should be treated as a proposition to be tested, not as a feature of a financial product.

A project can be financed with own funds, a loan, preferential financing or third-party capital and payments can be structured so that part of the cost is covered by lower energy bills. There is one condition: conservative savings must leave a safe margin above required payments and operating costs.

If financing is safe to service only under the highest savings forecast, this is not a robust “self-financing” model. In practice, commissioning, seasonality, energy-price volatility, production, service costs and possible delays also need to be included.

A hybrid model is often more resilient than a single source

Large upgrades rarely need to be financed from only one source. The financing structure can be built in layers:

1. core CAPEX financing — own funds, a bank loan, another loan or capital structured within an ESCO contract;
2. support reducing the effective project cost — grant, premium or partial principal repayment;
3. additional value from the energy outcome — e.g. Polish white certificates, if the investment meets the conditions;
4. liquidity buffer — for ineligible costs, additional works, reimbursement delays and a weaker-than-expected outcome.

However, all support percentages must not simply be added together in one spreadsheet without checking cumulation rules, State-aid rules and the common basis of eligible costs. Each layer has its own conditions and schedule.

Which model fits different types of upgrades?

For Polish white certificates, eligibility is assessed primarily by energy savings and statutory conditions, not by CAPEX alone. Two investments of the same value may therefore have very different potential under this Polish mechanism.

Example: one company, three different financing decisions

Assume that a company plans three projects at the same time: a lighting upgrade in warehouses, an upgrade of the compressed air system and heat recovery from the production process.

Lighting has low or medium CAPEX, predictable operating hours and an outcome that is easy to estimate. If the company has good liquidity, own funds or simple debt may be more rational than waiting for a complex support programme.

Compressed air can deliver significant savings, but the value of the outcome depends on compressor load, pressure, control strategy and production profile. If the planned savings meet the statutory conditions in Poland, Polish white certificates should be checked before equipment is ordered. For higher CAPEX, preferential financing may also make sense.

Heat recovery may have the highest CAPEX and the greatest dependence on the simultaneous availability of the heat source and demand. If the outcome can be measured reliably and the company does not want to bear all of the technical risk itself, an EPC/ESCO option may be worth comparing with conventional financing.

The same company therefore does not need to choose one model for every investment. A better strategy may be to finance quick and predictable measures from own funds, larger projects with debt, and use support mechanisms only where they genuinely fit the technology and schedule.

How to choose financing step by step

Step 1. Define the technical scope and baseline option

Define which equipment, systems or processes are to change and why. For larger projects, the analysis should include an energy balance, technical options and a risk assessment.

Step 2. Separate energy savings from monetary savings

Energy savings result mainly from the technology and operating method. Financial savings additionally depend on prices, tariffs, charges, service costs and which costs actually disappear after the upgrade.

Step 3. Build a conservative scenario

Check the result with lower production, shorter operating hours, lower savings or a slower ramp-up to the full effect.

Step 4. Define the maximum level of own involvement

Determine how much cash the company can allocate to the project without compromising its liquidity buffer and other investment plans.

Step 5. Build a market benchmark

Calculate what the investment would look like under ordinary own-fund or commercial financing. Only then can the benefit of preferential capital, a grant or ESCO be assessed credibly.

Step 6. Check the instruments and the required sequence of formal steps

For each potential source, record the verification date, call status, beneficiary group, required outcome, eligible costs, State-aid rules and the earliest permitted date for starting work.

Step 7. Compare the full cash flow and risk

For each option, compare:

• total CAPEX,
• own contribution,
• amount and cost of debt,
• payment schedule,
• expected and conservative savings,
• timing of support,
• cost of preparing documentation,
• measurement requirements,
• risk of failing to meet the conditions,
• asset life and its value after financing ends.

Only this type of model makes it possible to compare different sources on a common basis.

Common mistakes when financing energy upgrades

Waiting for a grant without calculating the cost of delay

If an investment generates high and predictable savings, waiting many months for an uncertain call has a real cost in the form of foregone savings.

Starting the project before checking Polish white certificates

A legally binding equipment order or another irreversible commitment may be relevant to the statutory definition of commencement of works under Polish law. Eligibility should be checked before that point.

