1. Energy Efficiency Insurance

2. With around 40%* of all the energy we consume coming from buildings, there
is a major opportunity to cut both emissions and costs by installing energy saving
technologies. Such projects bring with them a need to protect the assets installed,
revenues they generate and the potential savings they produce.
Energy prices are at an all time high and are only likely to increase further with
time. As a result energy costs are becoming an ever increasing percentage
of property owners‘ and occupiers‘ expenses. Whilst energy production from
renewable sources is a popular solution, it is much cheaper to save a kW
ofenergy thanitistoproduceone.
Energy efficiency – the statistics
Over 50% of buildings in the UK are over 50** years old and
over 50% of a typical buildings energy use is on heating and
lighting. As more and more companies are looking to reduce
their energy consumption there are numerous ways in which
their energy efficiency can be improved.
Funding energy efficiency projects
Since the credit crunch it has been extremely difficult to secure
financing. Whilst green energy projects have been one of the
few sectors to buck this trend, funding for energy efficiency
projects has been slow to materialise. The reluctance to
finance projects is due to the necessity to secure loans against
future cost savings following the installation of energy
conservation initiatives. If the project is miscalculated or the
technologies installed do not work as anticipated then those
savings are unlikely to be achieved, resulting in a possible
default on the loan.
Energy efficiency insurance
A combination of initiatives ranging from LED lighting and
improved building management controls right through to wood
pellet heat and power installations can be used to generate
significantenergysavings.
Examples of energy saving initiatives
− Enhancedinsulations
− LEDlighting
− Boiler optimisation
− Thermalwindowfilm
− Photovoltaicpanels
− Lighting motion sensors
− Improved building
managementsystem
Typical energy usage in a commercial building
Policy developed to meet the needs of organisations investing
in energysaving technology and energy service companies
working with them.
The policy is specifically designed for investors in energy
conservationmeasures,energyservicecompaniesandthose
financing energy saving projects. It provides cover for the
assets installed,revenue generated by projects and shortfalls
inenergysavingsrealisedeachyear.
Energy efficiency insurance removes the technical uncertainty
for the lender allowing them to concentrate on the credit risk.
Insuring the performance of the project with a highly rated
insurer like HSB Engineering Insurance results in reduced
financial exposure, improved credit worthiness and may lower
interest rates and funding costs.
Who is the cover aimed at?
Building Owners/End Users
Energy Service Companies
Lenders
Other
Ventilation
Hot water
Air conditioning
9
5
9
9
Office equipment 16
Heating
Lighting
25
29
0 5 10 15 20 25 30
Source: 2010 Builders Energy Data Book
For information on energy efficiency insurance contact:
Rupert Dixon
e: Rupert.Dixon@pib-insurance.com
t: +44 (0)7506 592 317
Sources:
* DCLG “Recast of the Energy Performance of Buildings Regulations” Nov 2012
** DECC “The energy efficiency opportunity in the UK” Nov 2012

3. In a nutshell
The policy is available for periods of up to five years and provides cover for the following:
Material damage
Covers physical damage, including breakdown and
manufacturers defects, to equipment and materials installed
as part of an energy saving project with the aim of saving or
generating energy. Replacement of equipment is on a new
for old basis.
Asset performance
Covers the annual shortfall in energy savings compared to
the amount of savings insured by the policy. It covers shortfall
caused by deficiencies in the design or implementation
of energy saving measures and does not require damage
to have occurred to the equipment. The cover is subject to
a projectaudit.
Business interruption
Covers loss of gross revenue and increased cost of working
following insured damage to equipment. Revenue is income
generated under an energy service contract and incentives
received for theproductionofrenewable energy.
Energy Efficiency Insurance – Case Study
Our client is an ESCO (Energy Service Company) providing
funded retrofit solutions under an EPC (Energy Performance
Contract).
Our client approached us to provide an insurance which would
cover the guaranteed element of the contract and effectively
take this amount “Off Balance Sheet”.
In this example our client was asked by an organisation who
run a 24 hour call centre to suggest methods of reducing their
energy spend. Our client conducted an audit of the premises
and determined that savings in the range of 30% per annum
could be achieved by installing a number of retrofitted energy
savings measures. These included replacement of the
conventional lighting with a LED system and up-grading
existing electrical and cooling systems combined with
a remote monitoring buildings management system.
We worked closely with HSB Engineering Insurance to create
a new policy which would provide the cover required. This was
provided as a package policy not only covering the shortfall of
the guarantee but also providing a full wrap around cover for
the installed equipment.
There are 3 sections to the policy being;
1 Material Damage and Mechanical/Electrical Breakdown
2 Resulting Business Interruption
3 Shortfall of the guaranteed savings amount
We were able to a deliver a 4.5 Year policy to the satisfaction
of our client’s funding providers.
Our client arranged the funding of these measures from
a specialist fund and guaranteed to their customer a
minimum level of savings per annum. The period of
the contract is 4.5 Years.
Benefits of Energy Efficiency Insurance
Building owner/end users  Reduced energy costs
 Reduced carbon footprint
 Confidence from insurance
backed savings
Energy service companies  Improved credit worthiness
 Improved availability and
cost of loans
 Assets, revenue and performance
protected
 Customer confidence
Lenders  Technical uncertainly removed
 Improved credit risk
 Loan repayments protected

4. For more information on
energyefficiencyinsurancecontact:
Rupert Dixon
Director – Renewable Energy
t: +44 (0)7506 592 314
e: Rupert.Dixon@pib-insurance.com