Recommendations are made to adopt ESCO (Energy Service Company) type business models, as well as to make grants available to low-income property owners through a single point of contact with them (customer interface).

The ESADEgov team – Carles Cervera, Francesc Pardo and Tamyko Ysa – involved in the European project mySMARTlife (H2020 framework programme), which is focused on energy efficiency, has worked on business models in the field of housing refurbishment in the cities of:

• Nantes (France)
• Hamburg (Germany)
• Helsinki (Finland).

The “Value Creation Ecosystem (VCE)” and “City Model Canvas (CMC)” tools, developed by ESADE, have been used to identify the key elements that ensure the deployment of sustainable business models from a public perspective. The results of the research have been presented to the European Commission under the title of: Key aspects of City Business Models.

It is worth underlining some of the key aspects in the field of building refurbishment, given that, in developed countries, housing is responsible for 40% of fossil fuel consumption.

Independently of the type of refurbishment, economic viability is the main obstacle to attracting private investment, in addition to the level of interest shown by owners. However, an analysis of the interventions from a perspective of sustainability reveals that these cannot be justified purely in economic terms, since, viewed objectively, the social and environmental benefits outweigh the risks of failing to refurbish.

This analysis has indicated that the principal bottleneck blocking housing refurbishment is the commitment of owners, as a result of economic, technical, political and social barriers; among these, three stand out:

• High initial costs.
• Assurance of a return on investment.
• Owners' purchasing experience.

In order to overcome these barriers, one of the key ideas is the customer interface concept. An analysis of the interventions shows the importance of this concept with respect both to securing the commitment of owners and to producing and delivering the value of the intervention. The customer interface serves as a single point of contact with owners, managed by only one public or private organisation, which promotes, advises on and accompanies the intervention, offering a complete project through energy experts and access to funding and grants. 

In this respect, both the value chain and the business model of the interventions are directed towards energy services similar to those of an ESCO (Energy Service Company), although, unlike the ESCOs, the financial risk in the interventions is still not shared through savings, since it is the owner who assumes this risk.

This is why it is recommended – as the European Commission itself advocates – to adopt ESCO type business models, as well as to make grants available in order to reach low-income owners.

Finally, the analysis also highlights the importance of involving owners as well as tenants in decision-making processes in all stages of the intervention, both from the perspective of strategy and definition, and from the perspective of implementation.

mySMARTLife

The mySMARTLife project aims to foster the smart transition of EU cities towards a new concept of smart life and economy. 

• Duration: December 2016 – November 2021
• Total project funding: €18,656,102
• Principal ESADE researcher: Francesc Pardo Bosch
• More information: https://www.mysmartlife.eu