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ENERGY EFFICIENCY
ENERGY PERFORMANCE CONTRACTS
BARRIERS OF FINANCING
(The Projects Bankability)
by
João de Jesus Ferreira
April 2015
ENERGY EFFICIENCY
ENERGY PERFORMANCE CONTRACTS
BARRIERS OF FINANCING
(The Projects Bankability)
INTRODUCTION
The aim of this article is to present a reflection on the existing difficulties in implementing energy
efficiency projects (EE) in the various sectors of economic activity.
Energy efficiency is the only means to enable the improvement of the productivity of energy in
economies, if the added value of the structure and quality of the production sector is maintained.
The justification for investing and developing these projects can be found in the analysis of the
most significant energy indicators, which are presented in this article.
The trend of improvement in the energetic productivity of our economy is only apparent and is
the consequence of the economic and financial crisis that Portugal and Europe have undergone
since 2006.
Evolution of the primary energy intensity (2006 prices)
180
Energy intensity [toe/M €]
175
170
165
160
155
150
145
140
135
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
130
Primary energy intensity
Source: JJF; DGEG; PORDATA
Figure 1 – Evolution of the energetic productivity of the Portuguese Economy
It should be noted, that since 2011, this trend has began to inflect, and the loss of productivity
resumes its acceleration, leading us to conclude that this apparent improvement, was not due
João de Jesus Ferreira, Eng.º (IST)
2
to the implementation of energy efficiency projects but due to the contraction of consumption,
mostly of oil based products, such as liquid fuels, and in particular of the road transportation
sector.
Total final energy consumption by energy source
12,000
10,000
[ktoe]
8,000
6,000
4,000
2,000
Coal
Oil (Total)
Natural Gas
Electricity
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
Renewables without electricity
Source: DGEG
Figure 2 – Evolution of the structure of the total final energy consumption in Portugal
Over the past 10 years, due to economic crisis, Portugal has undergone a recession that has
negatively impacted consumption in general and energy based products in particular, entering a
scenario of "limiting consumption by constraint". As referred, this has occurred since 2005/2006
with a significant decrease in the consumption of oil based products, namely industrial fuel,
gasoline and diesel.
The following points should be highlighted:
 A near stagnation of the consumption of natural gas since 2005;
 An abrupt decrease in the consumption of oil since 2005.
This occurs, fundamentally, due to the downturn of economic growth and the consequent
reduction of internal consumption, not only by individuals and their families but also the
production sector, situation that has been aggravated by the loss of some industrial production
units and others, over the past few years.
On the other hand, the fact that VAT over fuels, has surpassed the 19% barrier (in 2005), has
led to the displacement of an important share of consumption to Spain, in particular with regards
to large trucking fleets.
This downfall in the consumption of energy (both primary and final), is not a consequence of the
increase in energy productivity of our economy, through rational and efficient use of energy. This
João de Jesus Ferreira, Eng.º (IST)
3
may have had a positive impact in the secondary sector (production and manufacturing), but
doesn't explain the accentuated reduction that has been verified over the past 10 years.
The competitiveness of companies depends, mostly of:



