We had a great time during the last workshop, organized by SEDA, devoted to their project EnerFund, financed under the Horizon 2020 program. The main concept of the event was to demonstrate the possibilities of the internet application, developed by a consortium, coordinated by the Cyprus University of Technology, and to expand on the ways how it might fit in the energy efficiency ecosystem of the 13 countries involved. From my perspective, as being a keen advocate for open data, analytics empowered decision-making and market oriented business models in energy efficiency, when I was invited to present, I decided to share useful practices and sources of information that had proved in my experience to save time and money and that could easily take advantage of EnerFund, as well as a vision of the directions the energy efficiency ecosystem might further develop. In the next couple of paragraphs I will try to touch on the main points of the presentation I gave and I hope that to be of use for the major market stakeholders, acting in the energy efficiency arena.
Show me the … kWh/year
When we talk about development of energy efficiency market, it is of uttermost importance for the potential clients and financial institutions to validate that there is a tangible track record of completed projects, feasibility studies, accumulated engineering practice and sustainable positive financial effects, which is expected to increase their trust in the sector and, hopefully, put their money in.
What is even more important than that, envisioning the very near future, is ensuring the ability these kinds of „records“ to flow with no friction through the energy efficiency ecosystem, having the ability to be constantly enriched by the participating stakeholders and, as a consequence, unlock further investments, benefits, experience and trust. As a result we would have made energy efficiency more dynamic, transparent and tradable as well as the possibility for design of innovative energy efficient financial products – more realistic.
But, first things first. At the moment it is realistic for anyone to conduct a quick and cheap check of a given energy efficiency project and/or develop optimum strategy, using current sources of data. The ones provided are for Bulgaria, but an analogical infrastructure is expected to be present in other EU countries where the regulation in most cases is quite similar.
EnerFund is aiming at becoming the richest data source. Just for Bulgaria it consists of over 5 000 records, holding information of 14 parameters like savings, investments, geo-position, building type, year built and so on. With the help of some basic scripting skills it is possible to automatically download the data periodically and update models/indicators that one uses in its business processes. Holding information for Energy Performance Certificates, this data could easily be modeled for prediction of savings purposes.
Bulgarian Energy Efficiency Fund has decided to publish its database, consisting of over 150 financed by the fund and realized energy efficiency projects. It’s validated data, which makes it the most valuable one on the market. From my experience and familiarity with some of the projects in the database, I can say that one can quantify a coefficient of relation with the EnerFund data, adjusting the amount of investment and savings from certificates with the ones from the real world.
DEEP is probably the biggest database on EU level with its over 10 000 records. What’s valuable is that half of it consists of industry records. Unfortunately, I didn’t find a way to automate my interaction with DEEP so that I could include it in my decision-making process, regularly updating key indicators and models or to go deeper and conduct more advanced data exploration and analytics. The interaction is limited to just point-and-click routines which is usually more time consuming. Nevertheless, the project is excellent and second phase is on its way as far as I was informed by a member of the project team a few months ago.
Annual reports from the Sustainable Energy Development Agency and the energy efficiency related records in Public Procurement Agency can enrich and validate the data in the aforementioned data sources. Some of the valuables insights that could be extracted form this data can be found in my presentation, given in the end of last year on one of the events of the European Energy Network.
Invaluable sources for financial stability check of public and private entities.
Open data is indispensable in its the ability to empower not only authorities, shaping the public policy, but also financial institutions, ESCOs, multinational engineering companies, donor organizations and the like, envisioning the options to enter a new market.
The case for Bulgaria looks well defined with € 753 million, prescribed to be invested in 5 044 buildings certificates by energy auditors. At the same time there is a 4-digits GWh expected deficit for Savings Certificates, which energy traders have the option to buy in order to fulfill their obligations for energy savings each year. Current procurement procedures buy at € 2.85 million for 47.879 GWh.
Looking a bit closer and if we assume that:
(i) the private sector has access to up to 10 years credit lines at 5% i.r.;
(ii) clients pay back with savings,
then a good deal of projects fall behind,
which leads to lost opportunity, if we reason as entrepreneurs:
It’s really surprising that financial help/grants is predominantly channeled in that „bankable“ segment, practically pushing away the private capital. No one can compete with free money. Sadly, the „not bankable“ segment stays untapped, as well as the tons of CO2 emissions. On the contrary, the grants could be re-routed to subsidize excluded from the market projects to an extent to become reasonable to handle from entrepreneurs – ESCOs, Bank loans etc. In other words, repayment period of below 10 years would cost around € 120 million.
“The Gems & The Dregs”
The present open data infrastructure provides unprecedented opportunity for Consultants and ESCOs to precisely target prospective clients, based on a predefined set of filters/key parameters. For example it’s expected the most attractive projects to be the ones that unlock maximum savings with minimum investments and the savings are enough to repay the investment in no more than 10 years at 5% i.r.
It’s even possible to optimize for additional slices of data like current energy rating and building’s area, classified as small, average, above average number of square meters and we will get the following top 5 winners and losers:
Not all Libraries are „gems“ in terms of profitability.
What’s in it for me?
For EE Consultants
It’s probably the best time to be an EE consultant. On one hand you have a ready-made list with prospective clients and on the other – a list with buyers in the face of ESCOs and obliged to invest in savings energy traders.
After a process of selection of profitable market segments, demonstrated in the last section, the EE consultant is able to narrow his search to a concrete list of projects. At this stage it is a good time to conduct a financial check of the prospective clients.
Clients that have been able to pass the above checks are worth the time to be visited and a CEO-friendly one-pager offer to be presented with a few numbers in it: energy savings measures, investment, loan, i.r., repayment period, savings, the cost of doing nothing. Of uttermost importance at this stage is the client to build up a healthy level of trust in the project offered. In that respect the offer should also include number of records used behind the presented numbers, type of sources, data transformations and modeling applied, so that anyone can check for himself and rest assured.
The final step is the client to engage in a proper form with the project so that additional more expensive resources are authorized to kick in like engineering personnel on-site, financial due-diligence from a financial institution and legal analyses. The proper form of engagement could be a letter of intent, issued by the client or a facilitator contract between the EE consultant and the client. Both would send a strong signal to ESCOs and financial institutions to deploy resources for further structuring of the project at a stage when no one pays anything.
ESCOs definitely benefit from the open data infrastructure as the quality of projects, entering their pipeline funnel, increases due to the empowered EE consultants. In that way the ESCOs can spend resources only when project structuring fine tuning is required and leave the rest to the EE consultants.
For Financial Institutions
At this stage it’s possible financial institutions to implement scoring mechanisms allowing them to conduct quick checks on projects feasibility. Developing energy efficiency bureau, much like in the philosophy of/or extending credit bureaux, shared among market stakeholders, would ignite a positive avalanche effect in increasing transparency, trust, early detection of toxic effect and bubbles, ultimately paving the way for energy efficiency participation on the capital markets.
In the very near future the time will come for adaptive, micro-projects-based financial instruments at scale, preventing and/or correcting inefficiencies in seconds, not decades.
The Role of Alliance for EE
The Alliance for EE continues to play its role as energy efficiency market enabler. Consolidating over 20 years of knowledge and practice owing to its members, it continues to help policy makers, project developers and financial institutions aiming at highest standards in the sector.
Kiril Raytchev, Chairman of Alliance for Energy Efficiency
 Follow the link to view the source code and reproduce/develop further the presented analyses: https://github.com/kirilraytchev/EEDevFinance
 Presentation with a few improvements is available below:
 Some pictures of the event are available below: