Support for SME to finance energy efficiency measures

11 March 2022 by Rod Janssen
Support for SME to finance energy efficiency measures

The Energy Efficiency Financial Institutions Group (EEFIG) has been working with the financial community and relevant stakeholders to accelerate private finance to energy efficiency. The current policy focus is on the European Green Deal and within the EU Recovery Plan frameworks. Key barriers for SMEs include lack of awareness, low capital availability, limited access to additional finance, lack of internal technical resources and doubts around actual savings potentials. DEESME shows that there are important actions underway to help Europe meet its long-term climate and energy objectives. By taking such actions, SMEs will also contribute to reducing imports of fossil fuels from unreliable sources.

 

The project summarises experience and strategies for the creation of support mechanisms, handling limited human resources, guiding SMEs to actions, and raising awareness on opportunities. DEESME was glad to show the challenges and opportunities faced by SMEs and how it supports them.


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The Energy Efficiency Financial Institutions Group (EEFIG) co-convened by the European Commission’s DG Energy and the United Nations Environment Programme Finance Initiative (UNEP FI) has been working with the financial community and relevant stakeholders to accelerate private finance to energy efficiency. The current policy focus is on the European Green Deal and within the EU Recovery Plan frameworks.

At a recent meeting at EEFIG’s Working Group on Stimulating consumers’ demand for energy efficiency investments, Ivana Rogulj of the Institute for European Energy and Climate Policy (IEECP) and representing the Horizon 2020-funded DEESME project, explained how DEESME is taking an approach to anchor strategic thinking into companies’ decision-making to help in the necessary acceleration of financing energy efficiency measures. Small and medium-sized enterprises face many challenges and improving their energy performance is not always foremost in their day-to-day activities.

 

Key points made by Ms Rogulj were:

  • Key barriers for SMEs include lack of awareness, low capital availability, limited access to additional finance, lack of internal technical resources and doubts around actual savings potentials.
  • A review of the literature confirms that most of the barriers are neither technical nor economic but behavioural: lack of integrated design and whole system thinking, the lack of data, the difficulty of quantification of energy efficiency measures, lack of training, appraisals that do not include energy efficiency, lack of incentives, and variation/inconsistency in observed results, etc.
  • The most common approach for the evaluation of energy efficiency projects is the financial analysis based on a cost-benefit that tends to focus on the cost and revenues that will be produced by the energy efficiency project and to disregard or underestimate the other multiple benefits that come with such a decision. Therefore, it is important to connect the decision for energy efficiency projects to the business models and the strategic objectives.
  • The idea of DEESME is to change the perception of energy audits as regulatory obligations, expand the scope of energy audits beyond the direct benefits of taking measures for energy efficiency, and relate energy efficiency to the underlying business model and the attainment of the general business objectives.
  • The recognition of the multiple benefits that go along with energy efficiency is based on the analysis of the business model. The business model is a general description of the business logic that provides an answer to the most basic question: how can the business create and capture value?
  • The project summarises experience and strategies for the creation of support mechanisms, handling limited human resources, guiding SMEs to actions, and raising awareness on opportunities for EE.

 

DEESME was glad to show to a European-wide EEFIG audience the challenges and opportunities faced by SMEs and how the project supports them. DEESME shows that there are important actions underway to help Europe meet its long-term climate and energy objectives.

By taking such actions, SMEs will also contribute to reducing imports of fossil fuels from unreliable sources.