Costs and availability of Production Factors;
Contextual Costs;
o Non-Manageable impositions, such as:
 Licensing;
 Taxation;
 Environment;
Others...
Energy is not a contextual cost, it should be considered a production factor and as such,
managed rigorously. Therefore, energy should:
 Have a reduced price;
 Be used in the fewest amount possible;
 Be used efficiently - Increased production, using fewer levels of energy.
In this context, the actions which lead to a reduction in the unitary price of energy (in Portugal
1000€ /toe - final energy) and to energy efficiency, with the subsequent, permanent and
effective management of energy, will have, in all assurance, an important impact in the increase
in competitiveness of our companies, regardless of their sector and designated market.
Therefore, the implementation of energy efficiency projects is a priority and will be decisive in
the survival of the national production sector.
In such a context, it is imperative to find the appropriate financial resources for such projects,
due to their bankability being still a significant barrier to their execution and implementation.
João de Jesus Ferreira, Eng.º (IST)
4
THE ENERGETIC PRODUCTIVITY OF THE PORTUGUESE ECONOMY
The energetic productivity of an economy can be quantified, coarsely and aggregately, by the
energy intensity of their GDP, or more simply, by the amount of energy consumed to produce a
single unit of product.
Total primary energy intensity - 2000 - 2011
200
[kgoe/1000€]
175
150
125
100
2000
2001
2002
EU27
2003
2004
2005
2006
2007
EU15
2008
2009
2010
2011
Portugal
Source: EUROSTAT
Figure 3 – Evolution of energetic productivity in Europe (2005 prices)
In this context, it can be affirmed that the Portuguese economy, from an energy point of view, is
characterized by a weak energetic productivity when compared to other European countries.
Such productivity is normally quantified through a set of energy indicators, which stand out:
 The energy intensities of income (domestic; industrial and sectorial);
 Specific consumption of production;
 The elasticity of energy consumption (in relation to the GDP or GVA);
 .....
Portugal remains with greater economic energy intensity levels than those of its European
partners, although it has had a tendency to decrease (cyclical impact) and will probably do not
continue to do so, with the expected recovery of economic growth.
In this context, and the analysis that can be made from the data observed, it seems evident that
it is crucial to promote the rational and efficient use of energy, in detriment of promoting the
production of energy with recourse to primary and renewable resources or others.
Portugal doesn't have the need to produce more energy. Portugal needs to produce more wealth
with recourse to less energy.
João de Jesus Ferreira, Eng.º (IST)
5
Evolution of the total primary and final energy intensity (2006 prices)
180
Energy intensity [toe/M €]
170
160
150
140
130
120
110
100
90
Primary energy intensity
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
80
Final energy intensity
Source: JJF; DGEG; PORDATA
Figure 4 – Evolution of the energetic productivity of the Portuguese economy
From 2005 to 2011, the energy intensity of the Portuguese economy has benefited from an
apparent improvement. However, such an improvement has not been due to the better use of
resources, but fundamentally due to the constraints imposed on consumption, consequence of
the recent conjuncture, although this tendency has been countered since 2012.
If we analyse the energy intensity of each sector of economic activity in the following figure, we
shall verify that in cases where improvements have been registered, these may be considered
insignificant. However, a deterioration of energy intensity is also verified in some sectors:
 In the industrial sector, over the past 20 years, the reduction was only 11%;
 In the service sector, over the same period (1995 to 2013), the energy intensity had
increased by 27%;
 In the transport sector the 6% of reduction was insignificant.
João de Jesus Ferreira, Eng.º (IST)
6
Evolution of energy intensity by activity sector (2011 prices)
200
180
160
toe/M€ (2011)
140
120
100
80
60
40
20
0
Energy intensity in Industry
Energy intensity in Services
Energy intensity in Transportation
Energy intensity in Agriculture and Fisheries
Energy intensity of Families
Source: DGEG
Figure 5 – Evolution of energetic productivity of the Portuguese economy, by activity sector1
In this context, we can infer that there is still a lot of potential to explore in terms of the
application of innovative and efficient technologies, which implies the necessity to invest in
global projects of energy efficiency.
1
It should be highlighted, that the simple comparative analysis of energy intensity (defined as the ratio between energy consumption and GDP
at constant prices) is not sufficient to determine the comparative level of energy efficiency or energetic productivity between economies of
several countries or regions. Several effects should be evaluated, namely, corresponding to the GVA structure of each productive sector.
Portugal continues to have a productive sector that adds low value, when compared to other more developed countries, which also contributes
to a low energetic productivity of our economy. The share of the production sector in the energy intensity of the economy is very high when
compared with other sectors of economic activity.
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7
THE IMPORTANCE OF ENERGY EFFICIENCY
The concept of energy efficiency isn't an easy interpretation and isn't defined as an applicable
technology. Energy efficiency is mostly a state of mind, which is reflected in human behaviour in
relation to the use of energy.
Energy efficiency has 3 core principles of application and support:
 Behaviour;
 Technology;
 Management.
The effects and sustainability of energy efficiency measures that may eventually be
implemented, will only be effective if these 3 core principles are present and used together.
It should be highlighted that the concept of energy efficiency cannot be confused (because it
doesn't contemplate it) with the production of energy (thermal and electrical), with recourse to
primary and renewable sources of energy.
Energy efficiency translates into the reduction of energy consumption in its final application,
maintaining or increasing the level of specific output. Therefore, the impact of energy efficiency
is evaluated by the specific consumption attained by an activity. There is no sense in establishing
benchmarks for the reduction of consumption in regards to its absolute value, because they may
have a negative effect on the growth of the activity in its sectors.
The evaluation of results (and proposed benchmarks) should be based on appropriate indicators,
from which non-energy related effects should be withdrawn, such as:




