Europa goes Net Zero
The European Union (EU) has set an ambitious target of reducing its greenhouse gas emissions by 40 percent by the end of the decade and reaching climate neutrality by 2050. Energy efficiency is one of the key pillars of this climate strategy: the union aims to use 32.5 percent less energy compared to projections of energy use in 2030. In this context, the EU’s Horizon 2020 programme made nearly EUR 80 billion available to European research and development projects with one of its key focus being the development of sustainable energies.
Supporting the innovation and growth of small and medium enterprises (SMEs) was one of the focus areas of the funding programme, where the project of developing the Energy Savings Insurance (ESI) in Europe made a perfect fit and benefited from financial support to contribute to the adoption of higher performing energy wp-contentliances in six countries: Italy, Portugal and Spain from 2018 to 2021, and Croatia, Greece and Slovakia from 2021 to 2024.
The ESI model incentivises the adoption of energy-efficient technologies by guaranteeing the savings that they aim to deliver, compared to more conventional systems. To achieve this, several elements are designed to work together, including a standardised contract that defines the energy savings commitment from the technology provider, a technical validation to independently validate the energy efficient project in key phases, an insurance product (usually a surety bond) that, in case of a discrepancy between the committed energy savings and the actually achieved ones, enables an insurance company to reimburse the difference to the client, and finally a financing product for the energy-efficient equipment, such as a green loan.
The ESI Europe 2.0 projects, partners with Društvo za oblikovanje održivog razvoja (DOOR), one of the major Croatian civil organisations devoted to the promotion of sustainable energy development, the Greek national Centre for Renewable Energy Sources and Saving (CRES), and the Slovenská inovačná a energetická agentúra (SIEA), which is the national innovation and energy agency of Slovakia, to bring the model locally in the three countries. Over the past two years, in addition to adapting the ESI elements to the new regions, the project strived to produce market assessments and financial reports, where different sectors and technologies were analysed in order to find the ones with the most potential to adopt the GoSafe with ESI solution.
Promoting Energy Efficiency among SMEs
The reports unveiled the hotel and accommodation sector has the greatest potential for energy efficiency measures in all three countries. In Croatia and Greece, the food processing industry was also identified as a priority sector. In Slovakia, areas with great potential also included the manufacture of motor vehicles, as the country is the biggest car exporter per capita in the world. In terms of specific technologies, LED lighting, HVAC, solar PV and solar water heaters were identified as the most promising technologies in general and with the best internal rate of return and payback period.
Overall, there is a strong recognition of the importance of energy efficiency in these sectors across all target countries, with a focus on improving competitiveness and reducing energy intensity, and the hotel sector has been recognised as one of the most aware of the benefits of energy efficiency.
Based on those findings, and building on the partnerships simultaneously created with banks and insurance companies locally, the ESI Europe 2.0 team is now starting a new phase of active engagement of local technology providers and potential clients to integrate the model in a pilot project.
In the first place, the beginning of the year 2023 saw the organisation of consultation workshops rallying technology providers from the three countries with the aim to present the ESI model and its different elements and obtain feedback. Therefore, the sessions did not only include a general introduction of the model and its benefits, but also contributions from the lawyers, validation entity and insurance companies partnering with the project to present respectively the standardised contract, the validation procedure and the insurance product. In total, 100 participants representing over 40 technology providers attended the 6 events in Zagreb, Athens, Thessaloniki, and Bratislava. The survey conducted revealed that a majority of the participating providers believed that the ESI model could help them sell more efficient equipment and would be interested to discuss wp-contentlying the model to a project in their portfolio. More detailed feedback came in regards to the technicalities of the model and how to better simplify and adapt its wp-contentlication in the local context.
If the primary objective of the consultation workshops was to collect the opinion of persons with expertise in selling energy-efficient solutions in the local markets, the events also allowed to train them on the ESI model and build initial interest in implementing it. For further engagement and reach of providers, several online and offline activities are planned to start towards the end of the summer and continue throughout the third year of project implementation. The consortium identified various mediums that could potentially be leveraged to raise awareness of the model and create interest among the relevant targets of the projects: conferences, trade fairs, social media and specialised press (e.g. magazines focusing on the energy or the construction sectors) can reach suppliers of energy-efficient systems, while sectors associations (e.g. associations gathering real-estate companies, or hotels and restaurant owners) can effectively engage potential SMEs that wish to install a high-performance energy system. Over the following month, the team behind the project will focus on determining the channels with the most potential and prepare to actively leverage them.
Building the ESI pipeline
Spreading the word on a new business model, and particularly convincing suppliers and potential clients to adopt it instead of a well-established selling scheme, is always a laborious task. Therefore, it is crucial to ensure that knowledge acquired during past implementations is transferred to the new front runners and to gather external points of view from experts on different relevant sectors. To achieve that, an Advisory Board was established for ESI Europe 2.0, bringing together organisations previously involved in the rollout of the model in Italy (Federazione Italiana per l’uso Razionale dell’Energia (FIRE)) and Spain (EnergyLab) but also specialists in the worlds of climate finance, energy efficiency and responsible banking from the European Investment Bank (EIB), Inter-American Development Bank (IDB) and the UN Environment Programme Finance Initiative (UNEPFI) as well representation from the International Credit Insurance & Surety Association (ICISA).
The first meeting between the board and the ESI Europe 2.0 consortium occurred in May 2023 with the objective of presenting the results of the market assessments conducted in each country, reflecting on the consultation workshops and their outcomes, and discussing the strategy to adopt for the next steps of the project. It was highlighted that the recent surge in energy prices on the continent as a consequence of the war in Ukraine significantly increased the demand for energy efficiency investments, but at the same time, inflation and interest rates may lower the spending capabilities of SMEs. In parallel, the current strong interest in graduates with a background in engineering and energy may indicate a rising attentiveness to energy efficiency. On the side of banks, it was noted that there is extensive interest in offering green products and lending for energy-efficient equipment and that this trend could be leveraged for the deployment of the ESI model.
The next stages of the project will focus on building the project pipeline. For this, the ESI 2.0 team is developing a marketing strategy to communicate the ESI model among potential users, such as customers, relevant associations, and technology providers. The main goal of these activities will be to identify the initial pilot projects that will serve as test cases for the ESI model.
It is estimated that the project has the potential to mobilise EUR 12 million of investments, resulting in energy savings of 42 Gigawatt hours (GWh) and emission reduction of 19,000 tonnes of Carbon dioxide equivalent (tCO2eq).
If you are a financial institution, an insurance company, or a provider of energy-efficient systems active in Croatia, Greece or Slovakia, you can reach out to the team just to learn more, or to join the project and its work towards a sustainable future in central and southeastern Europe!
