SENSEI

Pay-for-performance to drive energy efficiency in Europe

September 2019 - February 2023

SENSEI enabled energy efficiency to be rewarded as an energy resource and a new grid service while turning the energy efficiency retrofit project’s value into an investable asset for private financing.

SENSEI combined pay-for-performance (P4P) arrangements with the Energy Performance Contracting (EPC) model and engaged in negotiation games with preliminary stakeholders. This offers the possibility for stakeholders to shape the SENSEI business models according to their needs.

In making buildings more energy-efficient and attractive for third-party investors, SENSEI is fostering the business community to contribute to the EU climate goals while avoiding the construction of new power plants and reducing grid infrastructure costs.

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Policy recommendations

Pay-for-performance schemes: An innovative policy-driven approach for building renovations

The 10 Recommendations for energy efficiency

The following 10 policy recommendations aim to create a market-driven, performance-based system that recognizes the value of energy efficiency. As an outcome, they should incentivize property owners, building managers, and energy service companies to invest in energy efficiency measures and establish market structures that reward market actors based on the achieved
energy savings.

Utilizing Economic Stimulus Packages to Support Metered Performance:

Economic stimulus packages can be leveraged to encourage the development of innovative business models that prioritize actual/metered performance, such as P4P schemes. This can help enhance the Energy Performance Contracting model through the presence of aggregators to reach “hard- to-reach” sectors, such as the residential and small to medium commercial building sector.

Establish Strict Energy Performance Requirements:

To improve the energy efficiency of new and existing buildings, strict energy performance requirements should be established for all parts of the building stock, with specific compliance deadlines.

Enhance the Role of Energy Efficiency Market Players:

The role of key energy market actors, such as Energy Service Companies, aggregators, and contractors, should be strengthened to ensure their participation in building renovations and involvement in the residential sector.

Recognize Energy Efficiency as a Valuable Resource:

Utilities and Distribution System Operators should be required and incentivized to utilize energy efficiency as a valuable resource in providing services to the energy system. The “metered savings” methodology outlined in Annex V of the Energy Efficiency Directive (EED) should also be partially required to support performance-based schemes.

Elevate Transparency and Accuracy through Metered Methodologies:

The rules for monitoring, reporting, and verifying energy savings outlined in Article 7 of the Energy Efficiency Directive (EED) should be further strengthened to improve transparency and accountability by promoting the use of advanced M&V methods.

Increase Ambition in Public Buildings:

Additional requirements should be placed on all public buildings, beyond central government buildings, to encourage increased energy efficiency renovations and actual/metered savings. The increased need for renovation should also include increased involvement from energy efficiency service providers.

Improve Energy Efficiency in Small and Medium Enterprises:

Small and medium enterprises should be subject to additional requirements, such as mandatory energy audits and the implementation of energy-saving recommendations, along with increased requirements for actual/metered savings.

Involve Stakeholders in Pay-for-Performance Scheme Implementation:

Involving stakeholders in all steps of the design process is crucial for the successful implementation of P4P schemes within the EU. Ministries and Energy Agencies could play the role of market facilitators and help design a widely acceptable system to drive investments in energy efficiency.

Promote Standards and Capacity Building:

Training and capacity- building activities should be promoted to encourage the adaptation and implementation of P4P schemes, along with establishing standards, template contracts, and procedures.

Raise Awareness and Empowering Citizens:

The concept of the energy efficiency aggregator should be promoted at a national level and final users/consumers should be made aware of the benefits and potential of P4P schemes.

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Project updates

Jan 30, 2023

Pay-for-performance to drive energy efficiency financing in Europe – how innovative business model...

May 12, 2022

Column for eceee: Time for energy efficiency to be valued as grid resource, by RAP and IEECP

May 31, 2023

Energy efficiency financing Energy efficiency in industry and SMEs Energy efficiency business models Energy savings obligation, monitoring and verification