The Ring Fencing Mechanism: a case study of innovative self-financing approach for energy efficiency upgrades

Abstract

This paper introduces an enhanced energy auditing process including a ring-fencing mechanism for the selection of energy efficiency measures considering a multi-stage planning of the energy retrofitting project. The proposed ring-fencing approach enables SMEs to overcome the barrier of lack of capital for the implementation of energy efficiency measures by implementing first no-cost measures and only after that energy savings are accumulated considering the installation of low-cost, medium-cost and finally high-cost measures. The advantages of the proposed methodology are illustrated by means of three case studies, where a variety of energy efficiency measures were first identified throughout the auditing process involving three different SMEs, then most effective measures were selected and scheduled to be implemented according to a multi-annual plan while considering budget and operational constraints. The results of the pilot studies show that the business owners have improved their decision-making with respect to energy efficiency upgrades by engaging in the auditing process and accepting the recommendations about the suggested interventions to maximize financial (and environmental) benefits.