Energy efficiency in supermarkets: Structured project financing for ESCOs

In this paper a new model to overcome the financial barriers to energy efficiency is described: for the first time in Europe, structured project financing technique has been applied to finance energy efficiency improvements in supermarkets, seizing a major quota of the important energy efficiency potential. Recently, there has been a significant evolution in several energy conversion technologies usually installed in supermarkets for refrigeration, lighting, HVAC and Automation & Control services. Since a supermarkets renovation occurs every ten to fifteen years, to substitute the existing stocks with a set of top-of-the-market technologies can significantly improve energy efficiency and reduce the final energy consumption. In general, the top-of-the-market energy technologies are the most efficient but also the most expensive on the market, in terms of investment costs. Since energy efficiency is not the supermarket core-business, the decision makers tend to minimize the capital expenditures for energy efficiency, even if the IRR is higher than the core-business one, in order to save precious financial resources. The structured project financing jointly to Energy Service Company (ESCO) model and Energy Performance Contract technique can successfully overcome such financial barrier to energy efficiency and give to banks and/or equity funds the opportunity to finance energy efficiency, as showed by the Italian success story described in this paper.