Latest developments in energy efficiency finance: Building ... · European Commission Disclaimer...

Latest developments in energy

efficiency finance:

Building the jigsaw

Dr. Steven Fawkes

EMANZ

May 2016

European Commission Disclaimer

This project has received funding from the European Union’s Horizon 2020 research and innovation programme

under grant agreement No 649836.

The sole responsibility for the content of this presentation lies with the authors. It does not necessarily reflect the

opinion of the European Union. Neither the EASME nor the European Commission are responsible for any use that may

be made of the information contained therein.

There is big money in energy efficiency

Status report on EE financing

• Scale of market potential recognized

• Non-energy benefits increasingly recognized

• Growing interest from institutional investors

• Slow development of the EE financing market – leading to frustration

✔

✔

✔

✗

“The ratio of conferences to deals is too

high!”

Energy financing - now

Standardized

Mainstream

Large volume

Multiple sources

Standardized

Mainstream

Large volume

Multiple sources

NOT standardized

NOT mainstream

SMALL volume

FEW sources

The energy efficiency funding gap

Projects & Potential

• Untapped market

opportunity

• Good returns

• Established industry

• Proven technologies

Investors

• Search for yield

• Risk/return ratio good

• Growing emphasis on

Impact Investing

• Growing interest in EE

Investing in energy efficiency is hard

• Projects are small

• Savings are hard to measure (and hard to see)

• Lack of confidence in the results

• Lack of standardization in development & documentation

• Lack of capacity within financial institutions to assess projects

• Not a defined asset class

• Balance sheet issues in corporates

• Lack of demand for financed solutions

• Lack of a secondary market

Energy efficiency is economic but hard to invest into

“energy efficiency is low hanging fruit”

Investing in energy efficiency is hard work

The jigsaw of energy efficiency financing

Lack of standardization

Lack of standardization (in project

development and documentation) is

one of the major barriers to

increasing investment into energy

efficiency

Energy efficiency projects do not yet

meet the requirements of capital

markets. No two projects or

contracts are alike.

Michael Eckhart, MD & Global head of Sustainable Finance

Factories need standardization

Financial institutions are factories

Lack of standardization results in:

Greater performance risk

Uncertainty limiting demand

Higher transaction costs

Difficult to build capacity

Difficult to aggregate

Investor Confidence Project Protocols

BASELINING

• Existing Building

• Drawings

• Weather File

• Energy Usage

• Energy Rates

• Occupancy

SAVINGS

• Model File

• Calibration Data

• Bid Packages

• Certifications

OPERATIONS

• BMS Points

• Fault Plan

• Maintenance Plan

MEASUREME

• M&V Model

• Regression

Model

• Adjustments

• Impact

• Baseline

Adjustments

COMMISSION

• Cx Plan

• Cx Authority

• Test Procedures

• Facilities Req.

C

x

Protocols standardize best

practice in project development

and documentation.

ICP Protocol development process

Organize market leaders to provide input into the development of the protocols

– Financiers

– Building owners

– Developers, installers, ESCOs

– Government agencies

– Utilities

Investor Confidence Project Protocols

Large Tertiary

Standard Tertiary

Targeted Tertiary

Large Apartment

Standard Apartment

Targeted Apartment

6 Protocols published.

Now being applied.

US & European versions.

Open source.

Investor Ready Energy Efficiency

Ecosystem of Project

Developers, Software Providers

and Quality Assurance Providers

being built in US and Europe.

ICP Europe Network Members

Join here:

http://europe.eeperformance.org/

join-icp-europe.html

ICP projects across US and Europe

Number & size of projects &

programmes growing

ICP Investor Network

United States Europe

Investor Days

Bringing together investors, lenders

and project developers

The jigsaw of energy efficiency financing

Different ways of building the jigsaw

Procurement frameworks

– RE:FIT

– Carbon & Energy Fund

ESCO facilitation

- Berlin Energy Agency

Super ESCOs

- Etihad Super ESCO

Retrofit Accelerators

- New York City

Retrofit Accelerator

Development

finance

Project finance

Commitment from

public sector

Active marketing

ICP Protocols

IREE

Contracts

Reporting

Training for:

Project

Developers

Owners

Banks

Now seeking partner cities and

regions for ICP Retrofit Accelerators

ICP – The future The future

Investing in energy efficiency is hard work

Standardization & automation

Energy financing - now

Standardized

Mainstream

Large volume

Multiple sources

Standardized

Mainstream

Large volume

Multiple sources

NOT standardized

NOT mainstream

SMALL volume

FEW sources

Energy financing – the future

Standardized

Mainstream

Large volume

Multiple sources

Standardized

Mainstream

Large volume

Multiple sources

Standardized

Mainstream

Large volume

Multiple sources

Thank you

Steven Fawkes

steven.fawkes@energyproltd.com

www.energyproltd.com

@DrSteveFawkes

+44 77 0223 1995