To optimize the financing of buildings energy efficiency: the increasing stake in Smart Cities

To approach the question of the financing of the energy efficiency initiatives cannot be made without making the difference between the possible actions. Have they all the same characteristics for whom has to finance them?

The passive energy efficiency initiatives, aiming at a performance attached to the evolution of the state of buildings, give permanent results but they are expensive.

The active energy efficiency initiatives, aiming at a performance linked to how the building is used, are less expensive but the obtained results have no “natural” sustainability.

The various possible initiatives in an energy efficiency program are thus more or less difficult to implement, according to their cost and the sustainability of the obtained results. So, most of the programs prioritize the renewal the most profitable of energy-consuming systems, before regulation and automation initiatives, before stumbling over the most complex actions to be implemented: insulation of buildings envelopes and change of the behaviour.

To accompany all these initiatives and stimulate the buildings owners to improve their property to make it less energy-consuming, exists a pallet of financing possibilities:

– The building’s owner finances himself some actions, in cash or via a bank loan.

– The Energy Performance Contract (on a model of performance contracting) allows a service company to finance energy renovation work for an owner, and to be paid by getting savings realized during a given period.

– Public-private investment funds can grant loans to energy efficiency projects, in a more adapted way than the usual financing bodies.

– Finally, public subsidies can complete this panel of possibilities to assure the missing viability the projects.

It seems to me important that these subsidies are not designed to be “automatic” because it is important to validate that all the means to benefit from private investments were explored before committing public money in the achievement of the desired profitability of the projects. It is in this hierarchical organization and this “coordination” of the various plans that lies the optimization of the financing of the energy efficiency and the maximization of the GLOBAL leverage on the public investment

The optimization of the financing of the energy efficiency initiatives deployed on a territory passes necessarily by the management of these interdependences between actors, in particular between private actors and public actors.

Certain attempts were made (France, Switzerland) by electric distributors or suppliers to offer simultaneously funding offers and energy services offers. In none of the cases, the coordination between initiatives was successfully insured. What a pity!

Does it mean that a semi-public body must assure the coordination of the various plans, under the authority of the local deciders? It must be very neutral, protect the competition, be managed on very business-oriented way, because the offers with strong leverage must be efficient on a business level to meet the expectations of the global plan, very close to all the actors: a real challenge!

Once the question of the optimization of the financing was addressed, Smart City will have to solve one more point: to integrate into the overall program initiatives to develop the behaviours.

(For more details about this topic, I propose you the following article)

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