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The Beginning
The idea of an insurance-based model that would help drive investments in energy-efficient systems by Small and Medium-sized businesses (SMEs) first germinated in Latin America. BASE shaped it into the Energy Savings Insurance (ESI) model and set it into motion with the Inter-American Development Bank (IDB) in Colombia and Mexico. After raising interest among stakeholders in other parts of the region, the ESI model is currently being used in El Salvador, Nicaragua, Brazil, Peru, Chile, Argentina, and Paraguay.
The ESI Model brought to Europe
Following its success in Latin America, the ESI model made its way to Europe in 2018 with the funding of the ESI Europe project by the European Commission Horizon 2020 (H2020) Research and Innovation Programme.
Around this time, the Commission’s 2030 Climate and Energy Framework set continent-wide targets and policy objectives across all sectors to cut down greenhouse gas (GHG) emissions by at least 40 percent from the 1990 levels and improve energy efficiency by 32.5 percent or more. Under the Executive Agency for Small and Medium-sized Enterprises guidance (EASME), which as a part of the H2020 programme sought to create a favourable ecosystem to develop and disseminate measures that accelerate the uptake of low-carbon technologies among industries, BASE found an opportunity to spotlight the energy savings potential of SMEs.
At an individual level, small businesses’ energy consumption seems relatively negligible compared to larger industries. However, at an aggregate level, promoting energy efficiency improvements in SMEs globally can provide an estimated 40 percent reduction in GHG emissions over the next 20 years. But SMEs continue to face a plethora of challenges, such as high upfront costs of the latest energy systems, conservative spending policies, and low trust in energy-savings promises that hold them back from prioritising energy efficiency considerations in their operations. The ESI model was launched by BASE in Italy, Portugal and Spain in February 2018, together with FIRE, BCSD Portugal, and Centro Tecnológico EnergyLab (collectively, the consortium) to build the business case for and increase trust in energy efficiency investments.
Lessons learned and the impact created
The implementation of the ESI model in Europe set sail in 2018 with a market assessment in each of the target countries. Its objectives were to identify the current state of the market, technologies with potential for energy-efficiency improvements, the key stakeholders in each country, and other H2020 projects to collaborate with locally. The learnings from the market assessment laid the foundation for developing the various financial and non-financial pillars of the ESI model, then bringing those to market through capacity building activities and a pipeline of pilot projects. Despite the pandemic disrupting outreach to stakeholders, the agility of the program, and business continuity of some end-users (SMEs), the consortium successfully engaged interested technology providers (TPs), a technical validation entity, insurance companies, financial institutions (FIs), and final clients, closing the visibility gap between these actors for them to work together towards the goal of the energy transition.
To facilitate targeted communication with the stakeholders that were keen on adopting energy efficiency measures, GoSafe with ESI was launched. Under this brand, an integrated, locally tailored solution was offered to energy efficiency customers looking for upgrading their technologies to benefit from guaranteed savings through four main components:
· a standardised contract establishing a simple and clear framework for the negotiations between SMEs and technology providers.
· an insurance product, offered by a local provider to insure against the technology provider failing to fulfil its contractual obligations regarding the energy savings.
· a validation process conducted by an independent technical validation entity that helps overcome the perceived high-performance risk of energy efficiency projects.
· a financing structure established by linking existing financial instruments (i.e., green credit lines) that are already available on the local market to realise energy efficiency projects.
These tools helped mitigate the high perceived risk of energy efficiency investments among SMEs by providing them assurance that the energy savings guaranteed by the TPs, if not met, will be covered by insurance. Through the market assessment, LED lighting, industrial refrigeration, cogeneration, solar PV systems, air conditioning systems, air compressors, boilers, and electric motors were identified as technologies with the greatest market potential. At the same time, BASE also ensured to connect with start-ups providing advanced energy management solutions, both as a way to support smaller organisations and tap into the latest technologies (such as, solar thermal panels) being rolled out in the European market.