Final energy intensity, referred to the final energy consumption;
Final energy intensity, by economic sector of activity;
Specific consumption of activity;
Others.
The total consumption of primary energy should not be used to evaluate the effects of energy
efficiency, due to it being, by definition, associated with its final application. The references to
reduction of energy intensity, fundamentally, concern the original mix and the reduction obtained
through conversion factors utilized in the national energy balance.
The production of energy, through the use of renewable sources of primary energy, should not
be accounted for or included in the evaluation of the generated energy efficiency. It doesn't
contribute, in any regard, to the reduction in consumption of energy in its final application. It
solely has impact on the accounting of primary energy.
I consider as basis, of an energy efficiency support policy, the guidance towards two fundamental
universes:


The consumer in general, in terms of his behaviour and attitude;
The activities and sectors where the impact of the measures of reduction in the energy
consumption is significant and economically viable.
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8
The sectors of activity I consider to be crucial to energy efficiency and where the support and
that should be guided and stimulated towards energy efficiency are:




Transport - basically behavioural and technological;
Industry - technological and behavioural;
Services - technological and behavioural;
Residential - basically behavioural.
It should be highlighted that the investment and the cost-benefit relationship is much more
attractive (although harder too) to energy efficiency projects (production of Negawatt-hour), when
compared to a typical energy production projects, as can be observed in figures 6 and 7.
Source: DOE
Figure 6 – Comparison of the cost of investment between the various energy
production technologies with the cost of energy efficiency
The fact that the current figures don't include the inherent over-costs of the electric power
production, with recourse to renewable and intermittent primary energy sources, such as solar
and wind power, should be taken into account. These costs could be summed up as:



