This event, hosted by our sponsors, Smith & Williamson, will focus on Cleantech-as-a-Service. The morning, which will commence with a networking breakfast, will be divided into two sessions:
1. ESCOs and Beyond: The first session will involve pitches from companies raising funds for ESCO (energy service company) and related business models focused on the deployment (specifically the financing of) renewable energy and energy efficiency - and a panel discussion on the innovative business models emerging in this space.
2. Cleantech meets Software: The second session will focus on software companies with solutions for environmental and cleantech related challenges, including software for the measurement / reporting of carbon emissions and other pollutants.
Speakers will represent companies including:
Cleantech has matured from the early days when investors regarded wind generators, solar panels, biomass boilers or LED lighting as disruptive technologies. These days, investors in the sector are more likely to focus on service-oriented businesses deploying such technologies, at least those versions which are now tried-and-tested, than companies in the business of technology innovation. However, cleantech can still be considered to be disruptive: The business models of some of these service businesses are potentially game changers, with implications for the energy sector and broader industry.
Incentives for the roll-out of clean technology differ from those for other technology sectors, because the benefits are not always so obvious. The authors of a recent publication, Citi GPS: Global Perspectives & Solutions, point to some of the challenges entailed in energy efficiency investment:
"Energy efficiency investment is unintuitive; while normally one invests in an asset which generates cash returns, in the case of efficiency the return usually comes via future avoided costs (i.e. lower energy bills/usage). It’s effectively the same thing, but it makes financing it harder as the investment is unsecured, and doesn’t explicitly generate a cashflow which can be ring-fenced to cover for example interest payments on the investment cost. Energy efficiency creates greater net cashflows to an entity, an element of which therefore have to be earmarked to cover the interest on investment. This lack of ring-fencing is a significant hurdle.”
'Energy Darwinism II: Why a Low Carbon Future Doesn’t Have to Cost the Earth' (August 2015)
Innovative Financing Solutions: Solar as a Service
One solution to this challenge inherent within the sector (i.e. the lack of obvious incentives encouraging cleantech deployment) is what the Citi GPS authors describe as "the right financing mechanisms". In this respect, the Solar-as-a-Service funding model has been a huge breakthrough for the solar industry in the US. As observed in the Citi GPS report:
"Innovative financing solutions in solar in the US where panels are installed on household roofs, but paid for by a third party, the return being shared, shows how goals can be achieved at a residential level without expecting the householder to put up the full capital investment."
This model has been pioneered in the US by companies such as SolarCity, Vivint Solar, Sungevity, Solar Universe, Verengo,, NRG Home Solar and Sunrun.
Infrastructure as a Service
US companies have also led in adapting the Solar-as-a-Service business model to other cleantech and related areas. Generate Capital claims to have ‘created’ (and has trademarked) the ‘Infrastructure-as-a Service™” business model which allows companies and local authorities to benefit from “resource productivity solutions” (i.e. infrastructure assets involving energy, water, agriculture and basic materials) without having to make the capital investment to acquire the new technology and infrastructure.
UK ESCO and Related Business Models
The ESCO (Energy Savings Company) business model was pioneered by Anesco, which has been ranked for two years in a row by the Sunday Times as one of the fastest growing SMEs in the UK.
Companies which have adopted the ESCO and related business models, including SESCO and INESCO, will be represented at the event, as will Clean Energy Prospector, a company which has developed an 'ESCO in a box' service for the solar industry.
Smart Cleantech: Software-as-a-Service
Software-as-a-Service (SaaS), the provision of software services via the cloud, is a well established business model in the IT industry. A growing number of IT companies offer software to measure a company’s environmental performance. Their focus depends upon the industry sector and the typical environmental issues it deals with.
Currently, the main driver behind the roll-out of this software is typically regulatory requirements to collect information on carbon emissions or other environmental performance metrics – and / or to provide a sustainability report. However, since savings from reduced environmental emissions (which often imply energy savings) offer the potential to feed through directly to cost savings, software to make these measurements should – in theory – increasingly be in demand, irrespective of regulatory requirements in the future. There is enormous potential for cloud-based SaaS products to grow in line with the expansion of the Smart Grid and Internet of Things.
Turnkey Solutions (HK) Ltd, which provides SaaS-based solutions for the sustainability reporting market – and has a particular focus on the measurement of the performance of a company’s supply chain – will be represented at the event.