A technical validation process to check and attest the capacity of the equipment offered by TPs to meet the promised energy savings was developed by SGS , a globally renowned certification company, together with the ESI Europe team. SGS was entrusted with the adaptation of the validation process and procedures for the technologies based on the existing internationally recognised standard of IPMVP and to modify it to the local context and regulation for all three countries. Furthermore, SGS serves as a neutral arbiter in cases where SMEs claim a failure to achieve assured energy savings by the TP.
Through various strands of work, from building elements for the deployment of the model and raising awareness, to undertaking negotiations and closing some deals, GoSafe with ESI was able to create project pipelines capable of mobilising energy efficiency investments to the tune of €12.5 million collectively in Italy, Spain, and Portugal. Together the four elements helped the team bring a total of 23 TPS and energy service companies, 25 final clients, and 4 manufacturers under the model’s reach in the three countries.
A closer look at each country
Italy
In Italy, during the course of the project, at least three insurance companies have been actively engaged, reviewing the ESI contract, participating in consultation workshops, publishing news on the collaboration with ESI Europe and/or evaluating technology providers for the possible issuance of the energy savings insurance coverage, namely Atradius, Abarca and Reale Mutua.
As another significant outcome, Banco BPM, the third-largest retail and corporate banking conglomerate in Italy, has shown a willingness to finance projects using the GoSafe with ESI approach as part of its sustainable strategy. Moreover, capacity-building webinars organised by FIRE attracted around 950 representatives of SMEs, TPs and FIs from Italy.
Spain
Partnering with Crédito y Caución, a leading credit insurance company in the country and the commercial risk management company CESCE for the energy savings insurance element, enhanced the model’s credibility and safety among potential clients, TPs and FIs. ABANCA, a bank based in Galicia saw the opportunity and alignment of GoSafe with ESI with their sustainability strategy and signed an agreement with EnergyLab for financing energy efficiency projects using the solution. GoSafe with ESI was awarded as one of the best innovation and technology research projects related to renewable energy, energy efficiency and environmental protection by GENERA2020 in Spain.
The Spanish market presented specificities that enabled the GoSafe with the ESI with a high interest in applying the model to solar energy systems. Thus, the team took this opportunity to adapt the contract to PV infrastructures further, enriching the model with this new capacity. Over 600 Spanish representatives from diverse sectors attended the ESI’s capacity-building webinars, organised by EnergyLab and in collaboration with other Associations and H2020-funded projects, such as INNOVEAS, FPI and Enerinvest.
Portugal
Farther into the Iberian Peninsula, the ESI model was simultaneously implemented in Portugal with BCSD Portugal. Abarca, an insurance company focused on surety bonds, was engaged in the programme, participating in consultation workshops, reviewing the ESI standardised contract and evaluating TPs for the insurance coverage. Furthermore, partnership with other Associations, such as the ADENE (National Agency for Energy) and APEMETA (Association for environmental technologies) and other H2020-funded projects, such as the ICP.
The capacity-building webinars of ESI registered more than 450 Portuguese representatives from SMEs, FIs or TPs sectors.
Spreading the word, Increasing the uptake
The ESI Website
New channels were created to promote the model: the ESI Europe project created two websites: www.esi-europe.org for initial circulation of the information regarding the project to the general public, and later the www.gosafe-esi.com page for direct communication of the GoSafe with ESI solution with TPs and final clients. More than the website being made available in Italian, Spanish and Portuguese, the GoSafe with ESI brand was also advertised through a digital marketing strategy for overcoming the hurdles of outreach imposed by the COVID-19 pandemic, which included a LinkedIn, a Facebook and a Twitter account dedicated to each country. Specific content was created for the particular needs of those channels, including e-books, guides, short videos, as well as informative posts on the topic of investments in energy efficiency. A blog page for the GoSafe with ESI website, where 11 posts have been published, was also added for greater visibility.
