New Underwriting Tools to Help Open Up €100 Billion Energy Renovation Market
(BRUSSELS – 1 March 2016) Environmental Defense Fund’s Investor Confidence Project Europe (ICP Europe), supported by the European Commission’s Horizon 2020 programme, released a robust set of project guidelines to facilitate investment in the building energy renovation market. Building owners, project developers, finance and energy service providers, insurers, local authorities, and utilities all stand to gain from the ICP system, which offers transparency and accountability to the energy efficiency market by standardising how projects are developed, maintained, and measured.
Only half of the estimated €60 – €100 billion investment needed annually to achieve Europe’s 2020 building energy efficiency targets is being met, according to the United Nations Environment Programme. ICP Europe’s new protocols aim at narrowing this gap significantly by enabling investment for building energy renovation.
In collaboration with industry stakeholders and with support from philanthropic donors, the Investor Confidence Project developed its ICP Europe Protocols to define European best practices for predicting energy savings, optimising performance, and monitoring the results of energy efficiency investments. These protocols enable the acceleration of energy efficiency investments and the emergence of a robust and thriving commercial renovation sector by increasing confidence in the engineering fundamentals and financial returns of projects.
“We are happy to fund Investor Confidence Project through the Horizon 2020 programme. It has the potential to transform the market by making building energy retrofits a standardised product for the finance industry,” said Vincent Berrutto, Head of the Energy Unit at the European Commission's Executive Agency for Small and Medium-sized Enterprises. “This will contribute to reducing transaction costs and make finance more affordable.”
“We are involved in the Investor Confidence Project Europe for purely business reasons: we believe it is a necessary step to unlock the capital our sector requires to meet Europe’s energy goals,” said Stephen Barker, Head of Energy Efficiency and Environmental Care at Siemens in the United Kingdom.
“The ICP Europe project is key for putting into place the right framework in order to unlock the financial stream needed to achieve the cost-effective potential of energy savings which exists in the buildings sector, therefore, unleashing the multiple benefits linked to building renovation,” added Adrian Joyce, Secretary General of EuroACE.
“For all stakeholders, a clear positioning of the values and benefits of Energy Performance Contracting, together with project financing represent the most crucial issues. The ICP Europe Protocols structure the necessary data, which in turn enables the underwriting and facilitates the management of energy performance risks. This is a welcome support for the development of the European Energy Performance Contracting market with the longer term goal of reaching maturity”, said Volker Dragon, Chairman of eu.esco.
"We are honored to partner with public and private sector leaders in Europe to help accelerate a global asset class for energy efficiency,” said Andy Darrell, Chief of Strategy Global Energy and Finance, Environmental Defense Fund. “Wasting less energy is an essential step to prosperity with less pollution: the Investor Confidence Project can help bring that future within reach for families, businesses, communities and cities across Europe."
ICP Europe has forged strategic alliances with the financial, real estate, and efficiency sectors to develop project origination and underwriting standardisation through its protocols, which help to reduce transaction costs and accelerate deal flow for building renovation projects. ICP has attracted interest from the Energy Efficiency Financial Institutions Group, (including Siemens Financial Services, Deutsche Bank, ING, Allianz, and BNP Paribas) which cited investor confidence as the top priority for transforming the energy efficiency market.
"Governments and NGOs have for years been talking about how energy efficiency is the low hanging fruit that can bring a healthy return on investment. But, despite the actions of a few market leaders, investing in it is not as easy as it's made out to be – or everybody would be doing it,” said Dr. Steven Fawkes, Senior Advisor for ICP Europe and a member of the Investment Committee of the London Energy Efficiency Fund with 30 years of experience in the energy efficiency sector. “With the release of the first six renovation protocols, ICP Europe is helping energy efficiency become a standardised product and, thus, an indispensable part of every institutional investor's portfolio."
Interested parties are invited to contribute to ICP Europe’s efforts through the Technical Forum and help make energy efficiency a global asset class by joining the ICP Europe Ally Network.
Investor Confidence Project Europe aims to enable a marketplace for building owners, project developers, utilities, public programmes, and investors to trade in standardised energy efficiency projects. Click here for more information or connect with us on Twitter @icpeurope.
Environmental Defense Fund (edf.org), a leading international nonprofit organisation, creates transformational solutions to the most serious environmental problems. EDF links science, economics, law, and innovative private-sector partnerships. Connect with us on Twitter, Facebook, and our Energy Exchange blog