Securing investments for small to medium enterprises (SMEs) can be a costly venture in of itself.
Facing extensive checks, long periods of waiting and a general lack of understanding between business-minded financiers and product-focussed engineers, SMEs and energy service companies (ESCOs) have had an uphill battle when supplying energy efficiency measures.
Addressing this pain point was a key aim for the eQuad platform, launched commercially in May 2018.
Joule Assets Europe frontiered the Sustainable Energy Asset Evaluation and Optimisation Framework (SEAF) Project, which was a two-year project funded by the European Union under the H2020 Framework focusing on growing the energy services sector.
This resulted in eQuad, an online platform that automates the pre-finance phase of energy efficiency projects.
Through eQuad, Joule Assets enabled Proven Lighting, a Belfast-based LED Lighting firm, to successfully secure a £5 million deal with a regional financial fund, allowing them to launch their Lighting as a Service model through Lumenstream – a Belfast-based company, whose commercial presence spans the UK and Ireland.
Lighting as a Service (LaaS) and financing
The LaaS model is based on the principle of Third-Party Finance (TPF) from a financial fund. This fund covers the upfront costs of lighting upgrades to building and industry, and in turn empowering owners to instantly reduce energy bills and benefit from increased comfort and sustainability.
Over time, through the cash savings the project generates, the LaaS company and investor have their investments recouped.
Alistair Brown, Director at Lumenstream, says: “Working with Joule Assets’ eQuad Platform was paramount to our securing the finance deal; Third Party Finance is the key enabler to successfully rolling out LaaS and it is extremely difficult to access.”
The platform provides access to third-party project valuation, performance insurance, project certification, due diligence, and introductions to pre qualified capital sources in the form of off-balance sheet financing.
Brown continues: “Joule’s eQuad platform expedited the entire process enabling us to launch Lumenstream in just over a quarter. We are now able to offer customers across the UK and Ireland the possibility of easily accessing highly energy efficient technology, and the cold hard cash savings that comes with it.”
Expediting energy efficiency financing
A key factor for delivering energy efficiency services through eQuad is access to insurance. Typically, insurance policies are based on potential damage or external event risk factors that may affect an assets performance.
However, new energy efficiency insurance policies offered through eQuad are focusing on asset performance - whether the end returns match preliminary expectations.
A byproduct of the eQuad platform and new insurance policy has also been the speeding up of the sales cycle for ESCOs by building trust with customers. In an interview at the SEAF investor forum, Stromback commented that although this wasn’t a primary aim of the eQuad platform, which works to build ESCO-investor trust, Joule Assets realised it was an important learning.
In our webinar, “Energy efficiency investment funds: How ESCOs can tap into €ms”, Benedetta Friso Bellemo, Director of Sales at Joule Assets, noted another key difficulty in the energy efficiency finance market as standardisation.
She says: “What we found was on one side fund managers struggling to find viable standardised projects, thus only funding 5-10% of the projects they were looking at, and on the other side we had ESCOs, with a lot of valid, small projects, unable to access funds and ending up either financing projects themselves or accepting bank loans with high-interest rates, impeding their growth.”
Of the project, Jessica Stromback, Chair, Joule Assets Europe, says: “We are excited about this successful partnership with Lumenstream. At Joule, our mission is to ensure money is never a barrier to the growth of the green economy – but a facilitator.
“This is why we created eQuad, and why we are committed to ensuring money is funneled to strong projects, such as these. Using this model, small businesses, communities, investors, the entire green economy – can flourish.”