Pay-for-performance

Pay-for-performance (P4P) is the key concept behind SENSEI business models. In a P4P scheme for financing energy retrofit projects, financial flows between the involved parties are linked to the actual – metered – and weather-normalised energy savings. This approach encourages long-term investment and transparent cash-flows (pay) in energy-efficient buildings by metering energy savings smart and getting a return on investment (ROI), based on proven and measured savings in the buildings (performance).

A Pay-for-Performance (P4P) model allows for savings to be offered on a bidding platform to players in the market as an investment, for example, thereby allowing the energy efficiency to become a manageable procurable resource that can contribute, additionally, to bring more flexibility into the grid.

Figure: The Energy Efficiency Aggregator Business Model*

By creating new business models based on P4P schemes, SENSEI will:

  • Generate new sources of benefits that increase the value of an energy retrofit project by enabling the compensation of energy efficiency as an energy resource
  • Turn the project’s value into an investable asset to attract private financing
  • Aggregate buildings and energy efficiency measure plans into portfolios of energy savings that can be offered to energy providers and to third party investors through energy savings purchase agreements
*The information and views set out in this graph are those of the authors and do not necessarily reflect the official opinion of the European Union. Neither the European Union institutions and bodies nor any person acting on their behalf may be held responsible for the use which may be made of the information contained therein.