How Energy Saving Certificates (ESCs) work

The Energy Triangle: How Obligated Parties, Responsible Subjects, and Verifiers Bring Energy Saving Certificates to Life

In the journey towards a more sustainable future, Spain has implemented various measures to promote energy efficiency. One of the most innovative is the Energy Saving Certificate (CAE), a mechanism that involves several actors in a dynamic process of saving and certification. In this post, we will unravel the roles of obligated parties, responsible subjects, and verifiers in the life cycle of a CAE.

Obligated Parties: The Drivers of Change

Obligated parties are generally large energy companies that have the responsibility to meet annual energy saving targets. These entities play a crucial role in the CAE process:

1. They identify and promote energy efficiency projects.
2. They finance or co-finance these initiatives.
3. They request the issuance of CAEs based on the savings generated.
4. They use the CAEs to meet their saving obligations or sell them in the market.

Who are the Delegated Subjects?

Delegated subjects are entities that, without being obligated parties, can acquire energy saving commitments and request the issuance of CAEs. They act as intermediaries between obligated parties and responsible subjects, facilitating the implementation of energy efficiency projects and obtaining certificates.

Accreditation Process for a Delegated Subject

The process to become accredited as a delegated subject involves several steps:

1. Application: The interested entity must submit a formal application to the Ministry for Ecological Transition and Demographic Challenge (MITECO).
2. Evaluation: MITECO evaluates the application and the documentation submitted to ensure that the applicant meets all established requirements.
3. Resolution: If the evaluation is positive, MITECO issues a favorable resolution, accrediting the entity as a delegated subject.
4. Registration: Once accredited, the delegated subject is registered in the Administrative Registry of Delegated Entities.

Who Enables the Delegated Subject?

The official enablement of delegated subjects is carried out by the Ministry for Ecological Transition and Demographic Challenge (MITECO). This body is responsible for evaluating applications, accrediting entities that meet the requirements, and maintaining the official registry of delegated subjects.

Requirements Demanded of Delegated Subjects

To obtain accreditation as a delegated subject, entities must meet a series of rigorous requirements. Let’s look at each of these requirements in detail:

1. Technical Capacity:

• • Qualified personnel: They must have a team of professionals with specific qualifications in energy engineering, industrial engineering, or similar fields.
  • Demonstrable experience: They are required to prove participation in a minimum number of energy efficiency projects (generally between 5 and 10) in the last 3-5 years.
  • Continuous training: Demonstrate a training and updating plan for personnel in energy efficiency and related regulations.
  • Professional certifications: It is valuable for personnel to have certifications such as European Energy Manager (EUREM) or Certified Energy Manager (CEM).

2. Financial Solvency:

• • Minimum capital: Depending on the scope of their activities, a minimum share capital may be required (for example, between 100,000 and 500,000 euros).
  • Financial ratios: Demonstrate a solvency ratio (total assets/total liabilities) higher than 1.5 and a liquidity ratio (current assets/current liabilities) higher than 1.2.
  • Absence of debts: Certify that there are no debts with the Public Administration or Social Security.
  • Civil liability insurance: Have insurance that covers possible liabilities arising from their activity, with minimum coverage (for example, 1 million euros).

3. Management Systems:

• • Specialized software: Have computer tools for the management and monitoring of energy efficiency projects.
  • Documented procedures: Have procedure manuals that detail the processes of management, measurement, and verification of energy savings.
  • Quality certifications: It is recommended to have certifications such as ISO 9001 (quality management) and ISO 50001 (energy management).
  • Monitoring system: Capacity to carry out real-time monitoring of energy savings in managed projects.

4. Independence:

• • Declaration of independence: Submit a sworn statement of having no conflicts of interest with obligated parties or responsible subjects.
  • Corporate structure: Demonstrate that there is no majority control by energy companies or large energy consumers.
  • Ethical code: Have an ethical and conduct code that guarantees impartiality in their actions.
  • External audits: Undergo periodic audits to verify their independence and the absence of conflicts of interest.

5. Savings Commitment:

• • Minimum volume: Commit to achieving a minimum annual energy saving, generally between 1 and 10 ktoe, depending on the size and capacity of the entity.
  • Action plan: Present a detailed plan of how these savings will be achieved, including target sectors and types of projects.
  • Compensation mechanisms: Establish how compensation will be made if the committed savings are not achieved.
  • Periodic reports: Commit to presenting quarterly or semi-annual reports on the progress in achieving savings.

6. Financial Guarantees:

• • Bank guarantee: Present a guarantee that covers a percentage (for example, 20%) of the economic value of the committed savings.
  • Reserve fund: Maintain a liquid reserve fund to face possible penalties or compensations.
  • Execution guarantee: Provide specific guarantees for each large-scale project undertaken.
  • Annual update: Review and update guarantees annually based on the volume of activity and commitments acquired.

7. Regulatory Compliance:

• • Clean history: Demonstrate the absence of serious sanctions in energy or environmental matters in the last 5 years.
  • Legislative knowledge: Accredit continuous training of personnel in energy and environmental regulations.
  • Compliance system: Have a regulatory compliance system that includes protocols for action and prevention of legal risks.
  • Compliance audits: Undergo periodic regulatory compliance audits by independent entities.

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The Role of Delegated Subjects in the CAE Ecosystem

Delegated subjects perform several key functions:

1. They identify and develop energy efficiency projects.
2. They act as intermediaries between obligated parties and responsible subjects.
3. They manage the documentation and procedures necessary to obtain CAEs.
4. They can buy and sell CAEs in the secondary market.
5. They contribute to the dissemination and promotion of energy efficiency measures.

The introduction of delegated subjects in the CAE system has allowed for greater flexibility and efficiency in the market, facilitating the participation of entities specialized in energy efficiency and expanding the scope of energy saving measures.

Responsible Subjects: The Executors of Savings

Responsible subjects are those who actually implement energy saving measures. They can range from small businesses to large industries or even households. Their role includes:

1. Designing and executing energy efficiency projects.
2. Documenting the savings achieved.
3. Collaborating with obligated parties and verifiers in the certification process.
4. Benefiting from the economic incentives associated with CAEs.

Verifiers/Auditors: The Guardians of Integrity

Verifiers are independent entities accredited by the National Accreditation Entity (ENAC). Their function is crucial to guarantee the credibility of the CAE system:

1. They audit energy saving projects.
2. They verify the accuracy of the declared savings.
3. They issue verification reports that are essential for the issuance of CAEs.
4. They act as guarantors of the transparency and reliability of the system.

The Process in Action: A Practical Example

Let’s imagine that a large oil company (obligated party) decides to finance the renovation of the lighting system of a supermarket chain (responsible subject). The process could develop as follows:

1. The supermarket chain implements the new LED lighting in all its stores.
2. The energy savings achieved over a year are documented.
3. An independent verifier audits the project and confirms the savings.
4. The oil company requests the issuance of CAEs based on the verifier’s report.
5. Once issued, the oil company can use these CAEs to meet its saving targets or sell them in the market.

This example illustrates how the interaction between the three key actors creates a virtuous cycle of energy efficiency, benefiting not only the parties involved but also the environment and society as a whole.

In conclusion, the Energy Saving Certificate system represents an innovative approach to incentivize energy efficiency, where each actor plays a vital role. By understanding and optimizing these interactions, we can accelerate our transition towards a more sustainable future.

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