Energy efficiency is quantifiably the cleanest and cheapest energy resource available to us today and therefore benefits from strong regulatory backing both at national and European levels. While the European Commission quantifies the potential of the European energy efficiency market at €8 billion, well under €1 billion is accessible to the energy service industry because of the high costs of due diligence, leaving significant commercial opportunity unavailable. The high upfront costs of project valuation lower the ability of institutional and private investors to invest in energy efficiency projects, hitting small to medium enterprises particularly hard.
The overall objective of the project is to complete and demonstrate through a group of investor and contractor stakeholders, the Sustainable Energy Asset Framework (SEAF) - IT Platform, to lower valuation and risk assessment barriers for SEA projects in 10 EU member states. This will lower the upfront cost for contractor-investor engagement by between 30% and 60% (depending on project type), thereby significantly enlarging the pool of potentially viable projects.
The project's aim was to develop a platform, combining the following existing functionalities:
• Valuation: Robust independent ex-ante automatic valuation of SEA projects for both SEA contractors and SEA investors in different market environments against current market data
• Risk Assessment: Initial audit of the project’s technical risks, including the proposal of risk transfer mechanisms such as insurance of equipment, business interruption or asset performance to increase investors’ trust level in a project;
• Optimization: SEA project optimisation through e.g. identifying additional revenue streams and providing partnering options
• Standardised performance protocols
• Facilitation of the communication and cooperation between investors and contractors
The key lessons the SEAF team learned during the project are the following:
Flexibility and usability
A successful product in this field needs to be both flexible enough to accommodate all the various business models, but also user-friendly enough so that users will actually want to interact with the product.
Standardization
One of the key values of the SEAF platform is that it gives investors a project report that always looks identical and contains the same key pieces of information needed to make an initial investment decision.
Trust
Understanding users on a deep level requires a high level of trust between the platform operators and the users.
Education
The SEAF platform finally addressed one more critical barrier in the energy efficiency finance sector: connecting valuable projects with sources of capital often fails simply because of a communication gap between the main parties involved. Here, the SEAF platform provides a number of tools to support this delicate process, by standardizing the use of terms, and offering explanations on concepts and parameters used.
