Open Research Europe (Jan 2024)

Analysis of business models for delivering energy efficiency through smart energy services to the European commercial rented sector [version 2; peer review: 2 approved]

  • Padraig Lyons,
  • Sotiris Papadelis,
  • Luciano De Tommasi,
  • Ruchi Agrawal

Journal volume & issue
Vol. 2

Abstract

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In this paper, we perform a comparative analysis of business models used by Energy Service Companies (ESCOs), suitable for the deployment of energy efficiency measures in the commercial rented sector across Europe. These models can effectively contribute to solving the split-incentive issue that arises in the rented building scenario. Some of them are obtained from their “traditional” counterparts, which do not consider the rented scenario, but just a bipartite agreement between an Energy Service Company and its client. The EU Horizon 2020 project SmartSPIN (Smart energy services to solve the SPlit INcentive problem in the commercial rented sector) targets delivery of enhanced energy services for commercial rented sector. These enhanced energy services (a) combine demand management services and energy efficiency interventions, (b) facilitate the adoption of renewables, (c) optimize the balance between demand and supply, (d) alleviate the split incentive issue. The pilot implementation of SmartSPIN is in progress in a business park in Greece, in an office building in Ireland and in two shopping centers in Spain. Key recommendations toward the implementation of such a smart energy service are provided in this paper. They have been obtained from a detailed analysis of ten interviews of key stakeholders of the energy efficiency sector and of the commercial rented sector, along with an analysis of a selection of the most relevant technical literature. This paper argues that the classical shared savings and guaranteed savings ESCOs models may be adapted to the commercial rented sector and used at SmartSPIN’s demonstration sites in Spain, Greece and Ireland. The guaranteed savings model appears to be the most appropriate one to use when the building owner is funding the energy efficiency project using own funds or liaising directly with a bank or other finance provider. The validation method for the comparative analysis of business models and selection of the most appropriate one is based on both literature review and consultation of selected stakeholders’ (stakeholder value creation framework).

Keywords