3FOOD

Third Industrial Revolution Consulting Group
4. Participating organizations, ESCOs, and the Issuer enter into multi-year, performancebased
Program Agreements outlining data reporting, criteria for measurement of
services, job creation, etc.
5. The issuer of the bond enters into Installment Payment Agreements with participating
organizations. Participating organizations agree to make payments for installation of onsite
clean energy and energy efficiency upgrades.
6. If authorized, the issuer dispenses (tax-exempt) by-appropriation bonds secured by
payments under the Instalment Payment Agreement. Alternatively, the issuer engages
with loan providers to raise the level of capital required.
The LuxSEF Sustainable Energy Services Variant
The second variant of the SEF investment model, incorporates components and lessons learned
from tested financial frameworks such as on-bill financing, property assessed clean energy
(PACE), and power purchase agreements. As mentioned, this approach is typically seen as more
attractive to the private sector due to its handling of the debt. The program mechanics of this
variant operate in much the same way as suggested in Figure 7:
1. First, the LSDFP performs its communication and aggregation function. This includes
surveying potential project promoters (both public and private) that are interested in
participating in the LuxSEF program. Interested public and private project promoters
sign a non-binding letter of interest (LOI). This group represents the pool of participating
organizations that will enter into the various contractual arrangements with the ESCOs
and the bond issuer.
a. A separate element not shown in Figure 7 is that the LSDFP could perform a prequalification
of ESCOs that can participate in LuxSEF. Such pre-qualification raises
participating organizations’ confidence in the program. Pre-qualification of
ESCOs furthermore facilitates a smooth roll-out of the program.
2. Participating organizations select – facilitated through technical assistance and advice
from the LSDFP – one of the prequalified ESCOs to perform a no-cost, pre-contract
audit. The selected ESCO presents an initial proposal based on the pre-contract audit.
This step provides participating organizations insight into their energy consumption
patterns and identifies potential saving and renewable energy opportunities.
3. Next, the participating organizations enter into Sustainable Energy Services Agreements
with the issuer. Participants agree to pay issuer for the sustainable energy services
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