Page 39 - European Energy Innovation - spring 2020 publication

Spring 2020 European Energy Innovation
energy bills. Utilities can therefore
segment their customer base
according to customer needs and
solvency risks, and propose concrete
building renovation solutions.
For third-party investors, utilities can party institutional investors.
leverage their role as aggregators,
bundling similar small projects in
order to achieve scale. Financial
institutions, on the other hand,
can reach the residential building
renovation sector and become active
in energy efficiency financing without
being confronted with issues such as
project fragmentation. A new Horizon
2020 project, RenOnBill, is currently
looking to introduce and pilot this
business model in Europe; it holds
real potential to open new markets
and drive growth at scale.
Energy Performance Contracting
(EPC) for the commercial and
industrial sector
Energy Performance Contracting
(EPC) is a contractual agreement
between the building owner and and
Energy Service Company (ESCO),
who implements energy efficiency
measures. Under this structure, the
ESCO provides the upfront finance
and the client pays the investment
back through energy savings that are
contractually guaranteed – in other
words, lowered energy bills offset the
1) Buildings Performance Institute Europe, Factsheet: 97% of buildings in the EU need to be upgraded,
October 2017
2) European Commission: Comprehensive study of building energy renovation activities and the uptake
of nearly zero-energy buildings in the EU, December 2019
www.europeanenergyinnovation.eu
39
ENERGY EFFICIENCY FINANCING
costs of repaying the project. The
principle advantage of EPC is that
it does not require upfront capital
investment from building owners,
and allows the ESCO to access off-
balance sheet financing from third-
A new project, Ambience H2020, aims
to take the concept of EPC one step
further, making it work for Active
Buildings, and thus making it available
and attractive to a wider range
of buildings as well as investors.
Combining savings from energy
efficiency measures with additional
savings and earnings resulting
from the active control of assets,
leveraging for instance price based
incentive contracts (Implicit Demand
Response), within one contract,
provides numerous benefits to
app parties.
For owners of commercial and
industrial buildings, adopting active
control of buildings through additional
flexibility and storage measures,
in addition to energy efficiency
upgrades, means further reduction
of energy losses and associated
financial costs. It also maximises
the use of self-generated renewable
energy; buildings owners can access
new revenue streams, through for
example participation
in demand response programmes
(ex: selling self-generated energy to
the grid). For third-party investors,
this translates to faster project
payback time.
Many solutions for a just and fair
energy transition
There is no one-size-fits-all solution
to financing energy efficiency
projects. Many solutions are required
to speed and scale markets that
will enable the energy transition.
However, one thing is certain: finance
is a key piece of the energy efficiency
market, which means it is a key driver
towards achieving climate-neutrality.
Business models must be developed
in tandem with building owners
and investors to ensure maximum
usability and scalability – now more
than ever, we need to think out of the
box, and we need to think big. ●
Contact information
For more information on BPIE’s
work visit www.bpie.eu