Last week saw the IEA’s 8th annual energy efficiency conference. The IEA event and the annual energy efficiency market report have helped to advance the energy efficiency agenda, something that for a long time was not given the attention it deserves at policy level.
This transition at the IEA is similar to the UK’s Energy Institute. When I joined the then Institute of Energy, it had grown out of the old Institute of Fuel which was dominated by fossil fuel interests. Beginning in the 1980s and early 1990s, we transitioned the Institute to a more balanced position and included more energy efficiency, as well as renewables on the agenda. Both these institutional changes demonstrate the energy transition in action.
Another indicator of the increasing focus on energy efficiency last week was a capacity building session on energy efficiency financing for banks in AsiaPacific which I presented at. My focus was the Energy Efficiency Financial Institutions Group’s Underwriting Toolkit. This was a tool we authored which provides financial institutions with a framework for assessing value and risk of energy efficiency projects, as well as a common language to ease communication between project developers and financial institutions.
There is no doubt we need to massively scale up investment into energy efficiency. The IEA report shows that global investment into energy efficiency has reached a record $600 billion in 2022, but in order to achieve the net zero scenario this needs to triple to $1,800 billion by 2030.
At ep, our roots are firmly in energy efficiency. The team all have long experience of developing and financing energy efficiency projects, providing advice to companies, investors and governments, and starting and building energy service companies (ESCOs).
We used that experience to develop ESCO-in-a-box®, a licensable business model that enables energy consultants, local energy agencies or equipment vendors to develop high quality bankable energy efficiency projects. It was originally designed in the UK to address SMEs and is now used by five local authorities. We have also adapted it for Kenya, with the support of German aid agency, GIZ where it has been used to develop $20m of projects in a range of sectors. In addition, we are developing it in the Philippines with UN funding.
We are building on these foundations to develop integrated financing vehicles which will build an ecosystem of ESCOs using ESCO-in-a-box®, which in time will be developing a flow of quality, standardised projects, and provide access to finance. Plans are well underway in East Africa and being developed in Asia and India.
ESCO-in-a-box® is an example of how ep works. We invest in small businesses that are supporting the transition to a net zero and regenerative economy, where we can see an opportunity to scale their impact. Then we provide assistance and finance to scale those opportunities, always with a focus on impact. ESCO-in-a-box® also demonstrates another aspect of ep’s work – no one company can do it all and we focus on enabling others.
We need hundreds or thousands of smaller ESCOs all over the world developing and financing energy efficiency projects of all types. The way to get there is to use a proven operating system like ESCO-in-a-box® that builds capacity and enables others to create a viable business.
One of the inspirations for ESCO-in-a-box® was fast food chains, whatever one’s views on their products their operating system enables entrepreneurs, often with little experience, to open and operate a successful business. McDonalds now has 40,000 restaurants world-wide, creating jobs and economic benefits.
We need 40,000 ESCOs world-wide all developing bankable projects to the same standards and delivering them to the sources of capital looking for investments that create real economic, environmental and social benefits – and ESCO-in-a-box→ can deliver that.
Story by epgroup
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