Potential Benefits of Digitisation for Energy Efficiency Finance - Joule Assets Europe
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Potential Benefits of Digitisation for Energy Efficiency Finance Joule Assets Europe Financing Energy Efficiency in Germany, France and Austria SEI Forum Frankfurt, 05-12-2018
OUR STORY
From the
US… …to Europe
Joule Assets launched in 2010 as a NY-based investment fund
Joule Assets Europe launched in 2016 with the SEAF
for Energy Reduction Assets (ERA) – focusing on projects under
H2020 project, to shape the EU EE market.
$1 million.
The SEAF project aimed to bridge the gap between
Today Joule Assets Inc. deploys PV and clean energy with
finance and sustainable energy projects across Europe,
municipalities as clients through Joule Community Power, and
through the development of an online platform, eQuad.
has launched an Energy Service Company (ESCO), JouleSmart.
c
OUR MISSION
“Our mission at Joule Assets Europe is to bridge the gap between finance and sustainable energy projects. We create the
market through our eQuad platform, which expedites the finance process for real projects on the ground, and we shape
the market through influencing policy at EU and local level, and our involvement in EU projects.”
Jessica Stromback, Chair and SVP, Joule Assets Europe
CREATING THE MARKET
• Portfolio development and market creation for EE and DRES in Europe through platform
• Financial due diligence and risk assessment
• Contract development – from term sheet to master agreement
SHAPING THE MARKET
• Stakeholder engagement and outreach for wider industry
• Market shaping through EU project expertise
• Influencing policy through engagement at EU and national level, with a focus on supporting ESCO growth and
innovative financing mechanisms.
CREATING THE MARKET Bridging the finance gap in energy efficiency through the eQuad platform
Bridging the Finance Gap
• The SEAF Project was funded by the European Commission*
• Budget: €1.700.000
• Duration: 28 months
*This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 696023. The sole
responsibility for the content of this document lies with the authors. It does not necessarily reflect the opinion of the European Union. Neither the EASME nor the
European Commission are responsible for any use that may be made of the information contained therein
"The EU Commission estimates that “the mobilisation of an extra €177 billion from public and
private investment sources is needed annually from 2021 to 2030 to reach the 2030 climate
and energy targets.”*
What if ALL viable projects successfully accessed
finance?
UK Germany
• Fund managers: successfully finance only 5%-15% of all > 600 Certified > 1600 Active
EE Players ESCOs
projects reviewed – representing a significant upfront cost
and reduction of profits UK
DE
France Austria
• Project developers: often self finance their projects > 350 Active FR AT > 350 Energy
or use bank loans due to perceived difficulties in ESCOs Auditors & ESCOs
accessing appropriate finance
IT
Spain
ES
Italy
eQuad is active today in: > 100 Active > 300 Registered
ESCOs ESCOs
Italy, UK, Ireland, Slovenia and Greece.
*Assessing the European clean energy finance landscape, with implications for improved macro-energy modeling. European Commission, 2017
The Journey:
Project Developer
A project’s journey toward finance
We help ESCOs, engineering firms, and construction companies across Europe
access appropriate project investment by providing third-party valuation,
performance insurance, project certification, and due diligence that facilitate and
expedites funding for energy efficiency projects.
VALUATION CONTRACT STANDARDISATION INSURANCE INVESTOR-PROJECT
DEV. QUOTATION HANDSHAKE
SUPPORT
Creating the Market Place for Energy Efficiency
How the
Process Works:
1 Input Projects
Contractor inputs projects and key documents into eQuad platform
• The Full Portfolio should reach over €500k but not all contracts must be signed
2 Proforma
eQuad produces a project Proforma which an Investor can look at and understand
and which is also visible to contractor and any colleagues on the platform.