Treating support as cash available from the first invoice

A reimbursement or partial principal repayment does not automatically replace bridge financing. The cash-flow schedule should show who finances the period between paying the contractor and receiving the support.

Comparing only the interest rate

A preferential instrument may be cheaper in nominal terms but require an additional audit, measurements, checks, documentation and longer preparation. What matters is the cost of the entire process and its impact on the implementation date.

No baseline for ESCO/EPC

Without an agreed method for calculating consumption “without the upgrade”, it is difficult to separate the technical effect from changes in production, weather or the way the facility is used.

Double-counting support

A grant, partial principal repayment and Polish white certificates cannot automatically be added together as independent benefits. Programme rules, State-aid rules and the common cost basis must be checked.

Financing period mismatched to the asset

Debt with too short a maturity may create high repayments for a long-lived asset. Conversely, financing equipment for longer than its useful economic life may mean continuing repayments after the asset has lost its economic usefulness.

What data should be prepared before discussing financing?

For an initial assessment, it is worth preparing:

• a description of the planned upgrade and estimated CAPEX,
• energy consumption before the upgrade,
• hourly profiles or measurements where the outcome depends on load,
• production data, number of shifts and seasonality,
• forecast energy and cost savings,
• a conservative scenario,
• investment schedule and planned date for placing orders,
• project location and company status,
• information on other financing sources and State aid,
• expected own contribution and minimum liquidity buffer,
• data needed to build the baseline and subsequently measure the outcome.

For many instruments, energy documentation is not an add-on prepared at the end. It may determine eligibility, the level of support or whether the result can be settled.

How should a company approach the decision?

The best financing model is not the one with the highest grant or the lowest interest rate on the first page of an offer. It should preserve safe liquidity, match the life of the investment, withstand a conservative savings scenario and avoid formal risk caused by the wrong sequence of actions.

Where several upgrades are planned, it is useful to build a common matrix covering CAPEX, energy savings, cost savings, certainty of outcome, asset life, measurability, available capital and potential support mechanisms. This map helps decide which measures to implement immediately, which to finance with debt, which to prepare for a specific instrument and which may be worth considering under a risk-sharing structure.

Energy Trend can combine technical investment analysis with an assessment of its energy outcome, eligibility for Polish white certificates and possible financing structures. The objective should be to select financing for a well-calculated upgrade — not to reshape the upgrade around a programme found by chance.

FAQ

Can a grant be combined with Polish white certificates?

There is no single answer for all programmes. Poland’s Energy Efficiency Act introduces restrictions concerning, among other things, investment aid and the thermal-modernisation premium, while the rules of a specific instrument may contain additional requirements. Cumulation must be checked for the specific project before work starts.

Does ESCO mean no own contribution?

No. ESCO describes a service model, while EPC is a way of contractually linking payment to performance. The source of capital depends on the specific contract and may be the company, the ESCO, a bank or another third party.

Are Polish white certificates a grant?

No. An energy efficiency certificate under Poland’s system confirms planned final energy savings, and the property rights arising from it have economic value. The mechanism follows different rules and a different schedule from a grant.

Is it worth waiting for a new grant call?

Only after calculating the cost of waiting. If an upgrade has a short and predictable payback, the foregone savings during the waiting period may exceed the benefit of a future, uncertain programme. If the project does not meet the company’s financial criteria without support, preparing for a future call may be justified.

Is an audit needed before choosing financing?

Not every small investment requires an extensive audit, but a larger project should have a credible technical and economic analysis. For some instruments, an audit or energy documentation is a formal part of the process, while ESCO/EPC additionally requires a sound basis for measuring and verifying the outcome.

Sources

• ELI – Poland’s Energy Efficiency Act, consolidated text, Journal of Laws 2025, item 711
• BGK – Kredyt ekologiczny (Ecological Credit)
• BGK – Energy Efficiency Loan for Businesses, Małopolskie Voivodeship,
• BGK – announcement of 23 July 2026 on the additional allocation for companies in the Małopolskie Voivodeship.
• NFOŚiGW – second FEnIKS call for large and medium-sized enterprises in Poland,
• Polish Energy Regulatory Office (URE) – non-repayable support programmes for energy efficiency improvements in 2026,
• EUR-Lex – Directive (EU) 2023/1791 on energy efficiency

verified on 19 August 2026