Blurring the boundaries between the physical, digital, and biological worlds that is underpinning the Fourth Industrial Revolution (4IR)^[1] is coming to energy, making the traditional model of centralised generation, where energy flows in one direction to passive ratepayers, to retire. Everyone can generate as well as consume.

The same convergence has been changing industries, such as manufacturing, hospitality sector or media. Generation, distribution, and consumption processes merged with digital technology and telecommunications. This changed how we enjoy mobility and content such as music, movies, news, and information. Same way, people will be not buying in future markets energy but an electric car that has power or a home that is warm, as the energy will be sold as secondary product that will be embedded in primary products. Like the services such as Airbnb changed the way how we buy spare rooms, people would be able to trade their excess supply through peer-to-peer markets thanks to growing menu of increasingly cost-effective distributed energy source options that provide choice how much and when to consume and even generate electricity.

These sources of energy are often diffusely distributed and intermittent by nature. Therefore, they potentially create problems for grid stability and efficiency which could lead to limitations on the amount of these resources that can be effectively added to the grid. Generation output by renewable resources is governed by environmental conditions and is generally not able to respond to changes in demand. Responsive control over non-critical loads which are connected to the grid has been shown to be an effective strategy which is able to mitigate undesirable fluctuations introduced by these renewable resources^[2]. In this way instead of the generation responding to changes in demand, the demand responds to changes in generation. This is a basis for demand response that has already evolved into complex services that are now ready to contribute to energy savings (as will be shown by the project) and in coordination with energy efficiency measures and in combination with other services such as e-mobility, energy storage/hybrid energy systems and building decarbonisation can bring new added value to operators and final consumers.

This is enabled by fusion of advances in artificial intelligence, the Internet of Things (IoT), big data analysis and quantum computing that creates a digital layer able to coordinate and distribute energy and information in real time, enabling trading of almost infinitive interactive products and services. This makes the energy market very complex and at the same time raises the expectations of the final consumers that want to reap all the benefits the distributed, horizontally networked, and bi-directional market can give.

Smart and connectable devices are gradually embedded in public infrastructure, buildings, and transport. Digital layer makes possible exchanging huge volumes of data enabling multi-sided market on which energy is bought and sold. Considering that the new market complexity is also a challenge to all players and the fact that coordination between energy efficiency measures and demand response is beneficial at both the provider and consumer level⁵, the future calls on Energy Efficiency Service Providers[3] to deliver total energy solutions that combine services into integrated/one-stop-shop and end-to-end solutions.

This goes hand in hand with a need for a strong penetration of renewable energies and an unprecedented increase of energy efficiency to address the challenge of the decarbonisation of the EU building stock. As proposed in the European Green Deal⁴ the EU and the Member States should engage in a “renovation wave” of public and private buildings[4]. The renovation rate will need at least to double to reach the EU’s energy efficiency and climate objectives. Fully developed smart energy efficiency service market would be a game-changer in achieving carbon neutrality of buildings by 2050.

The overall objective of the project is to develop an integrated package (a one-stop-shop package) of novel smart energy efficiency services (EES) integrating energy efficiency and distributed generation, demand response, e-mobility, energy storage/hybrid energy systems and integrating different energy sectors (e.g., electricity with heating and cooling), and to develop innovative financing and rewarding solutions. In addition, the integration of non-energy benefits and non-energy services will be investigated. Focus will be on identifying market, regulatory and other barriers for integrated energy efficiency. Innovative legal, financial, and regulatory solutions to overcome these barriers and enablers of EES market will be recommended.

Advanced analytics capabilities to better manage energy consumption in buildings and allow the implementation of the energy services integrated into smart EES package will be demonstrated to market actors and final consumers/prosumers allowing the integration on various markets (balancing market, wholesale market, ancillary services, flexibility market), as well as to ensure performance improvements providing benefits on comfort, health, and safety aspects. Focus will be on methods to assign rewards and financial incentives to all market actors, e.g., energy services providers companies (ESPCs), aggregators, DSOs, energy cooperatives, obliged parties under the Energy Efficiency Obligation Schemes implementing art 7 EED, final consumers/prosumers, etc. To further ramp up energy efficiency along with an interest in better use of digital energy meter data and analytics to encourage efficiency, the project will consider the use of pay-for-performance schemes that would reward energy savings on an ongoing basis as the savings occur, often by examining data from a building’s energy meters, rather than, for example, providing up-front payments to fund energy-saving measures.

Considering the differences in today’s differences between EES markets and relevant regulatory environment in EU Member States, the (r)evolution of smart EES will differ from one country to another. The project will analyse the regulatory conditions for unlocking the full potential of integrated energy efficiency services and whether any market organisation measure would be necessary.

In improving the quality of life and tackling climate change there is a golden opportunity to leverage the advancement of energy policy, delivering major changes in the future and help economic recovery. If emissions from buildings become part of European emission trading4 than carbon emission reduction will become new revenue source and/or source for financing energy efficiency.

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[1] Concept and technologies brought about by the 4th industrial revolution based on emerging technology breakthroughs in fields such as artificial intelligence, robotics, the Internet of Things (IoT), machine to machine communication (M2M), big data analysis, 3-D printing, nanotechnology, materials science, and energy storage.

[2] Reihani, Ehsan; Thornton, Matsu; Reihani, Ehsan; Ghorbani, Reza (2016). “A novel approach using flexible scheduling and aggregation to optimize demand response in the developing interactive grid market architecture”. Applied Energy. 183: 445–455. doi:10.1016/j.apenergy.2016.08.170

[3] European Commission defines more than one kind energy service companies (https://e3p.jrc.ec.europa.eu/node/190). An ESCO is a company that offers energy services which may include implementing energy-efficiency projects using energy performance contracting (EnPC) and in many cases on a turn-key basis. Another category of companies that offer energy services to final energy users, including the supply and installation of energy-efficient equipment, the supply of energy, and/or building refurbishment, maintenance and operation, facility management, and the supply of energy (including heat), are Energy Service Provider Companies (ESPCs). They may be consultants specialised in efficiency improvements, equipment manufacturers or utilities. As the project goes beyond these narrowly defined type of service companies, we use throughout the project the term Energy Efficiency Service providers (EES providers) and the term ESCO is only used if we refer specifically to a service company using EnPC in the meaning of the above-mentioned definition of the European Commission.

[4] Commission Communication the European Green Deal COM(2019) 640 final