SENSEI – Smart Energy Services Integrating the Multiple Benefits from Improving the Energy Efficiency of the European Building Stock

SENSEI – Smart Energy Services Integrating the Multiple Benefits from Improving the Energy Efficiency of the European Building Stock

The EC Horizon 2020 SENSEI is a 36 months project coordinated by IEECP, focussing on the Energy Performance Contracting Models. The Energy Performance Contracting (EPC) model has been successful in attracting investments in energy efficiency, but mainly for single, large projects where:
 The building owners offer a large portfolio of buildings;
 Either the energy service company (ESCO) is large enough to secure a loan to finance the retrofit (for the case of a shared-savings agreement) or the building owners have the capacity to invest in their energy efficiency (for the case of a guaranteed-savings agreement).

This is the reason why EPC has been mainly successful in the so-called MUSH market (municipalities, universities, schools and hospitals).
Energy efficiency programs constitute an alternative path to scaling up the number of buildings that implement energy efficiency interventions.

However, the typical approach to energy efficiency programs is based on rebates and incentives that are paid upfront and are based on a predicted result. Because energy efficiency is paid in advance, with little accountability as to results, there is a misalignment of incentives, a need to rely on deemed energy savings and, thus, on only a small number of predetermined energy efficiency measures, and a need for complex and costly regulations that hinder innovation.

By contrast, for energy efficiency to be attractive to investors, it must be associated with consistent returns and stable long-term cash flows. These cash flows would allow efficiency projects to be financed in the same way one would finance a power plant; power plants are financed based on the value of the energy they will produce, and not merely on the credit of the borrower. This means more opportunities for building owners to attract third party financing and to reduce upfront capital costs, and more opportunities for smaller companies and innovative collaborations to successfully compete in the market.

Building on earlier successful experimentation outside of the EU, we will design concepts and business models that will help:

  • 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 (including compensation for achieving compliance with efficiency obligation schemes);
  • Turn the project’s value into an investable asset to attract private financing;
  • Aggregate buildings and energy efficiency measure plans into portfolios of energy savings that can be offered to energy providers and to third party investors through energy savings purchase agreements.