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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. João de Jesus Ferreira, Eng.º (IST) 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. João de Jesus Ferreira, Eng.º (IST) 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 João de Jesus Ferreira, Eng.º (IST) 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