Columnists: Jason Erwin, Borg & Co

Published on: 25 Jun 2019

TrustEE tests new model to finance efficiency

The TrustEE platform aims to streamline financing while improving liquidity for industrial solutions providers and owners.

Project developers face challenges acquiring favorable financing for industrial energy efficiency and renewable energy projects, including insufficient credit, risk mitigation issues, and high transaction costs. 

The good news? TrustEE, an EU-funded Horizon 2020 project in which eceee has been heavily involved, is testing a new approach to increase investment in energy-saving and renewable energy assets.

How does it work? By working closely with technical suppliers and project developers throughout the project lifecycle, TrustEE partners optimise system design and establish favorable financing terms. Let's explore the approach. 

Development and installation

Prior to or during project development, developers submit proposals for energy projects that will offset fossil-fuel based sources at industrial plants. Examples include waste heat recovery, solar thermal, biogas, biomass, heat pumps or other energy efficiency measures. The TrustEE platform streamlines technical due diligence by using benchmarks versus state-of-the-art technology/systems. A financial assessment is also conducted based upon financial risk/return requirements. Technical optimization support is offered, and contracts are structured with the supplier and industrial owner based on standard templates.

Commission, financing and green bonds

Upon project approval TrustEE purchases the open price receivables from the technology supplier. The supplier receives payment directly without having to wait for the receivables to mature or expire.

TrustEE establishes a payment plan with the industrial owner, which can have a duration of two to three years or even longer in some cases. The payment schedule is based on the type of system or systems installed and the credit rating of the parties involved.

Investor demand for green bonds is growing. In a later phase, the TrustEE Securitization Vehicle (SV) will purchase the receivables and convert them to securities. These green bonds and tranches will be offered to investors on the capital markets.

Benefits for developers, owners, and investors

Beyond energy and carbon savings, the new model aims to improve liquidity for solution providers. It provides prompt payment for receivables after project commissioning, avoiding payment delays. It also enables developers to offer industrial customers flexible sales financing, which augments their value proposition.
Industrial owners gain an independent assessment of system quality, and access to an external refinancing line for projects. They can also access a wider selection of suppliers and solutions, as they are no longer restricted to working exclusively with larger ESCOs in order to take advantage of external financing.   
When TrustEE enters into the securitization phase, investors will gain access to new industrial sector green bond offerings. It is anticipated that these offerings should yield stable returns with low risk, as the technical risk remains with the suppliers and credit risk can be addressed with insurance.

More information

Companies and others interested in learning more or discussing industrial projects should explore the TrustEE website, and contact TrustEE partners at: 

Other columns by Jason Erwin