Management Information System
To facilitate the exchange of information between TPs, clients and the validation entity, an online platform has been developed using blockchain technology. It is a web-based portal, accessible via a secure password, which initially aims for the smooth transfers of files and documents. Since all these actions are traceable, each step of the process is recorded, providing perfect transparency on every operation. Moreover, the immutable characteristic of this type of database allows for conserving an indelible and unalterable history of transactions. As a private blockchain, enabling only verified participants to enter the system, the network guarantees users’ privacy and control over data. Finally, opening a world of possibilities, the platform has tremendous potential for further development, notably regarding the integration of the system with financial institutions and insurance companies and the reporting of externally verified emission reduction tokens.
The ESI Europe Toolkit
For a broader rollout of the GoSafe with ESI solution in other countries, the ESI Europe team captured the lessons learnt and the steps developed through the project in a toolkit. Providing a collection of resources adaptable to any specific situation, the toolkit is an essential starter pack for the front-line staff. It notably provides a full business model canvas and the GoSafe with ESI brand to add to energy efficiency products to create trust. Among several other documents, it also includes a template for market assessment reports, instructions on how to engage key actors, digital marketing instructions, templates for cost-benefit analysis, the validation processes, and a GoSafe with ESI standardised contract in English.
Dissemination
GoSafe with ESI’ dissemination activities transcended the borders of the three target countries, often reaching a wider audience within Europe and worldwide. Firstly, the ESI Europe team participated in webinars in synergy with other H2020 projects, including IMPAWATT, LAUNCH, ProDeSA and CONSTRUYE_2020Plus as well as EU-driven initiatives, such as SEIF and EU Smart Cities. On two other occasions, the team partnered with the Climate Technology Centre and Network, which on account of being the implementation arm of the UNFCCC Technology Mechanism, has a global audience of policymakers, private sector actors, and development agencies, among others. Approximately 430 individuals have been reached through these webinars attended by representatives from SMEs, FIs, TPs, and beyond.
Secondly, the word was also spread through governmental channels. Along with leveraging CORDIS, the portal to disseminate information on all EU funded research projects and their results, the project team also shared detailed explanations of the model in the European Energy Innovation Magazine and the Open Access Government Magazine.
ESI Europe’s work was also covered on extra-EU channels, such as the Swiss Sustainable Finance (SSF), which publishes advice, reports, and guidelines regularly for the integration of sustainability factors into all financial services. The SSF dedicated a chapter to the ESI model in their publication of “Financing the Low-carbon Economy” in 2020. The ESI model was also featured on two blog publications by the Green Finance LAC Platform and the IDB.
Thirdly, dissemination activities were also conducted on the consortium partners through their websites (5 in total), social media channels (totalising 13 accounts on 5 different platforms), newsletters (7 sent in total on the topic), publications (68 news and article have been published on different media and portals relevant to the sector), and press releases (3 in total). Furthermore, organisations within the consortium presented the model at conferences that covered diverse geographies via nine events occurring all over the continent, from Sweden to Malta, reaching 680 individuals from different sectors such as academics and energy experts or civil servants webinars already mentioned above.
Taking the Learnings Forward
Ever since the ESI model was first launched, the EU has raised its ambitions and updated its climate legislation to meet at least a 55% net greenhouse gas emissions reduction target by 2030 and become carbon neutral by 2050. To help achieve this bold vision, ESI Europe 2.0 was inaugurated in Greece, Croatia and Slovakia in late 2021.
As the ESI Europe team takes the lessons learned over these four years to other countries in the continent and beyond, it celebrates the tools, partnerships, and pipelines that are paving the way towards a sustainable future based on a foundation of energy efficiency and renewable energy. The project stood the test of a global pandemic, with the team continuing their efforts to engage more stakeholders through webinars, workshops, and telemarketing and digital campaigns. The TPs, SMEs, and FIs partaking in the project showed their commitment to the project by providing their comments on the draft ESI contract, evaluating the application of ESI for various works in addition to the usual ESCO approaches, sharing methodologies for assessing and reporting savings for different kinds of energy systems, collaborating with the technical staff to work on the validation and energy savings calculations procedures, and spreading the word about the model.
GoSafe with ESI’s latest video takes you through its rewarding four-year journey, told to you by the project team and partners.
