The business case for energy efficiency is becoming increasingly clear, thanks to awareness and regulatory efforts across Europe.
Servizi Energia Ambiente (SEA) was one of the first certified energy service companies (ESCOs) in Italy according to its ESCO standard UNI 11352, working mainly on energy performance contracts (EPC) in residential and tertiary sector, as well as auditing and energy management in the industrial sector.
SEA finances the whole project for its partners as a leading ESCO and is responsible for the design, installation and operations and management (O&M).
In a presentation at the Accelerating Energy Efficiency Engerati Meet titled ‘Creating business value with energy efficiency: Cost reduction for the customer’, SEA presented key takeaways from its experience as an ESCO in Italy.
With insight from Mauro Ciccarelli, who is responsible for obtaining and selling white certificates at SEA, we learn more about its innovative commercial model.
Making the business case for energy efficiency
Countries such as Italy that are threatened by frequent earthquakes and older, poorly maintained buildings are in need of better energy efficiency initiatives and efforts. In fact, the residential sector in Italy is the worst in the country sector for energy consumption.
Through the lens of working with a condominium, Ciccarelli explains how agreements for projects begin with laying out the baseline costs for energy and O&M, after which SEA can assess the best solution.
As is standard now in many energy efficiency projects, an EPC is put into place to guarantee savings, that will in turn pay back the ESCO's initial investment.
In addition to this, the ESCO becomes eligible to reap benefits from incentives, such as the Ecobonus tax credit, making projects such as deep renovations more interesting.
Incentivising energy efficiency
Ecobonus is a tax detraction obtainable as a result of works carried out to improve energy efficiency. For instance, Ciccarelli says, “You can reach 75% tax reliefs for high energy improvement, or 50-65% for an improvement on energy efficiency from thermoregulation systems.”
“The tax credit can be transferred to suppliers, to private subjects or to ESCOs, and what that means is that there are very strong partnerships.”
For instance, SEA has fostered a strong relationship with ENI Gas e Luce, established in 2017, to develop sales in the retail market and business gas, light and energy solutions.
In their working partnership, SEA acts as a general contractor for the retrofits, and ENI Gas e Luce promotes the services through its commercial networks, as well as supporting the tax credit system.
The owners of apartments in these projects receive the benefits of tax detractions immediately, and buildings become more efficient and thus increase in value.
Energy efficiency in practice
An example Ciccarelli cites is that of Condominio Lidia in Treviso, Northern Italy. Constructed in 1970, the 10 apartment building had no thermoregulation systems, and was heated by gas and oil, leading to overall costs of €16,350 per year.
SEA installed a new boiler and temperature control system as well as insulation through an EPC, and the €45,000 paid by apartment owners will be repaid by the savings achieved. In the first year alone, the heating cost was reduced to €6,000.
Thanks to the EPCs and tax deductions, no initial investment is required from the customer, and over the course of 10 years, the energy efficiency and avoided loans will bring a total of around €45,000. Furthermore, the adjustments moved the building from an energy performance class of G to B, increasing the property value significantly.
Ciccarelli concludes with the benefits for the customer: “What the customer is really buying is energy efficiency, savings, comfort, low cost, guaranteed savings and increased property value.”
To view the full presentation, visit Ciccarelli’s session ‘Creating business value with energy efficiency: Cost reduction for the customer’ and watch on-demand.