Periodic Reporting for period 1 - SENSEI (Smart Energy Services Integrating the Multiple Benefits from Improving the Energy Efficiency of the European Building Stock)
Reporting period: 2019-09-01 to 2021-02-28
Building on earlier successful experimentation outside of the EU, we will design concepts and business models that will help: (a) generate new sources of benefits that increase the value of an energy retrofit project by enabling the compensation of energy efficiency as an energy resource, and (b) turn the project’s value into an investable asset to attract private financing. The main concept underlying the SENSEI business models is pay-for-performance (P4P), which offers an effective way to engage both energy providers and third-party investors in energy efficiency.
SENSEI will first elaborate P4P schemes for financing energy efficiency that can be implemented across the EU, and then integrate these P4P schemes with the preparation and implementation stages of the EPC model, with the intention of increasing and/or financing the gains in a building’s value that are produced by energy efficiency improvements. The developed concepts will utilize actual building data and the consortium’s competences to carry out a series of negotiation games among all SENSEI parties – representing all links in the EPC and P4P chain. The project has planned a series of activities to both disseminate the insights from these games and to support stakeholders in using our recommendations with the goal of rolling out the first P4P pilots in the EU.
The six objectives of SENSEI are:
Objective 1: Quantify the market value of energy savings from the energy providers’ perspective.
Objective 2: Produce guidelines for designing P4P schemes to compensate energy efficiency as an energy resource.
Objective 3: Design variants of P4P schemes that attract third party investors.
Objective 4: Design the smart services to substantiate the integrated P4P and EPC model.
Objective 5: Engage and support stakeholders to design the first P4P pilots in the EU.
Objective 6: Design the business models to support P4P.
The foundational work examining P4P Schemes from the Energy System Perspective has been almost finalized. Its outcomes are four important reports:
• Rewarding energy efficiency for energy system services through markets: Opportunities and challenges in Europe. The report examines the three main mechanisms for rewarding energy efficiency as an energy system resource in the US and Europe and provides recommendations to realise those rewards.
• Quantify the drivers of the value of energy efficiency. This report models and evaluates energy efficiency as a load modifying resource, independently from capacity markets. The report is expected in early April 2021.
• The Boundary Cases for the P4P Rates. This report provides a concrete classification and evaluation of the various EE measures laying the foundation for proposing a definition of a P4P rate that is transparent.
• Experience and lessons learned from pay-for-performance (P4P) pilots for energy efficiency. This report provides a review of the current experience of Pay-for-Performance (P4P) schemes outside the EU, in particular with 10 examples from the U.S. and Canada.
SENSEI is half-way through examining how P4P schemes can compensate energy efficiency as energy resource in Europe. It has examined the application of the Smart Readiness Indicator (SRI) on public buildings of the Government of Catalunya, and is proceeding in exploring arrangements that align the interests of all involved parties. This ongoing work has led to successfully identify the compensation structure of a P4P scheme – an outcome that can be directly exploited by the Government of Catalunya. Additionally, the interplay between P4P and demand response is explored, having created an app that incorporates SRI.
In terms of engaging third party investors in energy efficiency, SENSEI has completed a guiding report on how to evaluate ex-ante the multiple financial benefits of a P4P scheme. The next steps have begun with an identification of the conditions of a P4P agreement that can make a retrofit project more attractive to third party financing, the planning of stakeholder consultation activities, and ultimately assessing the potential for establishing a P4P pilot in Catalunya. Another major upcoming activity is the elaboration of the business model of the energy efficiency aggregator.
SENSEI is pursuing Smart Services and has produced web-based demonstrations of the integrated P4P and EPC model, using a set of graphical widgets implemented to display building energy data and enable interaction (combine, aggregate, compare) between them. The tool is available at https://demo.senseih2020.eu/. The most important achievement has been the development of a state-of-the-art meter for energy efficiency, named eensight.
To advance P4P beyond the present consortium’s activities, the SENSEI project is proceeding with examining ongoing and future risks and opportunities in terms of policy developments, technology, and governance. This work is expected to be finalized last, and activities have begun on the policy and technology arena, with comprehensive reviews and stakeholder consultations.
SENSEI progressed to develop new methods and tools to better understand the characteristics of a building’s energy consumption and estimate the energy savings from an intervention, as well as to provide all of its methods and tools as a reproducible open source project for practitioners to experiment and test on different datasets.
The solution developed under T7.1 named eemeter, is based on machine learning algorithms and is now publicly available for experimentation and use by any organization interested in metered energy savings. The proposed methods and tools are accompanied by a open source library of data processing workflows that can be found in the GitHub repository at https://github.com/hebes-io/eensight.
This excellent work also attracted the interest of major asset owners and financing institutions that are interested in promoting this and similar solutions for metered energy savings and pay for performance schemes.