Case Study Details - Future of Power Systems - Energy savings insurance and standardized investment models

Energy savings insurance and standardized investment models make it easier to finance energy efficiency upgrades by addressing a long-standing concern – uncertainty about whether predicted savings will be delivered. In the past, many projects relied mainly on contractual performance guarantees from contractors, which could still leave building owners and lenders exposed if results were disputed, difficult to verify, or dependent on a single company’s financial strength.

This solution improves on that approach by adding two practical elements. First, an insurance policy can protect the customer if agreed savings are not achieved, shifting performance risk to an insurer that is structured to manage it. Second, a standardized package – including shared contract terms, a consistent method to estimate and verify savings, and independent validation – makes projects easier to compare and assess.

Together, these elements reduce uncertainty and administrative complexity, which can lower financing barriers and help smaller projects attract capital. A key benefit is repeatability: once the model is established, similar upgrades can be deployed across multiple sites and organizations with faster approvals and more predictable outcomes.

Main outcomes of the solution

Affordability: By making energy efficiency upgrades easier to finance and replicate, the solution accelerates demand reduction and peak load relief. This can lower system operating costs and help moderate consumer bills through reduced energy consumption and deferred network investment.
Business Value: By shifting performance risk from customers and lenders to an insurance-backed structure, the solution improves bankability and enables portfolio financing. This can increase private capital participation and make returns more predictable for efficiency investments.
Institutional Efficiency & Transparency: By using standardized contracts and consistent validation of savings – typically based on recognized measurement and verification protocols – the solution reduces negotiation and due diligence time, strengthens trust in reported results, and supports faster and more consistent approvals across projects and markets.

Key implementation and scaling factors

Standardize documentation and calculation methods so projects use repeatable contracts and consistent savings estimation and verification, reducing transaction costs and enabling replication.
Require independent technical validation to confirm baselines, assumptions, and expected savings before financing and insurance attach, reducing disputes and increasing lender confidence.
Develop clearly defined energy savings insurance products with transparent triggers, roles, and remedies, improving financeability and reducing risk premiums.
Build bank and investor readiness through consistent project data packs and underwriting guidance so financiers can evaluate projects without bespoke engineering reviews.
Enable pipeline aggregation through common eligibility criteria and reporting standards so smaller projects can be bundled into portfolios and financed at scale.

Case study

Inter-American Development Bank (IDB) and partners including BASE (2013), Global

In 2013, the Inter-American Development Bank (IDB), together with partners including BASE – the Basel Agency for Sustainable Energy – developed the Energy Savings Insurance (ESI) model to unlock investment in energy efficiency by reducing the risk that projected savings are not delivered.

In Europe, the model has been implemented in Italy, Portugal, and Spain through initiatives including the GoSafe with ESI program. These deployments combine standardized contracts adapted to national legal frameworks, independent validation of expected savings, and participation from local insurers and financial institutions.

European implementation has also incorporated digital project management and reporting tools to improve traceability of project performance and reported savings. Building on early implementation experience, the approach has expanded to additional markets, supporting wider replication of the same financing structure.

Reported results from early deployments indicate that the model can support measurable reductions in energy use for participating enterprises while helping build a growing pipeline of financed projects and mobilized investment. This helps shift energy efficiency upgrades from isolated transactions toward repeatable programs capable of scaling across multiple sectors.

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