Have Banks Become the new Energy Service Companies?
Have Banks Become the new Energy Service Companies?
Energy efficiency is making its way into all sectors, and banks are now developing solutions to be part of the energy transition process.
The targets set by governments and institutions to reduce emissions and preserve the planet have a direct impact on the energy sector. You may already know this figure, but we would like to remind you that one of the objectives of the Paris Agreement is to reduce the emission of polluting gases by 40% compared to 1990 by the year 2030. The European Union wants to go even further and achieve a 55% reduction.
These global objectives, together with the liberalised market, are generating a multitude of changes in the energy sector. That’s the case with the introduction of new energy service companies, self-consumption projects or energy communities, which we talked about last week.
In this article, we look at how banks are finding their niche to become active in the energy sector.
The Role of Banks in Energy Efficiency
Companies in the energy sector, whether they are service companies (ESCOs), retailers, installers, etc., have a long way to go and still lots of work to do. This is good news for business and employment figures. However, at times the willingness to do so can conflict with reality if there are not sufficient resources to finance energy projects.
Banks and financial institutions are there to fill the gap. As part of their efforts to be more committed and respectful of their environment, banks have launched sustainability strategies in recent years, including energy services.
And what motivates this new strategy?
One of the banks’ priorities is to invest in projects where they can secure a return on their investment (ROI), and renewable energy is a growing sector. For example, the European Investment Bank (EIB) is moving away from investment in fossil fuels and increasing its investment in renewables and energy efficiency. Between 2015 and 2020 the bank allocated €21 billion to renewable energy projects.
Several agents will benefit from the investment in energy efficiency projects including:
1.Installation and energy service companies
It will allow them to grow, create quality jobs and generate demand for renewable energy solutions.
2.The end-user
They can save part of the initial installation investment and choose among a wider range of options to be efficient.
3.The bank itself
Such investment will contribute to the bank’s Corporate Social Responsibility (CSR) or ESG and thus, improve its image. An institution’s commitment to sustainability and environmental causes is expected by modern customers, who won’t hesitate to switch to another bank meeting their needs.
How to Promote Energy Efficiency in your Bank and Reduce your Carbon Footprint
If you are familiar with the banking sector, you may already know that banks have their own challenges in terms of energy efficiency (e.g. increasing efficiency in their branches and offices) as we discussed in this article on the main energy challenges in the banking sector.
So before you start offering efficiency-related services to customers, it is important to promote energy efficiency in your offices and branches and reduce their carbon footprint.
Implementing an energy management system will help you to carry out an initial audit and establish efficiency measures. In addition, defining an internal awareness strategy for your employees will also be key to ensuring that the measures are effective and that your bank is more efficient and sustainable.
Opportunities exist for banks to move further into the energy sector and contribute to the expansion of renewable energy and energy efficiency. Let’s take a look at how banks in the UK are integrating energy efficiency into their service portfolio.
