Guaranteed and insured energy saving to boost EE investment by SMEs

Panel: 5. Business models, finance and investment

Authors:
Livia Miethke Morais, BASE - Basel Agency for sustainable Energy, Switzerland
Daniel Magallón, BASE, Switzerland
Daniele Forni, FIRE, Italy

Abstract

The EU 2030 and 2050 targets require to enhance the private investment in energy efficiency (EE) across all sectors. Innovative financing schemes can help to create the conditions needed to ensure an adequate supply of private finance for EE investments.

Enterprises employing fewer than 250 persons represented 99% of all enterprises in the EU and are a substantial market opportunity for EE improvements. However, this remains largely untapped.

The barriers inhibiting SMEs investments in EE include lack of trust between the different actors and perceived high risks. Decision-makers are price sensitive, especially in SMEs, which are faced with competing investment needs and opportunities, combined with limited financial resources or limited access to credit. The barriers exist despite the benefits of EE investments, such as the recovery of their - usually higher - upfront costs in a short period of time from cash flows generated through savings, while also improving productivity, efficiency and reducing emissions.

The energy savings insurance (ESI) model consists of different mechanisms that aim to drive demand and motivate SMEs to invest in EE, by reducing the perceived risks and creating trust between key actors (technology providers, enterprises, financial institutions). The main components of the ESI model are: 1) standardised turnkey contract including guaranteed savings clause, 2) insurance covering the contractual guaranteed savings, 3) procedure involving a third party to validate the project, the installation and the measurement and verification of savings, 4) financing structure linking existing financing instruments for SMEs and EE.

A pipeline of EE projects in Italy, Portugal and Spain is underway to operationalise the ESI model under the Horizon2020 funded project ESI Europe. To further built trust, the ESI implementation also counts on a management information system developed in Blockchian, guaranteeing traceability and reliability of EE projects.

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