“Simple is best” – why energy efficiency is the ‘new spade’
Example: http://www.seai.ie/Grants/Better_Energy_Communities/BEC-Application-Guide-2016.pdf (EIRE paper on energy efficiency – an example of the European appetite for a new way to use the lessons from clean energy asset creation to provide a new wave of “simple business”).
Globally, renewable energy companies are looking to refine their financial models to cost down their overall spend, become leaner, and to learn how to live subsidy-free.
The lessons from power plant creation such as solar (residential/commercial rooftop/commercial groundmount) can be applied to the energy service company which is often acronymed “ESCO”.
The ESCO’s team mainly:-
(a) survey a building, suggest energy consumption modifications/energy loss rectifications/energy creation or enhancement (e.g. solar panels and so on),
(b) sign the asset for the ESCO (the energy performance agreement or “EPA”),
(c) install the measures (such as: building energy monitoring software solution, building energy management/control (demand response) software solution, insulation, smart boilers, smart meters, upgrade internal wiring, install rooftop or BIPV (“built-in-photovoltaic”) solar/other renewable energy system tied into the main internal demand response IT solution controlling the building’s energy consumption – create the integral virtual power plant that can be locally/remotely monitored), and then,
(d) have an operation & maintenance service for the building (/this extends of course to owners of portfolio(s) of buildings e.g. in an office estate or local authority housing association (“LAHA”) housing portfolio, and such other types of owners of buildings).
EPAs can have a reward mechanism in-built if e.g. modelled savings given the energy audit and the implemented measures at the time execution of the EPA are exceeded during a set period (/set periods).
Many buildings can benefit their inhabitants, and their owners/primary lease holders, by becoming less wasteful in terms of energy use and consumption.
Real estate globally can benefit from an aggregated work-solution delivered by an ESCO.
ESCOs with multiple assets of executed EPAs with good (well rated) customers, and across a relevant tranche of assets good (net) returns, then lends the ESCO open to having the revenue streams being acquired from the EPAs into a relevant structured finance model.
Its often said that the spare parts businesses do the best as they identify a sector that will always be busy, then keep supplying it. There will always be a plentiful amount of real estate with energy consumption that requires management.