Energy Efficiency and Saving Projects: barriers, the role of ESCos, their business model and risk management solutions.

Abstract

Energy efficiency and saving are the workhorses of the clean energy world. Although renewable energy technologies usually take the spotlight, they often work quietly in the background. The International Energy Agency estimates that in order to meet the goal to stay under the two-degree limit by 2035, investments in energy efficiency must represent at least half of all the global energy investments. While there is a broad agreement at the international level that there is an unexploited economic and technical energy efficiency potential, the measures implemented to improve the overall energy consumption haven’t been enough so far to stay on track to reach the targets and overcome all the barriers affecting the implementation of any energy efficiency or saving project. Energy Savings Companies (ESCos) could play a crucial role in providing technical and financial expertise for the project development. Through the implementation of an Energy Performance Contract, they can correctly evaluate the technologies to be applied, define a correct project business plan, intervene in the financing phase of the projects using their own- or third-party resources and even more, putting clarity in the division of responsibilities related to the project, thus allowing a correct risks management. In addition to the classic technical/financial tools, the potential of blockchain technology has recently been studied as a solution to speed up the implementation of projects, able to solve enormous impediments such as trust between the parties, the accuracy of efficiency estimates, potentially making the market for certificates of functional efficiency and central to developments in the sector.