Periodic Reporting for period 2 - EENVEST (Risk reduction for Building Energy Efficiency investments)
Período documentado: 2021-01-01 hasta 2022-06-30
The perception of risk and uncertainty of results is an important barrier in building energy efficiency investments, which prevents mainstreaming private capital. Specific players as real estate developers and asset managers provide basic estimation on investment performance in terms of Internal Rate of Return (IRR) and Net Present Value (NPV) leveraging on a set of empirical methods. The investors need for standardized solid knowledge-based evaluation methods, to drive investments.
The overall objective of EEnvest project is to secure investors’ confidence in energy efficiency investments for renovation of existing buildings, thus mainstreaming energy efficiency financing thanks to a structured framework for technical and financial risk evaluation.
EEnvest supports investors’ decision-making process by providing a comprehensive outlook on the performance of building energy efficiency investment. EEnvest computes standardized investment performance indicators with no need to dive into technical details.
EEnvest contributes to reducing social and environmental impacts of existing buildings by allowing evaluation of non-energy related benefits triggered by investment. Those benefits target the building owners/users, i.e. comfort and productivity increase, and the investors, i.e. EU Taxonomy compliance and SDG impacts.
The overall objective of EEnvest project is to secure investors’ confidence in energy efficiency investments for renovation of existing buildings, thus mainstreaming energy efficiency financing thanks to a structured framework for technical and financial risk evaluation.
EEnvest supports investors’ decision-making process by providing a comprehensive outlook on the performance of building energy efficiency investment. EEnvest computes standardized investment performance indicators with no need to dive into technical details.
EEnvest contributes to reducing social and environmental impacts of existing buildings by allowing evaluation of non-energy related benefits triggered by investment. Those benefits target the building owners/users, i.e. comfort and productivity increase, and the investors, i.e. EU Taxonomy compliance and SDG impacts.
EEnvest developed models, tools and methodologies for de-risking building energy efficiency investments and evaluating non-energy related benefits. The methodology has been implemented in a web platform for meeting investors and project promoters needs and verified on two demonstration projects.
The methodology enables investors to streamline and standardize internal evaluation processes that
lead to building energy efficiency investments. The methodology adapts to private investors, asset managers, Financial Institutions and owners prospecting technical risk, financial performance, sustainability and other benefits.
In particular, the EEnvest methodology assesses renovation projects under i. Technical Risk Assessment, ii. Financial Performance Assessment and the iii. Multi-Benefits Assessment and works on an input-output basis.
The methodology mechanics consists of:
1. Input Data Collection: the project promoter provides necessary information about the building and proposed renovation project.
2. Technical Risk Assessment: quantifies the technical risks of energy renovation projects based on the Technical Risk Database and apply mitigations. The outputs are Energy Performance gap and Damage.
3. Financial Performance Assessment: combines the results of technical risk analysis with the variability of energy prices and future climate changes. Beyond the KPIs, it computes their probability distributions, enabling unmatched capabilities as sensitivity analysis and value-at-risk analysis for alternatives selection. Outputs are Payback time, Maturity, IRR, NPV, DSCR.
4. Multiple-Benefits Assessment: assesses environmental, economic, and social benefits, which create added value for the investors and other stakeholders, i.e. CO2 emissions reduction, predicted Primary Energy savings, number of jobs created, Property Value increase, EU Taxonomy compliance, SDGs.
5. MCDA Benchmarking Tool, for benchmarking investment alternatives.
6. EEnvest Risk Assessment Report, jargon-free KPI information for investors, available as PDF as well as blockchain-verified content. The information enables investors to compare different energy efficiency investments based on standardized KPIs.
The methodology has been implemented in a search and match web platform, the meeting point for project promoters and investors. The platform enables project promoters to enter information about their building and calculates technical and financial indicators related to proposed energy efficiency project and attracts investors. Investors can benchmark investment opportunities.
Two demo-case buildings have been subjected to an investment evaluation following the methodology. Project Quality Self-Assessment Tool provides an early indication of the quality of design, implementation and ongoing operation of an energy efficiency project and of the possible risks associated with the resulting quality, based on the answering of a specifically developed questionnaire. A scoring and labelling methodology has been developed.
Replicability of the EEnvest approach has been assessed for different geographic and building use markets, with a specific focus on residential buildings.
Beyond exploitation of each result by partners, EEnvest will originate a marketable online service supported by consultancy by project partners. Project development benefited of continuous feedback and engagement of external stakeholders. Early adopters among asset management companies and banks have been engaged during project workshops. Scientific community and professionals have been engaged by public events such as conferences and publications of results on journals and sectorial magazines. Finally, EEnvest supported clustering initiatives with other EU funded projects and initiatives.
The methodology enables investors to streamline and standardize internal evaluation processes that
lead to building energy efficiency investments. The methodology adapts to private investors, asset managers, Financial Institutions and owners prospecting technical risk, financial performance, sustainability and other benefits.
