Presented “TerniEnergia Hub”, the new working formula of the “Energy saving” LOB of the Group
- Target of the solution: to create a specialized investment asset class, which would allow to the capital markets to invest in Italian energy saving projects
- The business tool is the ideal convergence platform between the industrial chain of the energy efficiency sector and the institutional investors
- TerniEnergia will provide to the ESCo various solutions (from financial leasing to securitization of receivables projects) to solve the critical issues that hamper the financing market of energy saving
TerniEnergia, smart energy company active in the fields of renewable energy, energy efficiency, waste and gas&power management, listed on the Star segment of the Italian Stock Exchange and part of Italeaf Group, presented today the “HUB” project, a new operating mode to unlock the industrial energy efficiency market through the formula of the “third party financing” in Italy.
The aim of “TerniEnergia Hub” is to form a strategic alliance between all actors of the energy efficiency value chain to meet the needs of the capital market. The formula with which the Group active in renewable and energy management wants to turn a new lighthouse on industrial energy efficiency industry, was presented to a selected audience of partners and suppliers during a workshop held in the hall of meetings of the Hotel Principe di Savoia in Milan. In the three-year plan “Fast on the road smart energy”, in fact, TerniEnergia has paid great attention to the development of the “business line energy saving”, just by defining a new business model.
Stefano Neri, Chairman and CEO of TerniEnergia, stated:
“Combining size and capillary technical skills, the players in the energy efficiency sector – thanks to the strategic alliance with TerniEnergia – can take advantage from the HUB’s potential for a “turnkey” service to the end users with features of economy, industry knowledge, reliability, simplification of the mechanisms and financial availability. The partnership with TerniEnergia Hub produces at the same time a process of dialogue towards investors optimization, providing those who adopt the intervention of energy efficiency an interface that can overcome the current complexity, thanks to the benefit of an integrated approach. Thanks to the Hub, TerniEnergia represent itself as subject aggregator of the player involved in the construction of energy efficiency intervention, through a proper project risk management system and business plan assessment, assuming the responsibility. What we look for are not final customers, but energy service providers, from which we receive and which we remunerate services and technologies to facilitate the convergence with the capital market, aggregating and making critical mass”.
Giovanni Fabrizi, Executive Director at LOB “energy saving” said so:
“TerniEnergia Hub selects energy efficiency projects and interventions with FTT formula (financing through third parties), assesses the economic returns from the business plan and the technology risk and offers them to institutional investors to finance the construction or acquire credits generated by the activities of energy saving. The operation aims to create a specialized asset investment class, that allows capital markets to invest in Italian projects of energy saving. It is one of the factors that, according to the analysis of the financial community, have so far delayed the development of the energy efficiency financing market, leading to frustration the sector and delaying the achievement of a significant size for projects”.
Among the activable formulas, TerniEnergia has entered:
- Financial leasing
The project is completed and accepted by the end user. The Hub assess the intervention and assumes its ownership, absorbing the industrial risk and activating the funding with financial leasing. TerniEnergia takes care of performance guarantees, assumes the role of ESCOs, pays the partner for the investment, for the costs of the technologies and for the O&M activities. The partner retrieves the equity invested, freeing resources for new interventions, TerniEnergia Hub remunerates its business thanks to savings generated and guarantees the investor’s expected return. At the end of the contract, TerniEnergia redeems the plant and transfers it to the end user properties.
- Securitization of receivables
Even in this case, the intervention is completed and accepted by the end user. The Hub evaluates and activates a special purpose vehicle aimed at acquiring the energy efficiency system, remunerating partners for the investment, for the costs of the technologies and the O&M activities. The SPV sells the facility and the receivables to investors. Securitisation can also be applied to portfolios of similar transactions, if it’s not financed a single project of high value.
- Funding from the contract signature
The intervention is at the project stage and the end user has signed the contract for the installation and management. TerniEnergia Hub acquires the contract and activate the procedures to finance it with the FTT formula the project. The possibility of issuing guarantees, the track record and the TerniEnergia’s governance are the plus that frees up the capital necessary for investment. Once acquired the contract, depending on the type, the size, the business plan and the quality, TerniEnergia decides whether to activate the lease option or the securitization of receivables.
