A group of energy services companies (ESCOs) and investors gathered in Italy in early March with the aim of building confidence in the energy efficiency sector.
The Sustainable Energy Asset Framework (SEAF) Investor Forum in Milan attracted 100 delegates - the project’s largest audience yet, according to Jessica Stromback, Chairman of financial services company Joule Assets Europe and SEAF project coordinator.
SEAF is a two-year project funded by the European Union under the H2020 Framework focusing on growing the energy services sector.
At the event, organisers launched eQuad, an online platform that automates the pre-finance phase of energy efficiency projects.
The aim of eQuad is to “reduce the heavy lifting” for small and medium-sized ESCOs looking for finance for the 85% of energy efficiency projects that need an investment of below €1m,” says Stromback.
ESCOs enter data into the platform to achieve three elements of pre-qualification - third-party analytics provided by Joule Assets Europe, project accreditation from the Investor Confidence Project, and Energy Efficiency Insurance from HSB Engineering Insurance.
Once ESCOs have run projects through the platform, they are matched to an appropriate finance solution from the SEAF investor network, estimated at €1.2bn in available project finance.
Energy efficiency services and customers
Stromback says that while the platform is designed to automate and expedite the journey to project financing for ESCOs particularly in southern Europe, France, the Balkans and Belgium, another major finding came out of the launch.
European ESCOs that have trialled the online platform talked about how the tool could help speed up the sales cycle by building trust with customers.
Stromback says: “This wasn’t a primary aim of the eQuad platform, which works to build ESCO-investor trust, but we realised it was an important learning.”
Stromback explains that if it takes an ESCO 18 months to close a €14m project that is okay, but if it takes the same period to close a €100,000 deal then loses financial viability.
“There is a long arc to build trust in this industry”, says Stromback, which is why acquiring a stamp of approval from eQuad could help in this process.
Antonio Ciccarelli, CEO of Italian energy services company Servizi Energia Ambiente, attended the SEAF Investor Forum and agrees with Stromback.
He told Engerati that “the most complicated thing is trust”.
“You are selling savings and how does the customer know if they can trust you to deliver on them,” says Ciccarelli.
If you can show the customer that you have investor interest in your project and an insurance quotation, “your offer doesn’t seem that crazy”, he says.
Energy efficiency projects - due diligence
eQuad allows ESCOs to register for personal accounts and input information on the type of energy conservation measures, specific technology, manufacturer, capital expenditure, annual energy savings in kWh and annual savings in euros.
When they have an investment document, SEAF offers to assist with early due diligence to ensure a contract with a prospective client will “hold water” for an investor.
It is this level of help that will make Greek ESCO Energineering Solutions “absolutely use the platform as the country tries to address its larger financial problems”.
Anastasios Vasilopoulos, Energy Engineer, who works on industrial projects for waste and heat recovery, told Engerati that he has approached banks but they want larger projects and it’s been difficult to bundle projects on their own.
eQuad is therefore a good way to access funds within the wider European investment community and provide a way for the two sides - ESCOs and investors - to communicate.
A discussion panel featuring five energy efficiency investors at the Milan event also highlighted the gap in understanding and the need to build trust.
Marianna Digka of Energineering Solutions commented that the investor panel was a “real eye-opener with fund representatives explaining their stance and improving our understanding of what the fund is looking for from ESCOs.”
Cicarelli agrees. “This was the first time for some ESCOs to understand how an investment fund thinks and what they want from a project. Debt and credit finance is a standard discussion for multinational investors but certainly not for an energy efficiency company with less than 20 employees.”
To make use of the tool, ESCOs can become early users of the beta version, which will run for free until January 2018. Early users will be eligible for a discounted account in 2018 following the official product launch.
To become an early user of the SEAF IT Platform, contact Caroline Milne.