The release of the Investor Confidence Project (ICP) Europe’s full set of Building Performance Protocols is a vital step toward unlocking the economic potential of the European retrofit market, estimated at between EUR 60-100 billion per year to achieve 2020 climate targets, but investments today are only half way there.
Hailed by the European Commission as “having the potential to transform the market”, the ICP system being deployed into U.S. markets, is well on its way to validating the business case and attracting third party financing into retrofit projects. Now that the protocols are available in Europe, public authorities and funds can use them to kick-start the investment process.
The ICP Europe project started just one year ago to standardize the way energy efficiency projects are developed and brought to market, increasing confidence in predicted returns and scaling up energy efficiency investments globally. These project guidelines – known as protocols – facilitate investment in the building energy renovation market by assembling already existing best practices and technical standards for developing projects, determining savings estimates, and documenting and verifying results. The result: Investor Ready Energy EfficiencyTM (IREE) certified projects, which give investors the confidence needed to put their cash into energy efficiency.
Consistent with today’s best practices
The ICP approach, versus creating new standards in an already overcrowded market, has been enthusiastically received in Europe, where a plethora of different building standards and regulations already cause headaches for product manufacturers, investors, and policymakers alike. Periodic efforts to establish pan-European harmonised standards have been blocked by a surplus of radically different building traditions and codes. Cleverly, the ICP Europe system sits on top of existing regulation and best practice – and therefore has the potential to coalesce the fragmented renovation market.
Europe says ‘yes’
At the European level, senior officials are upbeat about the project’s prospects. According to Vincent Berrutto, Head of the Energy Unit at the European Commission’s the Executive Agency for Small and Medium-sized Enterprises, “[ICP] has the potential to transform the market.” ICP Europe co-hosted the recent Investor Days event in Brussels, and was mentioned by almost every speaker, including representatives from the European Commission, Deutsche Bank, and the U.S. Department of Energy.
Alongside key European initiatives, such as the Covenant of Mayors and the prestigious think tank Building Performance Institute of Europe, ICP Europe’s central role in Investor Days shows that it is already at the forefront of the European movement on energy efficiency financing – a diverse group which includes policymakers, activists, bankers, and project developers.
At Investor Days, Panama Bartholomy, ICP Europe Director, hosted the first European “Interconnect” – a pitching session for investors (Deutsche Bank, Green Investment Bank, Joule Assets, European Investment Bank, SUSI Partners, Triodos Bank, Amber Infrastructure) looking to identify projects and project developers.
Already, the ICP Europe protocols are being incorporated into a number of energy efficiency renovation projects and programmes in Portugal, Germany, and the UK. ICP Europe’s steering group has attracted heavy hitters including the UK’s Green Investment Bank, Department of Energy and Climate Change, ING Bank, and Siemens.
Stephen Barker, Head of Energy Efficiency & Environmental Care at Siemens in the United Kingdom, says his company is “involved in the Investor Confidence Project Europe for purely business reasons: we believe it is a necessary step to unlock the capital our sector requires to meet Europe’s energy goals.”
Policymakers are keen to use public funds for energy efficiency to attract private investment into retrofit projects. Through the European Structural and Investment Funds (ESIF), over EUR 40 billion will be channelled into the low-carbon economy between 2014 and 2020. Speaking at a workshop on financing energy efficiency, Berrutto said, “Let’s use ESIF to trigger mass scale investment.”
Public authorities are the beneficiaries of the ESIF, and are pointed to as potential aggregators in the marketplace. With public budgets still squeezed after savage recession-era cuts, national authorities are looking for ways to bring in much-needed private investment.
It is time for energy efficiency to realise its full potential. With ICP’s protocols, the European market now has the tools it needs to communicate the safety of standardised projects and manage owner and investor risk. The resulting investment in projects will build the business case we need to allow the institutional investors into the game. Only then can we start to see the path towards meeting Europe’s climate and energy goals.
In the second quarter of 2016, ICP Europe will provide training and quality assurance to enable full-cycle IREE certification for the first group of retrofit projects by June 2016. Join the ICP ally network to keep updated.
Writer: Panama Bartholomy, ICP Europe Director