Project SENSEI, together with other six Horizon 2020 projects: LAUNCH, Novice, Triple-A, U-Cert, QualitEE, and Quest, took part in the European Sustainable Week (EUSEW) as a digital side policy session on the 18th of June to discuss Energy Transition: New Business Models to De-Risk Investments and Kick-Start the EU Building Renovation Wave. The session was hosted by Build Up, a collaborative platform for energy-efficient buildings founded by the European Commission.
The webinar focused on the role of buildings in the larger European strategy of the Renovation Wave, setting out the barriers and solutions from the projects’ various perspectives dealing with energy-efficient renovation.
Buildings in the centre of the Renovation Wave
European Commission Policy Officer and session’s keynote speaker, Dimitrios Athanasiou, stated that the Renovation Wave, a newly released initiative in the wake of the COVID-19 crisis, sees buildings renovation as very high on the agenda:
“We are aware of the significance of the building sector to the economy and the protection of the environment. Buildings, being the largest energy consumer in the EU and responsible for over 36% of gas emissions, are indispensable for the EU to reach carbon neutrality, renewables, and energy efficiency targets.”
According to Athanasiou, the Renovation Wave will take the form of strategic communication, financial and regulatory support, and should provide an “impetus for renovation in all member states”. It is, furthermore, an opportunity for growth and innovation in the construction sector, which tends to be a traditional and very technical industry.
The aim will be to at least double the annual renovation rate of the existing building stock, both public and private, which is at the moment very low (less than 1% on average of the national building stock is renovated each year in the EU).
In this context, the European Commission is currently consulting all types of stakeholders interested in building renovation until the 9th of July 2020.
Increase trust and reduce complexity among stakeholders
Whilst buildings retrofitting is the cheapest way to meet the EU climate goals and fully endorsed by the Commission, there is a clear need for de-risking the investment in the building sector. As pointed out by Klemens Leutgöb from project QualitEE and according to their latest market research: energy efficiency is perceived as quite complex by potential customers who do not understand the business models. It is therefore crucial to “increase trust and reduce complexity”, so new business models become more attractive and an actual choice.
The various H2020 projects have encountered similar barriers. Jo Southernwood from project NOVICE, which has now reached successfully the end of its 3-year duration, affirmed that by turning the buildings smart – energy-efficient –, they can respond in a flexible way to the grid, provide a service and generate a revenue stream, however, this is not particularly understood by building owners.
One of the main challenges is, thus, to educate and convince key stakeholders in the building sector, namely building owners and investors, that energy efficiency is the way to go. As Frank Hovorka, REHVA’s president, stressed in his welcoming remarks:
“[we need] to help different stakeholders stabilise data transmission and management, translate technical data into financial tools and provide them with the right educational material and guidelines”.
SENSEI’s critical role in the energy transition
Murray Birt, a Senior Strategist for DWS, a major institutional investor, brought good news to the table in the session’s concluding remarks: many investors are strengthening their climate targets, in alignment with the Paris agreement. There is a group of over 20 institutional investors in real estate, including DWS, committed to net-zero by 2050 and they own more than 11.000 buildings around the world.
Birt added that project SENSEI may have a critical role in this reformation process, and he explained:
“Utilities need to make part of the success, otherwise their profitability may decline with energy efficiency. We have to enable them to start making contracts with aggregators and other energy efficiency projects, so they have a constant revenue source and greater financial flexibility and stringency.”
In fact, DWS published a report in late May with a series of policy recommendations to the EU on starting a paradigm shift, calling on all involved stakeholders to engage in project SENSEI.
SENSEI’s business tools are based on the Pay-for-Performance concept. Sotiris Papadelis, SENSEI’s concept designer, clarified the relations behind it:
“[Pay-for-Performance] works, first, to coordinate various actors in the value-chain for energy-efficiency retrofits based on what one has defined as performance targets and then having financial exchanges based on the performance. Second, it provides incentives for energy efficiency measures in line with specific demands of the energy grids and specific characteristics. In this way, energy efficiency can turn into something that can be regarded as a resource for the grid, at least as a capacity resource.”
Read more about SENSEI and Pay-for-Performance.
Elsa Alves, GECO Global