European Commission, EIB Launch Energy Efficiency Initiative for SMEs

The European Investment Bank (EIB), the European Commission and the Solar Impulse Foundation have launched a partnership to spur energy efficiency investments benefiting small and medium enterprises (SMEs) in the European Union.

“The energy efficiency initiative has been developed based on market testing with several fund managers and is therefore likely to attract investment platforms and funds”, a joint statement said. The initiative was launched at the 29th COP taking place in Baku, Azerbaijan.

“In cooperation with the Solar Impulse Foundation, it will support the establishment of pilot projects, which will serve as proof of concept”, the partners added. “Some of them are expected to change the way businesses operate, particularly through an approach known as ‘servitization’ or energy efficiency as a service.

“In this servitization model, companies pivot from selling products to selling outcomes. For example, rather than buying energy-efficient heating or lighting equipment, SMEs pay for the warmth or light they need, while the provider of these services retains ownership of the equipment. This allows businesses to implement energy efficiency measures without the usual upfront costs, thereby turbocharging the transition”.

The initiative supports an EU law mandating member countries to curb energy consumption by 11.7 percent by 2030 relative to projections for 2020, “contributing significantly to the global pledge of doubling energy efficiency”, according to the statement published online.

The Commission will provide support through InvestEU, the 27-member bloc’s umbrella investment program. In 2021 the EU adopted InvestEU, a budget guarantee of EUR 26.2 billion ($27.6 billion), to support economic recovery from the coronavirus pandemic and drive climate projects. At least 30 percent of InvestEU, which mobilizes both public and private investments, is allotted for EU climate action.

The partners said, referencing an analysis by the International Energy Agency, that the global efficiency goal could cut energy bills by about 30 percent and lower energy-related carbon dioxide emissions by half.

“However, the pace of energy-efficient technology deployment is hindered by prohibitive upfront costs, and a lack of resources and knowledge within SMEs”, the statement said.

Ambroise Fayolle, EIB vice president in charge of climate action, said, “Studies show that small and medium-sized businesses find it much harder to invest in energy efficiency than large companies”.

“At the same time SMEs generate about 60 percent of Europe’s emissions, and unless we help them to become more efficient, it will be impossible to achieve EU climate goals”, Fayolle added.

Bertrand Piccard, initiator and chair of Lausanne, Switzerland-based Solar Impulse Foundation, said, “Implementing efficient solutions that reduce the use of energy and resources allows to decrease GHG [greenhouse gas] emissions, but also to save huge amounts of money and increase the profit margin of a company”.

“However, even though the operational costs are much lower, high initial investments often limit their use. This is what we aim to address today by partnering with the European Investment Bank and introducing ‘efficiency as-a-service’ models for small and medium businesses — an approach that enables stakeholders to access clean technologies without prohibitive investments”, Piccard added.

Energy Efficiency Directive (EU) 2023/1791, adopted last year, aims for a final energy consumption of up to 763 million metric tons of oil equivalent (MMtoe) by 2030, compared to the EU 2020 projection of 868.8 MMtoe.

The directive sets a primary energy consumption target of no more than 992.5 MMtoe by 2030, compared to the EU 2020 projection of 1,176.1 MMtoe.

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