“Productive backup” costs;
“Economic backup” costs;
Power grids investment costs.
If we consider these costs, the value of the investment cost, for instance in regards to on-shore
wind power in Portugal, would be far superior than the referred 2000€/KW. Due to prevailing
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9
conditions in Portugal, the total cost of each new MWh of electric energy from a wind power
source is around 134,00 €.2
Source: DOE
Figure 7 – Comparison of production costs between the various technologies
that produce electric energy and the cost of energy efficiency
Independently of the presented values in figures 6 and 7 being susceptible to dispute, due to
their source and date of collection (2010), what is important to retain from these figures, is the
great difference between producing energy and reducing the consumption through the
optimization use of energy resources, valuing the option for energy efficiency.
2
NUNES, Clemente Pedro e NUNES, Pedro Sampaio — «Contributo para os Cenários de Avaliação Económica-Tecnológica Relativos à eventual
Instalação de Novas Potências Eólicas em Portugal», revista Energia e Futuro, n.º 4, Junho – Setembro 2012, p.p. 72-75.
João de Jesus Ferreira, Eng.º (IST)
10
THE ENERGY PERFORMANCE CONTRACTS AND THE BARRIERS TO THE
DEVELOPMENT
An energy performance contract based on the concept of "third party financing" (TPF), can be
defined as the providing of a complete audit service which includes the research, project,
installation, operation, maintenance, management and financing, ready to "turn key" in regards
to technological systems for the increase in energy efficiency, with guaranteed return on
investment and breaking-even in terms of costs, totally or partially, through the obtained energy
efficiency.
This financing system consists essentially of the offer of a service integrating a mix of economy,
financial, marketing and technical expertise, capable of generating an energy performance
contract. 3
The TPF companies, designed as ESCO – Energy Service Companies, are intensive capital
companies with reduced operational staff and a comprehensive shareholders body (big energy
bases companies, banks, insurance companies, venture capital funds, engineering companies).
The shareholding body usually integrates companies susceptible of directly or indirectly
competing with the different levels of expertise required by the investment project, or the
providing of services, which are generally subcontracted.
The energy performance contracts are usually mid/long term (5 to 10 years), with a short return
period (2 to 5 years) and characteristically of high complexity. The risks involved in the contract
are of a technical order (maladjustments between the predicted and implemented diagrams for
the operation), economical (change between prices of primary and final energy), financial
(change in interest rates), regulatory (change in legislation) and potential bankruptcy of client
company.
The preparation of the contract is time consuming (up to 6 months or more), complex and
involves considerable risks in the rupture of negotiations. 4
From the the client/entrepreneur point of view, the energy efficiency service is provided in order
to make unnecessary the investment cost and/or the involvement in strange areas of their
business.
3
One that ensures the contractual relationship between the operator and the user, established on the basis of practical implementation of
energy savings quantified in a previous study.
4
The contention of this risk may benefit in the following observations:
1. The proposed technology is part of the user's current needs,
2 The user has been properly warned of the proposed technological advantages,
3. Os The risks and benefits are know,
4. There is a financial scheme adapted to their financial policy and to the cash flow forecasted in the project,
João de Jesus Ferreira, Eng.º (IST)
11
Typical procedure of a third party financing contract
Initial contact
Energy assessment
Insufficient energy
savings potential
End of the process
Disagreement
End of the process
ESCO
Energy audit
Insufficient potential
End of the process
Sufficient potential
Costumer prefers not
to continue
Costumer pays the
energy audit
Sufficient potential of
energy savings
Contract / Negotiation
Agreement
Costumer choose to
continue the process
Investment negotiation
Elaboration of
engineering project
Installation and start of
the project
The calculated energy
savings pay the
investment costs
Equipment assisted by
the ESCO
End of the contract
Costumer assume the
investment property
Source: Economia e Gestão da Energia (JJF)
João de Jesus Ferreira, Eng.º (IST)
12
Energy Service Companies (ESCOs) entirely assume the technical and financial risks. These are
partially transferrable by an insurance policy based on performance, which assures, in the terms
of the policy, the financial outcome in consequence of the efficient intervention, assuming the
potential difference, in case the operational results are inferior to the ones projected. The cost
is calculated based on a percentage of the projected results (around 5% of the total amount
predicted for the resulting energy savings).
Taking into account the operational costs are essentially financial, which could reach 80% - it is
natural that this is the aspect most worth safeguarding and detailing in its analysis.
From the point of view of a bank, the contract isn't conducted in a traditional way, obliging the
participation of specialized personnel. Due to this, the contract is extended as high risk level
which translates immediately to its capital cost. The contracts are usually of a non-compatible
dimension in the view of a "project-finance", normally reserved to characteristic "utilities"
projects, or in other terms, projects associated with companies responsible for providing energy.
This could potentially benefit the financing of energy efficiency projects in terms of their capital
cost.
The project sustains itself on its ability of the project to generate quantifiable energy savings. It
is essentially based on the economic viability of the project that the Energy Services Company is
subject to a "rating" operation - project by project -, in comparison to a company owned and
managed by credit entities, resulting in the attribution of a specific interest rate.
The financing scheme prevails and privileges the tendency for a low “apport” of the own-capital,
used in tandem with other supplements of capital - that may be charged differently, allowing a
reduction of dividends, which are highly taxable.
Some thoughts, relative to the positioning of Energy Service Companies and third party financing,
can be taken into account:
a) Third party financing is a renewed concept, aimed at a corporate cast that is insufficiently
informed and not willing to take risks, especially SME's;
b) Some corporate organizations contractually involve their employees of various roles
within the organization, sometimes with a limited interest in an energetic scope,
especially when the cost is low and the economic environment is recessive;
c) The coordination of subcontracted multidisciplinary skills is complex and sometimes
involves contradictory interests. The vendors of equipment and systems don't always
promote a dialog with consultants, and mostly possess a flawed assistance policy - which
could potentially be a problem;
d) The impact of energy investment in the general reduction of costs is low (although there
is also a low time-frame between implementing a decision and reaping the benefits, which
is potentially very positive);
e) It is hard to benefit from competitive interest rates, and an Energy Services Company will
usually be overlooked when it comes up against the following modalities of funding:
i.
ii.
iii.
iv.
Mid-term bank funding, in an internal or external credit modalities;
Financing by the equipment supplier;
Leasing;
Bond loan.
João de Jesus Ferreira, Eng.º (IST)
13
f) There is a large disproportion between proposed projects and implemented projects;
g) Though venture capital societies, have by default equity in companies, their participation
in the social capital of an Energy Service Company seems to be an important marketing
factor;
h) During the start-up of an Energy Service Company, the financial endorsement of its
partners is of special importance, particularly when trying to obtain credit. The
performance insurance policy also plays an important role, as well as the sustainable
solvency of the client company;
i) The time extension of the contract may constitute a barrier to the energy performance
contract, and a 5 year financial restitution normally implies a minimum of 8 to 10 years
of contract, with the inherent risks, as is the fluctuation of primary energy prices and
others;
j) The time extension of the negotiation of the contract may also constitute a barrier to third
party financing - a period of around 3 months is considered to be the norm, although
some negotiations have been known to go on for 2 years;
k) The hosting of strangers inside organizations during the execution of the contract is an
obstacle that should be taken into account when accepting the third party financing;
l) The moderate receptiveness of credit entities towards the third party financing
contemplates the following:
i.
ii.
iii.
iv.
Operational complexity;
No guarantees;
Risk versus technical effectiveness is an unusual concept for credit entities;
The small dimention of some projects might not justify the effort and investment.
Dimention of energy efficiency projects
More than 3M €
Between 1 and 3M€
Between 500 000 and 1M €
Between 250 000 and 500 000 €
Between 50 000 and 250 000 €
Less than 50 000 €
0%
5%
10%
15%
20%
25%
30%
35%
40%
Source: JJF; NOESIS
Figure 8 – Average dimension of energy efficiency projects
From the elaborated points, we can already identify the following potential barriers to
penetrations of the system:
João de Jesus Ferreira, Eng.º (IST)
14



