Innovative financing solution for mid-scale energy efficiency / renewable energy investments in industry
If you’re an SME owner and want to invest in low-carbon or energy-efficient production processes, chances are you’ve struggled to get support from investors. The truth is, you’re not alone. Even though the technology is there to save up to 10 % in energy and provide 50 % of the remaining needs from renewables (depending on the technology), third-party investments are far from easy to obtain. There are numerous reasons for this lack of enthusiasm. Banks and investors lack the technical know-how, the transaction costs are high, and the projects often lack necessary credit and performance guarantees. To make things worse, there are neither standardised procedures, nor industrial standards available. “Renewable energy (RE) and energy efficiency (EE) are not realised despite a well-done design. The risk is generally assessed as too high due to a lack of technical expertise in RE/EE,” says Christoph Brunner, CEO of AEE INTEC and coordinator of the TrustEE (Innovative market based Trust for Energy Efficiency investments in industry) project.
From assessment to investment
TrustEE gets around these problems with a new, tailor-made solution to support investors. Instead of leaving them with information they don’t understand, TrustEE handles the whole process. It screens industrial efficiency and renewable projects, optimises them through a technical assessment, and offers flexible refinancing. Its platform is specifically built for what Brunner calls ‘mid-range’ projects. These cover projects with almost no access to external financing, low EE/RE capacity and a lack of specific know-how, but committed to industrial decarbonisation. “Should the project assessment be positive, TrustEE will add it to its portfolio. The platform already includes thermal EE, solar process heat, biomass and biogas. Heat pump projects are ready to be implemented, and PV, optimised control systems and other technologies will follow shortly,” adds Brunner. It is the first time in this sector that a single tool handles project development, assessment and financing. The process results in significantly decreased risk for all involved stakeholders: the industrial end user gets access to low-risk EE/RE solutions with low impact on their balance sheet; technology suppliers can push their solutions and get their capital ready for new projects; and investors trusting the ‘TrustEE stamp’ can finally integrate bankable EE/RE projects into their portfolio. The three groups of stakeholders were involved across all project phases to ensure the platform’s commercial success. “Their feedback led to the constant improvement of the TrustEE concept and handling of submitted projects. Additionally, they were involved in continuous testing and further development of the TrustEE platform,” explains Brunner. “The final solutions and project results address their needs and we are convinced that our approach will contribute significantly to industrial decarbonisation.” The consortium is now busy commercialising their solutions. The TrustEE securitisation vehicle (which purchases the receivables and converts them to green bonds and tranches offered to investors on capital markets) is ready to be implemented, whilst the assessment solution has been transferred to a commercial platform with an investment volume of more than EUR 10 million. “Overall, TrustEE is a two-way approach, standardised project assessment as a basis for innovative financing. The EE/RE technologies implemented will be steadily extended in the coming months outside the project,” Brunner concludes. Specifically, commercial plans will first focus on Austria, Germany and Sweden, before being extended to other European and third countries.
Keywords
TrustEE, energy efficiency, renewable energy, SMEs, investment, financing, securitisation, green bonds, technical assessment, standards
