Energy efficiency in focus

To meet the objectives of the Paris Agreement, energy efficiency must play a much bigger role than it does now. There have been several attempts to create incentives for energy efficiency, but none have been so successful that it has made a difference in the long term. The aim of SENSEI is to make energy efficiency an attractive investment opportunity, which will give a real boost to the European climate action – it is a win-win situation for all parties involved.

Make energy saving a good business

SENSEI’s general approach is to develop a business model based on a pay-for-performance (P4P) scheme. This scheme will involve energy suppliers (DSOs), transmission system operators (TSOs) and third party investors in energy efficiency. The P4P model will make energy efficiency an attractive and safe investment for investors and transform energy efficiency into energy resources for TSOs and DSOs.

In other words, the project will make it profitable for the investment industry to finance the improvement of the European building stock and get energy suppliers and operators to buy reduced energy consumption instead of adding additional energy to the system.

Supply and demand

When you charge your phone, you expect the electricity to flow through the cable continuously. Electricity is a commodity that we can not imagine being apart of for just a second. You probably do not think about it, but it is a huge task to ensure that there is always power in the socket. The TSO is responsible for this task, which in Denmark is also known as energinet.dk. They make sure that enough electricity is always produced to meet the demand. Both too little and too much energy added to the network causes problems. A TSO therefore works on the basis of an estimated consumption which means that they always know how much energy is to be supplied to the network.

How does the calculation work out?

When the estimated consumption shows that demand will increase, the TSO should make the calculation go up. Typically, this will be done by adding new production to the network. Imagine that a new data center is built somewhere in Denmark. To match the increased consumption the center creates, the TSO will ensure that a similar number of wind turbines or solar cells are built. But instead of adding new production to the network, SENSEI’s P4P models will make it possible to buy energy demand reductions.

The TSO will create a tender that aggregators can bid for. The winning aggregator is tasked with delivering the energy savings the TSO demands. The TSO will then pay a predetermined price per kW / h saved corresponding price on electricity. Third party investors will finance the energy efficiency measures required and receive payment from the TSO based on the actual savings. This example is simplified, but explains the basic concept behind SENSEI’s P4P models. The project will also develop several other models that can be used differently and by other players in the energy market.

Huge reduction of CO2

The project therefore has the potential to create a massive reduction in European CO2 emissions, while Europe’s residents will enjoy improved indoor climate and a much smaller electricity bill in the long run, without having to have money out of pocket.

Many other projects have been launched with the aim of making Europe more energy efficient. Act4eco is one of the projects that gives the average European citizen the tools to become more energy efficient. Europe has very little to no experience with the P4P model, so far.

SENSEI wants to change this by developing business models that make P4P attractive to stakeholders and spread the message near and far, for the benefit of both the climate and the European citizen.

Follow the project: Senseih2020