It is an innovative system, when compared to traditional financing systems;
The reduced importance attributed to energy in the global context of companies;
The fact that these are projects with difficult interpretation on behalf of credit entities,
subjects them to high premiums of risk and consequently high interest rates.
To sum up, it is obvious that energy efficiency projects are profitable and contribute to the
increase of competitiveness in companies and the following barriers have been identified:




Policies and Regulations
The policies are poorly orientated and the existing regulation is poorly applied.
Decision makers of energy consumers
With some exceptions (where energy is an important factor), the decision makers do
not prioritise the energy efficiency because they have more concerns with investment
directly linked with the production sector and because they don't possess the
appropriate skills to evaluate these projects.
Equipment suppliers
Most companies in this market have lack of adequate skills and therefore there is an
inherent lack of trust in them.
Credit Entities
Don't possess the adequate lines of credit.
Source: Limaye; JJF
Figure 9 – Barriers to investment in energy efficiency projects
Considering that, if the non-financial barriers are overcome, the financial barriers are quite
significant:
João de Jesus Ferreira, Eng.º (IST)
15





Availability of funds
The use of own capital has other priorities.
Information
Lack of adequate technical communication between clients and credit entities.
Costs of development
The costs of development and engineering may undermine other projects, especially
those of low investment.
Management and evaluation risks
Financial entities aren't orientated towards the technical evaluation of these projects.
Lack of skills
Lack of appropriate knowledge and skills on various levels.
Source: Limaye; JJF
Figure 10 – Types of barriers to financing in energy efficiency projects
Taking into account everything that has been referred in this article, it appears that the main
barriers to energy performance contracts are directly linked with risk: financial, energy price,
company solvency and performance. Effectively there is always a difference between the
potential of an economy and what it produces. The management of this difference, can
constitute an effective barrier due to conflict induced by clients and operators. Still on a technical
point of view, the barrier regards to the time of negotiation of the contract should be taken into
account - it can sometimes be delayed indefinitely, due to conflicts that may be generated, or
because the decision maker doesn't want to take responsibility due to a high number of
participants in the negotiation, or due to the barrier resulting in the excessive extension of the
contract (financial restitution in 5 years results in an 8 to 10 year contract). In relation to this,
João de Jesus Ferreira, Eng.º (IST)
16
and in terms of the proposed marketing of the operators, their experience and references should
play an important part.
A brief review of the national program ECO.AP
Energy Service Companies have operated on the American continent since the late 1970's and
in Europe since the beginning of the 1980's. In Portugal, this concept was introduced by Eng. º
Luis Mira Amaral in the late 1980's. At the time, 3 or 4 Energy Service Companies were
constituted, that since then have ceased to exist.
They essentially were interested in projects with an involved high level of investment and with an
easy budget and contracting control, such as cogeneration. At the time, several barriers to public
contracting were identified, having as a base the same model (third party financing). The referred
researches allowed to conclude that the main barriers were (and still are) in terms of the public
and corporate sector of the state, among others:




