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LAUNCH: sustainable energy assets as tradable securities

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A EUR 150 million pipeline bringing liquidity to energy efficiency investments

Innovative, industry-tested tools aim to encourage more investments in energy efficiency initiatives – especially those being led by SMEs.

Energy

As the world looks to reduce its carbon emissions, there’s an increasing demand for energy-efficient solutions. Unfortunately, much of this demand risks being left unmet due to a lack of financing. “SMEs and small projects within the energy efficiency sector struggle to secure the affordable third-party financing and investments they need to succeed,” says Michael Pachlatko, European director at Joule Assets, a company working to expand clean energy development, small customer market access, and energy efficiency marketplaces. With the support of the EU-funded LAUNCH (Sustainable energy assets as tradable securities) project, Joule Assets is working to close this financing gap. “Our key aim is to standardise the processing of energy efficiency investments through the use of innovative, industry-tested tools,” explains Pachlatko. “Together, this portfolio of solutions will allow for the aggregation and securitisation of energy efficiency investments – regardless of a project’s size.”

Turning on the taps

The LAUNCH consortium brought together hundreds of stakeholders within the energy and financing sectors, including project developers, financial funds, banks and energy service companies (ESCOs). “In order for our solutions to provide real value to users – and to ensure market uptake – we knew they had to be designed by those who stand to benefit from them,” adds Pachlatko. Together, the team produced an array of practical, standardised materials. These include investor-grade energy performance contracts, standardised risk assessment protocols for investors, tools for project developers to access growth capital, and market-tested value propositions for project developers’ end clients. “Each of these solutions was designed with the goal of bringing money and liquidity into the energy efficiency market and allowing SMEs to take hold of it,” notes Pachlatko. To ensure that these tools meet actual market needs, the project conducted an extensive pilot programme across a dozen European countries. In total, 17 project developers and five financial institutions tested one or more LAUNCH solutions over the course a year. The results of these pilots informed and added value to a EUR 150 million pipeline of project investments. “This includes EUR 2.1 million in deals closed during the project itself, and a further EUR 31 million of investments being processed for finance at the end of the project,” says Pachlatko. The project also established the LAUNCH Learning Hub, a collection of free educational resources on key financial and commercial concepts. “With the Hub, users can improve the way they present their company, project, or pipeline of projects to investors and end clients,” remarks Pachlatko.

Paying dividends

But LAUNCH is more than just a collection of tools – it’s a movement. “All of our solutions can be best framed as a launching pad for further work,” says Pachlatko. Take for example the EU-funded PROPEL project. Launched in June 2021, the project involves many of the LAUNCH project stakeholders. “This project builds on LAUNCH’s momentum and looks to create a long-term, institutionalised solution for addressing the challenges of sustainable energy investments,” explains Pachlatko. According to Pachlatko, the project will establish the Sustainable Energy Finance Association (SEFA), which will incorporate and continue the work done by both the LAUNCH and PROPEL projects.

Keywords

LAUNCH, energy efficiency, energy efficiency investments, investments, SMEs, financing, clean energy, sustainable energy

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