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Driving investments in energy efficiency through Energy Savings Insurance: David Magallon, BASE.pdf

  1. General Implementation information CEFIM - International Focus Group Discussion 14th March 2023
  2. The ESI model was recognised by the Global Innovation Lab for Climate Finance as one of the most promising instruments to mobilise private sector investments in energy efficiency. ESI also features in the G20 Energy Efficiency Investment Toolkit by the UNEP FI and in the Swiss Sustainable Finance compendium of instruments for Financing the Low- Carbon Economy. 1 Mexico El Salvador (GCF) Bancoldex Argentina Chile Peru Mauritius Turkey Mongolia (XavBank) India Goiás Fomento BANDES BRDE Paraguay )GCF) ESI Europe in Italy, Portugal and Spain Croatia, Greece and Slovakia Morocco Seeking support to implement ESI in Indonesia
  3. barriers: - Higher upfront costs - Lack of trust among stakeholders - Competing investments/ financing opportunities • 'Small’ Investments 2 $ $ Year 1 Year 2 Year 3 Year n $ CAPEX OPEX High-efficient Conventional 1 2 Project Investment Maintenance cost Energy Consumption cost Accumulated cost over the lifespan of equipment (10 years)
  4. Risk/Return tradeoff investment opportunities for enterprises EE is perceived as a high-risk investment whose return does not compensate for the risks. The ESI model reduces the perceived risk of EE investments, making them more attractive. 3 Percived risk Expected return Savings account Investment in key activities related to the business Investment in energy efficiency Stock market Investment in energy efficiency
  5. 1. Energy Performance Contract – Guaranteed Savings 3. Energy Savings Insurance 3. Technical Validation 4. Green Financing 4 Operation Implementation Phase Contract and negotiation Arbitration Verification of reporting Verification of Installation Validation of project
  6. ü Customer as investor and credit taker for EE project with ESI. ü Banks mobilise their green credit lines for EE projects. ü Banks are engaged and trained to integrate the ESI as part of the credit process for EE project. 5 Financing Institution Customer Tech provider Energy Efficiency Project 1. Turnkey contract - Project payments 2. EE Performance Guarantee 3. Supply, installation, maintenance M&R 4. Energy Savings 2.EE Performance Guarantee Credit/ leasing Insurance company
  7. 6 1. Periodic Reporting 2. Reporting approval 4. Convened in case of Disagreement 5. Reports on the actual savings 5. Reports on the actual savings 3. Aggregate information to report EE benefits