An interesting “Financing Energy Efficiency Retrofits in Buildings” discussion paper recently released in Madrid argues that a significant expansion of energy efficiency retrofits can be driven by a model that employs:
- Standardized contracts adopted by a wide variety of loan originators, such as banks, utilities, ESCOs and other retail outlets.
- A re-financing fund that agrees to buy loans using the standardized contract (thus driving adoption). The fund then taps the wholesale financing markets.
The proposal for what is dubbed an “Aggregated Investments Model” has come from Climate Bonds Advisory Panel member Peter Sweatman, founder and CEO of Climate Strategy and Partners, and Katrina Managan, Fulbright Scholar and International MBA Candidate at IE Business School.
The paper focuses on the Spanish market, where it argues that savings of 30% in residential energy use can be achieved; but the authors believe it’s applicable in a variety of markets.
In Spain a 30% saving across residential and small commercial buildings would equal cost savings of €3 billion p.a. and would deliver thousands of jobs in the hard-pressed local construction industry.
Integral to the regulatory recommendations is the enabling of on-bill upgrade repayment (similar to “Green Deal” proposals in the UK) and government credit enhancement to kick-start a market which is in its early stages of development.
