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Driving Investment in Energy Efficiency through Energy Savings Insurance in Europe

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Reduced risk for SMEs contemplating energy efficiency

The ESI Europe project brings about a turnkey solution for SMEs wary of the risk of investing in energy efficiency. Its approach has been presented to relevant SMEs in Italy, Portugal and Spain. It is already supported by major insurance companies and financial institutions.

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SMEs may be a motor of innovation, but energy efficiency remains somewhat of a black hole for them. Once the decision to invest is made, there is no turning back – and very little certainty as to what awaits at the end of the process. Will the huge spending eventually pay off? Can the promises of energy service companies (ESCOs) related to savings really be trusted? So far, the easiest and safest choice in the face of these questions has mostly been status quo. As Daniel Magallon, managing director at the Basel Agency for Sustainable Energy (BASE) explains: “SMEs normally prioritise investments closer to their core business. By doing so, they better control the risks and returns, and avoid squandering already limited resources.” As coordinator of the ESI Europe (Driving Investment in Energy Efficiency through Energy Savings Insurance in Europe) project, Magallon believes in energy savings insurance (ESI) as a solution to providing SMEs with more guarantees of returns on energy efficiency investments. “ESI reduces risk and ensures energy savings. The model has four main components: A customer-provider contract template; an ESI offered by local insurance companies; a technical opinion on the project carried out by an independent technical validator (SGS); and access to different sources of competitive financing from local financial institutions,” he adds. Besides this unique combination of mechanisms, ESI’s main innovation lies in its so-called Management Information System (MIS). This web-based platform reports on and monitors the performance of each project. It also uses blockchain technology to guarantee the immutability and security of operations. The MIS essentially provides a platform to facilitate the exchange of information between stakeholders. “The solution provider elaborates and uploads performance reports to the platform, after which the customer approves or rejects the reports. The validation entity manages and verifies the reports when needed, and the insurance and financial institutions have visibility of the performance of the projects they support,” Magallon notes.

Attracting SMEs

The purpose of ESI Europe was to bring this combination of ESI solutions to Europe, with a focus on Italy, Portugal and Spain. Various collaboration agreements have already been reached with the different actors playing an important role in the ESI model. “We have engaged a total of six reputed insurance companies in the three countries we are operating in. This is an important outcome, since the ESI model is essentially meant to bring end user confidence in energy efficiency. We also enlisted five financial institutions and have been working closely with all these actors on relevant aspects of the ESI model,” Magallon says. Efforts to engage SMEs had started to gain traction before the COVID-19 outbreak and Magallon is confident that the consortium can rebuild momentum later in 2020 and hopes that many of the investments aborted because of the coronavirus will be resumed soon. The team have notably found opportunities in the solar rooftop sector in Spain. “We believe that the ESI Europe model can work even under these difficult circumstances. It reduces the levels of uncertainty in investment,” he notes. The service will be commercialised under the name ‘GoSafe with ESI’. If successful, it has the potential to considerably shake up market behaviour by breaking down most of the barriers between SMEs and investment in energy efficiency.


ESI Europe, ESI, SMEs, energy efficiency, finance, energy savings insurance, management information system, MIS

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