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Understanding Your Total Cost of Ownership for Your Infrastructure

September 08, 2023

Authored by Taylor Oswald

With the Federal Reserve raising interest rates to the highest level in more than 20 years, the cost of capital is front and center for CFOs when it comes to funding projects, including energy infrastructure. Public and private sector companies are grappling with meeting approaching sustainability objectives, addressing deferred maintenance and labor shortages while the cost of money and project payback continues to rise. Without the proper support and planning, the effects of these changes are proving to be detrimental to infrastructure owners across the U.S.

This significant shift in the cost of capital is altering priorities to revenue-generating outcomes and putting projects on pause versus addressing areas of critical infrastructure that are in desperate need of repair. Moreover, the necessary budget resources to enact infrastructure projects come with higher scrutiny leading to a “kicking the can down the road” attitude, a behavior that has now resulted in a debilitating infrastructure backlog that few are able to catch-up on. Ultimately, these areas of critical infrastructure need to be addressed, and ideally not when things are in dire straits and the cost of capital is more expensive than ever.

Through a Total Cost of Ownership estimate, infrastructure owners and decision-makers understand the needs of the infrastructure development and care, while also seeing how they can utilize available capital to do so. Time and again, owners are faced with the shocking increase of costs for maintenance, construction, and operations, but do not always understand exactly why these costs are rising, nor how to strategize to meet them. By taking the time to have companies like Viridis come in and review their facilities and establish a Total Cost of Ownership, owners and facility operators are able to go into the fight educated and with a solid plan.

The energy as a service model with Viridis Initiative can offer compelling outcomes with third-party capital, operational certainty, and risk transfer. Outsourcing operations and maintenance, the performance of assets, risk of failure, etc., with a fixed or variable payment model allows ultimate stability and flexibility to address today’s energy infrastructure priorities despite the challenging borrowing environment.

Source: https://www.nbcnews.com/business/economy/interest-rate-hike-july-2023-how-much-higher-federal-reserve-rcna96210