EU Merci Conference, 23. February 2017 THE DE-RISKING ENERGY EFFICIENCY PLATFORM (DEEP) Clemens Rohde, Fraunhofer ISI (clemens.rohde@isi.Fraunhofer.de) 1
BACKGROUND – EEFIG GOAL TO UP-SCALE ENERGY EFFICIENCY INVESTMENTS IN EUROPE • Energy efficiency investments have multiple benefits for Europe: Increase security of supply - through reduced reliance on imported energy; Enhance competitiveness of Europe's industry; and Reduce global and local environmental problems. Buildings are responsible for 40% of final energy consumption and industry is responsible for 26% of final • energy consumption in EU. 75% of buildings were built with no or minimal energy-related building codes and 75-90% of today's buildings will still be in use in 2050. EU's industry is a world leader in energy efficiency, but there are still substantial potential savings. EU's investment need in energy efficiency 2014-2035 (for 2 ⁰ C scenario, IEA) is EUR 1,180 billion in buildings • and EUR 140 billion in industry. Current investment trends must increase multiple times. The Energy Efficiency Financial Institutions Group (EEFIG) was established by the European Commission • Directorate-General for Energy (DG Energy) and United Nations Environment Program Finance Initiative (UNEP FI), in 2013 to address these points and make policy and market recommendations. • EEFIG established an open dialogue and work platform for public and private financial institutions, industry representatives and sector experts on how to overcome the challenges of obtaining long-term financing for energy efficiency. Since its launch, EEFIG has engaged 120 active participants from 100 organizations to deliver a clear and unambiguous messages to policymakers and market stakeholders. 2
THE EEFIG DE-RISKING ENERGY EFFICIENCY PROJECT • The EEFIG 2015 report "Energy Efficiency – the first fuel for the EU Economy; How to drive new finance for energy efficiency investments" highlighted among others the following problems: • Lack of evidence on the performance of energy efficiency investments makes the benefits and the financial risk harder to assess. • Lack of commonly agreed procedures and standards for energy efficiency investment underwriting increase transaction costs. The EU Commission has taken EEFIG report in full consideration for the implementation and • development of its review of energy efficiency related policies. In continuation of the EEFIG 2015 findings, the EEFIG de-risking project is during 2016-17 addressing • the fundamentals of energy efficiency investments in the buildings and corporate sectors through: • Creation of an open source database for energy efficiency investments performance monitoring and benchmarking (De-risking Energy Efficiency Platform or 'DEEP') • Development of common, accepted and standardized underwriting and investment framework for energy efficiency investing (Value and risk appraisal framework for energy efficiency finance and investments) • The goal of these initiatives is to increase energy efficiency financing at competitive terms through improving risk assessment and reducing transaction costs. 3
THE DE-RISKING ENERGY EFFICIENCY PLATFORM (DEEP) The De-risking Energy Efficiency Platform (DEEP) was launched on 30 November 2016 in close coordination with the Commissions launch of the Clean Energy for All Europeans package. DEEP is an open source database for energy efficiency investments performance monitoring and benchmarking that provides detailed analysis and evidence on the performance of energy efficiency investments to support the assessment of the related benefits and financial risks. The main objective of the DEEP Platform is to better understand the real risks and benefits of energy efficiency investments based on market evidence and track record. Since launch on 30 November 946 users from 61 countries have viewed 4,500 DEEP pages 4
THE DE-RISKING ENERGY EFFICIENCY PLATFORM (DEEP) Upon launch the database includes 7,800+ energy efficiency projects in buildings and industry from 25 data providers: 5
THE DE-RISKING ENERGY EFFICIENCY PLATFORM (DEEP) EMERGING RESULTS - BUILDINGS Single measures (e.g. Lighting or HVAC) payback in a median of 3 years, whereas projects with deeper renovations typically require over 11 years to be paid back. 6
THE DE-RISKING ENERGY EFFICIENCY PLATFORM (DEEP) EMERGING RESULTS - BUILDINGS Deeper renovations are attractive from a socio-economic point of view, but require access to long-term financing. Avoidance costs - socio-economic point of view Avoidance costs - financial point of view (2% real discount rate) (6% real discount rate) Note: The avoidance cost is the average cost in Eurocent for each kWh energy saved over the lifetime of the measure. Financing terms have a significant impact on project viability for deeper renovations. 7
THE DE-RISKING ENERGY EFFICIENCY PLATFORM (DEEP) EMERGING RESULTS - INDUSTRY The median payback from over 2,700 DEEP contributed projects from Industry is 2 years Many energy efficiency opportunities in industry have payback times below 3 years 8
THE DE-RISKING ENERGY EFFICIENCY PLATFORM (DEEP) EMERGING RESULTS – VERIFICATION • For buildings projects, savings have been verified by third parties for 31% of the projects and 20% have not been verified. The verification status is not known for almost half of the building projects. • For industry projects, less than 1% of the projects have an independent ex- post verification of the energy savings. EE projects continue to lack sufficient • monitoring of ex-ante and ex-post data, leading to higher risk perception. 9
THE DE-RISKING ENERGY EFFICIENCY PLATFORM (DEEP) EMERGING RESULTS – NON ENERGY BENEFITS • Non-energy or multiple benefits from energy efficiency projects (such as carbon emission reductions, reduced maintenance costs, health & safety and employee satisfaction) are important investment drivers. • At present just 12% of Buildings and 5% of Industrial projects (775 total) from over 7,800 in DEEP contain information about the non-energy or multiple benefits delivered through energy efficiency investments. Multiple benefits continue to be less • visible and hard to track consistently. This suggests that real project returns are, in fact, much higher than reported in DEEP. 10
THE DE-RISKING ENERGY EFFICIENCY PLATFORM (DEEP) WHY SHOULD YOU USE IT? • DEEP provides anonymized historical data structured along major project characteristics (geography, energy efficiency measures, verification status, industry / type of building, multiple benefits, etc.). DEEP platform provides insight on financial performance • indicators such as payback time (allows assessment of minimum loan tenure needed) and discounted avoidance cost (allows assessment of financial viability at different interest rates and energy prices). • These clearly document the existence of many investment opportunities within energy efficiency in both buildings and industry. • Financial institution may upload their own individual projects or portfolios as private projects and benchmark them against user-selected sub-sets of the projects in DEEP. • Want to test it? Access DEEP through: deep.eefig.eu 11
THE DE-RISKING ENERGY EFFICIENCY PLATFORM (DEEP) FOCUS DURING 2017 Focus on supplementary data collection during 2017: • Better geographic spread of buildings energy efficiency projects (more projects outside Germany, Poland, France, UK and Belgium) • Better geographic spread of industrial energy efficiency projects (more projects outside Germany, USA and UK) • More projects with data on verification status (for both buildings and industry) More projects with information on multiple benefits (for • both buildings and industry) Please help us achieving this by becoming a data provider! You may contact: Carsten Glenting (cag@cowi.com) or Timothée Noël (Timothee.Noel@ec.europa.eu) 12
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