In particular, the EEnvest methodology assesses renovation projects under i. Technical Risk Assessment, ii. Financial Performance Assessment and the iii. Multi-Benefits Assessment and works on an input-output basis.
The methodology mechanics consists of:
1. Input Data Collection: the project promoter provides necessary information about the building and proposed renovation project.
2. Technical Risk Assessment: quantifies the technical risks of energy renovation projects based on the Technical Risk Database and apply mitigations. The outputs are Energy Performance gap and Damage.
3. Financial Performance Assessment: combines the results of technical risk analysis with the variability of energy prices and future climate changes. Beyond the KPIs, it computes their probability distributions, enabling unmatched capabilities as sensitivity analysis and value-at-risk analysis for alternatives selection. Outputs are Payback time, Maturity, IRR, NPV, DSCR.
4. Multiple-Benefits Assessment: assesses environmental, economic, and social benefits, which create added value for the investors and other stakeholders, i.e. CO2 emissions reduction, predicted Primary Energy savings, number of jobs created, Property Value increase, EU Taxonomy compliance, SDGs.
5. MCDA Benchmarking Tool, for benchmarking investment alternatives.
6. EEnvest Risk Assessment Report, jargon-free KPI information for investors, available as PDF as well as blockchain-verified content. The information enables investors to compare different energy efficiency investments based on standardized KPIs.
The methodology has been implemented in a search and match web platform, the meeting point for project promoters and investors. The platform enables project promoters to enter information about their building and calculates technical and financial indicators related to proposed energy efficiency project and attracts investors. Investors can benchmark investment opportunities.
Two demo-case buildings have been subjected to an investment evaluation following the methodology. Project Quality Self-Assessment Tool provides an early indication of the quality of design, implementation and ongoing operation of an energy efficiency project and of the possible risks associated with the resulting quality, based on the answering of a specifically developed questionnaire. A scoring and labelling methodology has been developed.
Replicability of the EEnvest approach has been assessed for different geographic and building use markets, with a specific focus on residential buildings.
Beyond exploitation of each result by partners, EEnvest will originate a marketable online service supported by consultancy by project partners. Project development benefited of continuous feedback and engagement of external stakeholders. Early adopters among asset management companies and banks have been engaged during project workshops. Scientific community and professionals have been engaged by public events such as conferences and publications of results on journals and sectorial magazines. Finally, EEnvest supported clustering initiatives with other EU funded projects and initiatives.
EEnvest promoted building energy efficiency project financing by translating project technical features into investment performance profile, including costs from underperformance/damages and non-energy related benefits. EEnvest approach to building energy efficiency investments is based on the following pillars:
- Structured technical risk evaluation framework, with a focus on energy performance baseline and impacts of renovation actions in terms of reduced energy consumption, operation and maintenance costs, increased building value accounting also for non-energy related benefits. The framework includes a method for technical risk evaluation.
- Structured financial performance evaluation framework, which includes the evaluation of building energy efficiency action performance, to allow for the translation of technical risk (failures or mismatch between designed and as-built performance) into financial indicators for investors.
- Standardized approach to technical/financial due-diligence & standardized agreements to manage contractual issues among actors of the building process, including both traditional instruments, such as energy performance contracting (EPC) as well as emerging financing options, such as crowdfunding, energy efficient mortgages schemes and others.
The project produced an ex-ante evaluation of:
- Increased building value, rental income and marketability expected after the investment for investors, i.e. funds and asset managers, to be confident and willing to upgrade their assets.
- Increase comfort and improve well-being conditions in the built environment, for occupants to achieve higher living standards and higher productivity.
- Compliance to EU Taxonomy and contribution to SDG goals, for impact investors.
- Building stock decarbonization and improved building operation, with a focus on energy efficiency as the most relevant element to ensure O&M cost reduction.
- Structured technical risk evaluation framework, with a focus on energy performance baseline and impacts of renovation actions in terms of reduced energy consumption, operation and maintenance costs, increased building value accounting also for non-energy related benefits. The framework includes a method for technical risk evaluation.
- Structured financial performance evaluation framework, which includes the evaluation of building energy efficiency action performance, to allow for the translation of technical risk (failures or mismatch between designed and as-built performance) into financial indicators for investors.
- Standardized approach to technical/financial due-diligence & standardized agreements to manage contractual issues among actors of the building process, including both traditional instruments, such as energy performance contracting (EPC) as well as emerging financing options, such as crowdfunding, energy efficient mortgages schemes and others.
The project produced an ex-ante evaluation of:
- Increased building value, rental income and marketability expected after the investment for investors, i.e. funds and asset managers, to be confident and willing to upgrade their assets.
- Increase comfort and improve well-being conditions in the built environment, for occupants to achieve higher living standards and higher productivity.
- Compliance to EU Taxonomy and contribution to SDG goals, for impact investors.
- Building stock decarbonization and improved building operation, with a focus on energy efficiency as the most relevant element to ensure O&M cost reduction.