Those responsible for public buildings aren't motivated towards investments in energy
efficiency, given that the generated economies in energy are then withdrawn from their
budgets in future years. Therefore they cannot (directly) benefit from the results obtained.
This situation demobilizes and demotivates those responsible.
Many public organisms don't pay (on time) the energy supplied by providers, such as EDP,
GALP and others. There were cases where payments were due for over 12 months. This
situation is incompatible with the contracting of services through third party financing.
The lack of technical resources, with adequate skills in the energy and energy efficiency
domain, constitutes a barrier towards both public institutions and companies that intend
to constitute themselves as Energy Service Companies.
Etc…
We can state, that most of these barriers are still present today. The vast majority of companies
that registered this year with the Directorate General for Energy and Geology as ESCOs don't
possess the skills in the energy efficiency and management domain. On the other hand public
buildings of various state organisms, don't possess the resources to appoint the "energy
manager" that should ensure the predicted benchmarks, as set by the resolution of the Minister's
Council n.º 2/2011 of the 12th of January.
We can take a risk, and claim that, only due to these facts, we can conclude that the application
of the ECO.AP program will not be successful in Portugal, under the current form.
The application of the System of Energy Certification of Buildings should be highlighted, which
has no oversight and nothing happens to entities (public or private) that don't have certified
buildings, even though they are obliged to since the 1st of January 2009, including buildings
owned by the state or municipalities, which don't lead by example.
On the other hand, some existing ESCOs on the national market don't have the technical ability
and knowledge to perform their demanded functions, and apart from some exceptions, don't
have the financial capabilities to take on the necessary investments and consequent risks of
projects they may potentially be involved in. Portuguese credit entities are also not adapted to
João de Jesus Ferreira, Eng.º (IST)
17
this type of business e don't possess adequate credit lines for investment projects based on
energy performance contracts.
Therefore, there is little hope that, effectively, Energy Service Companies can contribute towards
national and European objectives, in regards to energy efficiency in public sector.
This program was thought of and put into action erratically, and maladjusted in terms of the
technical reality and knowledge on what global energy efficiency projects are.
The revised public contracting scheme, in order to become adequate to the specificities of energy
efficiency contracts, continues to not satisfy the technical or methodological needs of the
market.
The ECO.AP methodology is maladjusted, and doesn't guarantee a good performance for ESCOs,
technically and financially. In the current context, all risks are passed on to the ESCOs with no
counterpart. On the other hand, the state organisms that intend to implement these services,
imposes, with no technical support information, the level of economy that it intends to obtain.
This is irrational, and equivalent to beginning the construction of a building by its roof, without
having set the foundations.
In this methodological configuration, the Energy Service Companies incur on initial high costs,
without knowing if there are technical, economic and financial conditions to even begin
discussing a potential energy performance contract. This isn't normal e doesn't give credibility to
who wrote the Decree nº29/2011 of the 28th of February.
In such an unfavourable context, only companies with a healthy cash-flow or a high threshold for
contracting debt can accept such terms with inadequate costs and deadlines for these types of
contracts.
Effectively, and without a doubt, the private sector is notoriously more efficient in every way,
obviously in terms of energy too. In the public sector, we end up paying through taxes, and no
one is held accountable for the way our money is spent and managed. In the private sector, there
is accountability for the management of financial resources, besides the fact that they constitute
a scarce and limited resource. In regards to the state, until not so long ago, financial resources
weren't scarce or limited. This culture is maintained, because the people are essentially the
same!
João de Jesus Ferreira, Eng.º (IST)
18
THE BANKABILITY OF ENERGY EFFICIENCY PROJECTS
As referred, one of the main problems in terms of financing energy efficiency projects is the way
that the financial sector (especially commercial and investment credit entities) looks upon these
sorts of projects.
Many ESCOs are resorting to private investment funds that are available to finance energy
efficiency projects and energy production, with recourse to renewable sources of primary energy.
The credit entities are not funding these projects, sustaining their views through the following:




The dimension of the projects is too small for investment banks, that prefer projects
above 10 million Euros;
The project-finance view doesn't adapt to the type of projects and its dimension;
These types of projects fit the commercial banking entities, with resource to normal
guarantees, and eventually, resource to personal guarantees from shareholders of the
Energy Service Companies;
….
Therefore, and beyond the recourse to private investment funds, it is of relevant importance to
make these projects attractive for credit entities, in adequate conditions to the specific type of
investment. For this to happen, certain barriers must be eliminated, such as:





