Barriers and challenges to the deployment of Smart Energy Services in Europe

On April 25th the EU Horizon 2020 funded project SmartSPIN, led by IERC, participated in an online clustering event with other EU Projects (Sensei, e-Crew, Fresco, SmartEPC) where projects’ different perspectives on Smart Energy Services in Europe were presented. Presentations were followed by a discussion on barriers and challenges identified by each project that hinder an increased uptake of Smart Energy Services.


The research performed in all the five EU projects confirms that barriers and challenges for the deployment of Smart Energy Services still exist in Europe. One of the identified barriers is related to standardisation of relevant business models like Energy Performance Contracting. The EPC model is not universally applicable (e.g., it may not be suitable for small buildings and for small public lighting systems or when the payback time is too long, e.g., longer than 12 years). Moreover, regulations and policies show differences across EU countries as well as shortcomings in regulatory frameworks and lack of adequate policies. The former issue hinder replications of successful business models and best practices identified in one EU country in other EU countries. The latter issue determines a lack of interest or scepticism among stakeholders with respect to novel and more innovative energy services.


In addition to regulatory barriers, the projects have also identified market-related barriers. In fact, markets of Smart Energy Services are not enough developed or are not growing with a significant rate in several EU countries; such situation makes several energy service companies reluctant in launching new Smart Energy Services because they are afraid that clients would prefer traditional and well-established services. Another barrier is related to potential clients’ lack of sufficient awareness about the Energy efficiency as a service (Eeaas) business model, including its deployment in the commercial rented sector. One of the challenges that projects are facing is to communicate the advantages of a pay-for-performance business model to stakeholders, including facility managers, building owners, tenants and to gain their trust in relation to the fact that Eeaas will enable a fair and transparent distribution of costs and benefits between the parties. Finally, another barrier identified is the distrust of some about energy consumption data sharing with service providers due to privacy concerns.


The approach followed by SmartSPIN to overcome the challenges of the commercial rented sector is first to deliver a detailed but easy to read representation of the business model. This includes nine segments: key partners, key activities, value proposition (using value proposition canvas) customer relationship, customer segment, key resources, distribution channels, cost structure, and revenue streams. Then, SmartSPIN will validate its business model with the advisory board and by means of a stakeholder consultation. The research team will present the final version of the business model to stakeholders at three final national exploitation workshops and at the final SmartSPIN event in Brussels, before the end of the project.


To facilitate the deployment of Smart Energy Services, SmartSPIN has developed a contractual template that regulates the relationship between ESCO, landlord and tenant when delivering energy efficiency as a service, as well as a new flexible electricity tariff template that links the electricity market’s hourly clearing electricity price, with the actual electricity price paid by the customer. SmartSPIN will contribute to improve stakeholders’ awareness developing two of best practice guides, one for ESCOs that wish to deploy smart energy services to commercial rented properties and another one for landlords and tenants wishing to procure smart energy services.


Finally, SmartSPIN will contribute to the development of an adequate European regulatory framework developing a series of best practice guidelines for policy makers that want to encourage uptake of smart energy services in the commercial rented sector.


The recording of the SmartSPIN clustering Event is available here