Agreement Efficiency

The Energy Efficiency Act requires large companies to carry out an energy audit every four years. Energy audits are used to gain knowledge about the existing energy profile of a company or all units in a group and to identify opportunities for energy savings. A company`s energy audit includes on-site audits to obtain detailed information on energy consumption and the corresponding energy efficiency measures. For several years, companies and municipalities have been taking voluntary measures to improve their use of energy. Since the 1990s, energy efficiency agreements in Finland have been the main instrument for improving energy efficiency and meeting the EU`s strict energy efficiency obligations. Efficiency as-a is gaining popularity because it overcomes market barriers, does not exceed other mechanisms, and limits customer performance risk while providing a way to achieve energy and cost savings in the short term. With the Financial Accounting Standards Board`s upcoming changes to the leasing balance sheet, which will place operational leases on the balance sheet, Efficiency-as-a-Service is likely to be one of the few remaining efficiency financing options to be consistently considered off-balance sheet. Efficiency-as-a-Service is part of a larger industry-wide shift away from customer equipment ownership and to an “as a Service” model in which the customer does not own the efficiency equipment, but instead pays for energy savings or services such as service. Thanks to the good results achieved, Finland will continue to apply the voluntary approach for the period 2017-2025. To do this, however, the agreement must remain comprehensive and achieve the energy efficiency targets. In practice, this assumes that from the beginning of 2017, a significant number of companies and municipalities adhere to the agreements and actively implement their energy efficiency measures. The Agreement on Energy Efficiency for Industries is an agreement between government and industry associations on the efficient use of energy. The parties that have committed themselves to this agreement are the Ministry of Employment and Economy, the Energy Authority and the Finnish Industry Association EK, as well as the following members of their member associations: the Finnish Food and Beverage Industry Association, the Finnish Chemical Industry Association, Finnish Forestry, the Finnish Technology Industry Association, the Finnish Federation of Commerce, the Finnish Hotel Federation (MaRa) and the Finland Central Organisation of Motor Crafts and Repairs.

The market for efficiency as-a services is believed to be growing rapidly, but no in-depth and up-to-date analysis of the current market size has been carried out. Navigant estimates that global revenue from the Lighting as-a service alone could amount to $US 2.6 billion by 2026. A 2012 analysis by Deutsche Bank Climate Change Advisors and the Rockefeller Foundation estimated that more than 100 ESA projects had been completed, with a pipeline of potential ESA projects of around $500 million across all companies. These numbers have probably increased significantly since then. As part of the Better Buildings program, financial allies completed projects worth more than $450 million between 2012 and 2019 in Efficiency as a Service projects. Financing small and medium-sized projects has proven difficult due to high transaction costs, but through the aggregation and optimization of business models, Efficiency as-a-Service has the potential to develop this market that many traditional EPC (Energy Performance Contract) models are not able to handle. To compare Efficiency-as-a-Service with other financing options that might be a good fit, answer a few questions about your organization…