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Subsidy evaluation tool for deep renovation of public buildings

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Securing funds for renovating hospitals, schools and other large public buildings to reduce their energy consumption is not easy for public authorities in the Mediterranean area. Indeed, public bodies cannot afford the high costs of deep renovation so they need to attract private investors. However, the poor financial prospects of such projects - long payback time and low internal rates of return (IRR) – makes the investment unappealing for the private sector.

 

To tackle this issue, SISMA project developed the “Subsidy Evaluation Tool” (SET). It provides an accurate calculation of the IRR indicator that offers confidence for private investors on the project performance, acting as a key driver to trigger long-term bankable energy efficiency investments.

 

Nowadays, one of the best ways to mobilise funds for such renovations is through the Energy service companies (ESCOs). These organisations are providers of energy services or energy efficiency improvement measures in buildings, accepting some degree of financial risk.

 

To move forward the interested public authority and an ESCO usually agree on an Energy Performance Contract (EPC), under which the ESCO implements an energy renovation project and uses the flow of income from the cost savings to repay the costs of the project, including the costs of the investment.

 

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