Large-scale finance of SEA projects is necessary in order to reach Europe’s 2030 energy efficiency and carbon reduction targets. The European Union (EU) must move beyond improved eco-standards for technologies for everything from household appliances to industrial processes and enable market growth of the full range of SEA projects. For example, while buildings are responsible for the largest share of European final energy consumption (40%) and represent enormous potentials for energy savings, current investment to improve their energy performance is too low to meet the energy and climate objectives set by the EU. Indeed, building renovation rates must triple, increasing from 1% a year today to 3% - and investment of an additional €100bn/year is required annually until 2030, cumulatively amounting to over €1 trillion.
Project deployment at scale is not taking place and efforts on the part of governments have not fostered European-wide change. Market forces must be considered, and financial capital must be mobilised at a large scale.
One challenge is the average size and complexity of SEA projects. Over 80% of the necessary renovations and technology upgrades require an investment of less than €500,000, which is far too small to attract either large project developers or investors. Projects therefore must be developed in a manner, which allows them to be aggregated and traded in bundles. Due diligence processing, risk analysis and Developer-End Client contracts must become standardised, in order to lay the groundwork required, to accelerate the development of Sustainable Energy Assets (SEA) into tradable securities.