3 Pre Due Diligence
Joule Assets performs first financial review on Full Portfolio
4 Project sent to Investors
Following financial review, the portfolio is sent to 1-4 investors who in principal should be interested
in such a Portfolio of Projects or Project
Creating the Market Place for Energy Efficiency
5 Investors Response, Yes or No
• The Investors usually return to us within 1 week with an initial Yes or No
Introduction or they then ask either for a call with you or for some further information such
as a draft of the customer’s contract…
6 Next Steps
Credit check of end client
Legal document check
7 Second Meeting
Assuming the meeting goes well and the required information is available
the Investment committee will agree
or not to finance and provide an offer.
This takes another 1-2 weeks until next meeting is scheduled
eQuad Investor Network
Results:
For Investors
• Lowered project processing fees
• Vetted, viable opportunities
• Risk mitigation: Meet the fund’s financing requirements
• Due diligence: Have had technical due diligence preformed by accredited ICP rep.
• Insurance: Have the option of a insurance quotation for performance insurance
• Standard Contracts: Can be structured according to the fund’s contractual requirements
Investor Journey
FUND KEY ICP INSURANCE PROJECT
REQUIREMENTS CONTRACT DUE QUOTATION
ELEMENTS DILIGENCEESCO Finance needs The key to growth is not technical, it is contractual! Innovation in deal structure: • Umbrella contracts to bundle projects with equal capabilities • Clear risk mitigation strategies which fits their projects/profile • Performance risk mitigation through performance insurance • EPC contracts: off balance sheet and performance based • Innovative ad-hoc financing solutions • SPV structures: Align requirements between projects Technical criteria: • Portfolio appropriate rates • Project appropriate duration • Partnership
Investor requirements Main criteria: • Strong project pipeline to pay for upfront engagement • Credit worthiness of end-client • Credit worthiness of the ESCO • Low payback time (3-7 years depending on technology type) • Longer payback time may be accepted for larger projects with higher returns (in the millions) • Robustness of the project design • Project investment is part of ESCO’s core growth strategy
Case studies Before & after financing deal
Case Study: Lighting-as-a-service finance
7 days 10 days
eQuad Finance offer
Performance
Due Diligence of £5 million
Insurance
Standardized investor-agreed Off balance
LaaS agreements sheet finance
LED supplier Product
warranties ESCO Company
PROJECT PROJECT PROJECT PROJECT PROJECT
1 2 4 5
Pipeline
3
£370kCase Study: Lighting-as-a-service finance
Process
Financing Process: lighting-as-a-service well understood and safe. Fund was
interested and the negotiations were simple.
Criteria: we have £5 million to spend in 1 year – “you spend it for us on lights”.
Contractor had clients to make this realistic.
Contracting Phase for finance: fund is large and new to energy efficiency,
took over 5 months to complete 3 agreements with ESCO
RESULT 1: ESCO lost most of their clients – has had to start again.
Contracting w/clients: Fund has spent 10-15k in legal fees on the first £40k
RESULT 2: the client is confused, and the fund will now lose money on these
lighting deals.
Main Learnings
• Contract standardization matters! ESCO-client, ESCO-fund, Fund-Client
• The Fund’s experience level matters
• The ESCO: will use this as a launching pad for their business. Gain clients and
attract an equity investor in their companyConclusions: The way forward
CONCLUSIONS
Markets are different, taxes are different, tariffs are different
Issues with finance are unified
Many of these problems are beyond what eQuad was designed to do
• A lack of contract standardisation
• A lack of risk assessment standardisation
• A lack of access to growth capital for ESCOs
• A lack of SEA Developers’ robust project pipelines
• A lack of innovative financing structures across countriesJoule’s Vision Remains
to remove finance as a barrier to the growth of the green economy
Next development: support the market in a manner that
creates the basis for tradable securities
Continue to improve technical usability of the eQuad platform
Active support with due diligence process itself
Funds risk assessment standardisation
Cooperation with securities traders
Closer cooperation with best of class funds
Standard ESCO presentation templates for private equity investors
Growth of projects through improving ESCOs value propositions
Funds Contract standardisation20
Benedetta Friso Bellemo
Director of Sales
Joule Assets Europe Thank you!
+33 (0) 7 66 89 43 92
bfrisobellemo@jouleassets.comYou can also read
