Now is the time. Energy Efficiency First!

I had the privilege to attend the CEO roundtable at the International Energy Agency (IEA) Energy Efficiency Conference co-hosted by the European Commission and supported by the Energy Efficiency Movement in Brussels last week. The discussions reinforced my view that energy efficiency has never had better momentum than now, driven by both climate commitments and energy security considerations that have become central to European policy.

I am particularly encouraged by the leadership of Dan Jørgensen, the EU Commissioner for Energy, with setting the target to double the energy services market and to double down on the energy efficiency first principle.

As CEO and co-founder of Solas Capital AG , an investment advisor focused exclusively on energy efficiency investments in buildings and industry, I've spent over a decade observing the challenges that limit deployment in this sector. Backed by the European Investment Bank (EIB) , we've built the largest investment team in Europe dedicated to energy efficiency project financing.

The Challenge We Face

Our climate and energy security goals require significant acceleration in energy efficiency deployment. 40% of the CO2 reductions needed by 2030 must come from energy efficiency, making it as important as renewable energy generation.

Despite the clear economic benefits of energy efficiency, deployment is not fast enough to reach targets. In my experience, I consistently encounter three fundamental barriers preventing implementation:

• Lack of awareness and technical know-how - Many energy users lack the expertise to design, implement, and maintain energy efficiency solutions effectively

• Lack of internal resources - Organisations often lack dedicated personnel to manage complex energy efficiency projects from assessment through to long-term monitoring or in the case of the public sector to run time consuming tender processes

• Lack of accessible funding solutions - Traditional financing models struggle with energy efficiency investments, whilst energy users face significant upfront capital requirements

These barriers are particularly challenging for SMEs, which represent 99% of EU businesses and employ two-thirds of Europe's workforce, as well as for the public sector and building owners.

Buildings account for 40% of the EU's energy consumption and one-third of its emissions. We must find scalable solutions to decarbonise our building stock.

The Energy-as-a-Service Solution

There is one business model that addresses all three barriers simultaneously: the Energy-as-a-Service model. Instead of purchasing equipment upfront, energy users sign long-term agreements for services such as heat-as-a-service, cooling-as-a-service, or lighting-as-a-service.

The Energy Service Company assumes operational risk, organises financing, and delivers guaranteed performance. This model removes capital barriers, provides technical expertise, and transfers performance risk, creating cost savings whilst achieving decarbonisation goals. The best energy is indeed the one we don't use.

The current context makes this model particularly relevant. Energy security concerns have elevated energy efficiency from an environmental initiative to a strategic economic imperative. The financing is available, the technology is proven, and digital monitoring enables reliable performance tracking.

Policy Recommendations

Based on my experience across European markets, I have three specific recommendations for policymakers:

• Prioritise Energy Service Company business models - Create regulatory frameworks that explicitly support long-term service agreements and ensure procurement rules don't favour upfront capital expenditure over service delivery models. E.g.: The current draft on State Aid Guidelines supporting the Clean Industrial Deal (CISAF) does not support Energy-as-a-Service business models and does not foresee direct grants to Energy Service Companies, which pass on these benefits to their customers.

• Public sector leadership - Run sizeable, long-term tender programmes to decarbonise public building stock, providing the market certainty that industry and financing partners need to scale operations. Energy Performance Contracting or Public Private Partnerships are available instruments to mobilise private capital for the transition, without constraining public budgets.

• Address small-scale project economics - Support Energy Service Company business models through mechanisms like white certificates or other fiscal incentives because energy efficiency projects are in many cases small and hence suffer from lower returns for Energy Service Companies due to higher proportional overhead costs.

When there's a strong business case, projects will follow. From our experience in renewable energy projects, we know that if the regulatory framework allows project developers to make money, they will take the business development risk and projects will be implemented. Now we need to allow Energy Service Companies to make these profits by supporting the development of smaller projects.

The Path Forward

The opportunity is significant. Europe has the technological capability, financial resources, and policy tools necessary to transform its building stock. The European Performance of Buildings Directive will lead to an estimated annual investment amount of EUR 150bn. What we need is the political will to implement supportive frameworks and the commitment to lead by example.

At Solas Capital AG , we work to bridge the energy efficiency funding gap, providing financing solutions that make energy efficiency projects commercially viable. The current momentum around energy efficiency represents an important opportunity to create the policy frameworks that will enable Energy-as-a-Service models to scale effectively.

The financing is available.

The technology is proven.

We simply need the right policy framework to bridge the energy efficiency funding gap and unlock Europe's potential for building decarbonisation.

#impactinvesting #energyefficiency #energysecurity #climateaction #buildingdecarbonisation #energyservices

p.s.: Thank you International Energy Agency (IEA) and Energy Efficiency Movement for organising this leading intentional event on energy efficiency

Fatih Birol Brian Motherway Emma Mooney Kristina Klimovich Mike Umiker Lisa Bounoure, PhD Mechthild Wörsdörfer Anne Weidenbach Rosalinde van der Vlies Ditte J.