EFFECT4buildings Project - Risk management for energy efficiency investments


Spring 2020

EFFECT4buildings project provide a set of financial tools and instruments for lowering the risks

40% of energy consumption and 36% of CO2 emissions in the EU relates to buildings. To achieve a climate-neutral Europe by 2050, energy efficiency in buildings has to be improved. Key actors to make the change is building managers. They are often aware of possible technical solutions, but at the same time facing challenges with limited human and financial resources. To convince decisionmakers to invest in energy efficiency measures, both financial and technical risks have to be limited.

Project EFFECT4buildings is providing building managers with a set of financial tools and instruments for risk management to support the implementation of more energy efficiency measures, developed and improved in real cases - real buildings.

EFFECT4buildings project team together with public building managers visiting Estonian National Museum

Toolbox for financial calculations
92% of all interviewed building managers stated that fi nancial calculation methods are extremely important when justifying energy investments, but only half of them found it easy to do or even to understand them. Most common way for calculations of energy measures is pay-back-method, but it does not take aspects of technical lifetime and profitability demand in consideration. Conclusions from recalculations of measures has shown that using Net present value method or Internal rate of return, investments with longer lifetime will benefit and many more measures will be profitable.

Another very useful tool is the Total Concept method. When bundling several measures into a larger investment package, the profitability of the whole package can be calculated. Less profitable measures will then be covered by the more profitability ones, making it possible to implement more energy efficiency measures in total.

The toolbox also contains calculation tools for Prosumerism, helping building managers to find out the optimal size of a solar energy power plant as, both from financial and energy production perspective.

Tools for partnering
Investments decisions will of course be facilitated by funding, green loans or bonds. Financial and technical risks can also be lowered by contracting partnership with an external service company. In the Energy Performance Contracting (EPC) model results are guaranteed by the Energy Service Company (ESCO), making sure that energy savings cover the costs of the investments.

The project introduces an improved EPC model with contract-based partnership for the analyses phase. The Multi Service Contracting (MSC) model, based on some of the same ideas as EPC, includes several benefits except for energy savings, making investments more effective, lowering the risk of sub-optimization and giving more value for money spent. Also, with models for implementing Green Lease Contracts, users of buildings and tenants can be involved in increased sustainability.

Technology solutions
Last, but not least, it is of great importance to lower the risk of investing in wrong technology. To make sure building managers invest in the best available solutions, more knowledge on different possibilities is needed as well as confi rmation from colleagues that the solutions performs well.

The full toolbox will be presented in the EFFECT4buildings final conference in Krakow in 16th of September 2020. Projects working on similar topics are welcome to join the conference.

About EFFECT4buildings:
Financed by EU Program Interreg Baltic Sea Region (European Regional Development Fund) and Norwegian Funding. The goal is to implement more energy efficiency measures in public buildings in the Baltic Sea Region. Partners from Sweden, Finland, Norway, Latvia, Estonia, Denmark, Poland.

Website: www.effect4buildings.se