Reinforce and improve the communication between Energy Service Companies;
Dispose of financial assessment instruments, that eliminate potential doubt from credit
entities, in terms of the risks of the projects;
Provide credit entities with skills in this area of business, ensuring the correct evaluation
and perception of projects, their risks and advantages;
Consider the view of project-finance, to support energy efficiency projects, independently
of their dimension.
….
One of the goals of the European project Trust-EPC-South is to create better conditions for the
appreciation of energy efficiency projects and produce an assessment tool that is credible and
acknowledged with high prestige by financial and credit entities, attaining to eliminate systematic
doubt in regards to the risk of these projects.
Therefore, there is an important work to do in order to make these projects enticing for the
financial sector and especially the banking sector.
João de Jesus Ferreira, Eng.º (IST)
19
CONCLUSIONS
The prospects for energy efficiency in Portugal should be excellent, if only there was some
political will to stimulate the economic agents, and if these acquired the motivation and
necessary knowledge for their implementation.
Portugal has a very high potential for the energy economy, taking into account what has been
done in these areas, even though existing national regulations, if well applied, would show
relevant results.
It should be highlighted that the assessment carried out on the impact of the implemented
measures in the past, presented by the Directorate General for Energy and Geology at the
National Action Plan for Energy Efficiency, isn't real and is quite far away from being put in place,
especially as they aren't mandatory.
These impositions (aren't binding in terms of energy efficiency) by the EU should provide greater
action on the field. On the 14th of November 2012 the Directive 2012/27/UE was published by
European Parliament and its Council, relative to energy efficiency. This directive establishes a
common framework of measures of promotion of energy efficiency in the EU, trying to ensure the
attainment of the EU goal, which consisted of reaching 20% in terms of energy efficiency by
2020, and path the way towards new improvements in this domain beyond that date.
On the other hand, the XIX Constitutional Government Program defined a new energy policy that
should actively seek and reach, among others, the following objectives:



Guarantee final energy sources at relatively competitive prices, contributing to reducing
intermediate costs of companies and increase their competitiveness in international
markets;
Substantially improve the energy efficiency of the country (reducing consumption by 25%
by 2020), with the state as its first example (reducing consumption by 30% by 2020),
fighting waste and contributing to the improvement of the balance of payments and
towards a more thorough attainment of objectives and sustainability;
…
In this favourable conjuncture for energy efficiency, an intense activity on this matter should be
expected, which in fact doesn't happen.
“THE MOST MAGNIFICENT INTENTIONS MAY RESULT IN THE ABSURD, IF ONE DOESN'T
CONSIDER THE HUMAN FACTOR, THE SELFISH INTERESTS OF SMALL GROUPS AND
MINORITIES"
João de Jesus Ferreira, Eng.º (IST)
20
BIBLIOGRAPHY

FERREIRA, João de Jesus. "Gestão de Energia e Eficiência Energética em Portugal", Seminar
“Energy - Management – Innovation”, Avignon, May de 1992.

FERREIRA, João de Jesus. “Economia e Gestão da Energia”. Texto Editora (Págs.156), Lisbon,
1994.

FERREIRA, João de Jesus. “FINANCIAMENTO POR TERCEIROS (ao sector privado) IDENTIFICAÇÃO E ESTUDO DE BARREIRAS - MEDIDAS DE DINAMIZAÇÃO”, CCE - Center for
Energy Conservation, Lisbon, July 1995.

FERREIRA, João de Jesus, “Indicadores de Eficiência Energética para Portugal”, CCE - Center
for Energy Conservation, 1995.

FERREIRA, João de Jesus. "A Gestão da Energia – Monitoring & Targeting", Lisbon Order of
Engineers, May 2005.

AMARAL, Luis Mira. “E Depois da Crise?”. Bnomics Editora, Lisbon, 2010.

FERREIRA, João de Jesus, FREITAS, Bernardo Rebelo, “A Utilização Racional e Eficiente da
Energia em Grandes Edifícios (Um método de Gestão) ”, National Conference on the
Sustainability of Tourism, Évora, 28-30 October 2011.

NUNES, Clemente Pedro e NUNES, Pedro Sampaio — «Contributo para os Cenários de
Avaliação Económica-Tecnológica Relativos à eventual Instalação de Novas Potências
Eólicas em Portugal», Magazine Energy and Future, n.º 4, June – September 2012, p.p. 7275.

FERREIRA, João de Jesus. "ECONOMIA DA ENERGIA: A importância da eficiência energética",
Magazine Energy and Future n.º 06 (págs. 24 a 40), Lisbon, March 2014.
João de Jesus Ferreira, Eng.º (IST)
21