“The problem isn’t the technology – it’s the capital.”

Everything is in place: ambition, technology and profitability. But the energy efficiency of buildings is being slowed down by one thing, capital. What is now required is financing that can quickly reach property owners and accelerate energy and sustainability performance.

This is according to Jesper Jonsteg, CEO and founder of Rison Capital, which works to connect institutional investors with concrete projects within the energy transition.

“There is enormous competence and technology available. Yet progress is still not happening fast enough. That is when you have to dare to ask what is actually holding things back,” he says.

A structural investment gap

Jesper Jonsteg’s engagement in energy issues began in the financial sector. After working with investment calculations for wind power and later running a solar energy company in Portugal, one thing became clear: the obstacle was rarely technical, but financial.

“Energy efficiency is almost never core business for the one using the energy. Even if the business case is strong, there is always something else that is prioritised higher in the investment budget,” he says.

At the same time, investment needs are substantial. Sweden’s public housing sector, mainly municipally owned housing companies, is estimated to require investments of hundreds of billions of kronor to transition and adapt properties to upcoming regulations. Amounts that rarely fit within the financial frameworks of municipalities or individual companies.

“When you look at the overall picture, it is difficult to see where these hundreds of billions are supposed to come from. That is when you realise that there is really only one type of capital that is large and long term enough, and that is pension capital,” says Jesper Jonsteg.

When energy efficiency becomes an infrastructure issue

It is in this context that Rison Capital positions itself. The idea is to use the same type of institutional capital that has traditionally been invested in infrastructure, such as district heating, wind power and electricity grids, to instead finance energy efficiency and local energy production in existing buildings.

“These are long term, stable investments with predictable returns. Exactly the profile pension funds are looking for,” he says.

One example is a new development project in Järfälla, where SEB Nordic Energy Fund has invested in geothermal heating and solar energy. The structure allows the property owner to avoid carrying the entire investment, while still gaining access to local, fossil free heating at a competitive cost.

“In practice, it works like district heating, but locally. You pay a fee for access to heat, while the facility itself is owned and financed by an external investor,” Jesper Jonsteg explains.

More paths forward than waiting

A recurring point in Jesper Jonsteg’s reasoning is that many energy efficiency projects are not stopped by lack of profitability, but by financing structures that postpone decisions.

“If the choice is between investing now or not investing at all, people often choose to wait. That applies to companies, municipalities and private individuals,” he says.

When external capital is introduced, the conditions and the decision making process change.

“Suddenly you have two alternatives that are both better than doing nothing. Either you make the investment yourself, or you make it together with an external financier. That is where the shift happens.”

For property owners, this can mean lower operating costs, strengthened property value and faster progress towards climate and energy targets without burdening the balance sheet in the same way.

A holistic perspective more important than individual solutions

Rison Capital does not start from a specific technology, but from the building’s total energy performance. Geothermal heating and local energy production are often relatively straightforward to finance, as they resemble traditional infrastructure investments. But measures inside buildings are just as important and often more challenging to implement.

“To reach the energy targets, it is not enough to change the energy source. We must reduce energy consumption. Insulation, windows, ventilation, all of that must be included,” says Jesper Jonsteg.

For this reason, Rison prefers bundled solutions, where several measures are implemented simultaneously, for example to lift a building from energy class E to B.

“First, you have to dare to ask: what does it cost to reach the target? Then you can discuss how it should be financed. Not the other way around.”

Energy efficiency requires more actors than the property owner

Energy efficiency is often described as an issue that lies with the property owner. But according to Jesper Jonsteg, this is an oversimplification that risks slowing down development. In practice, several parties are required for projects to become reality, especially when investments are large, technology is complex and time horizons are long.

“The one using the heat, the one owning the property, the energy company, investors and banks all need to be involved somewhere. There are many stakeholders, which means that no one automatically raises their hand and says, ‘we will fix this.’”

This is also an important reason why profitable measures are often not implemented immediately. There is often no clear structure for distributing risk, investment and benefit in a way that simplifies decision making.

“No one wants to take the entire risk alone. But in our projects we see that risks can actually be distributed quite effectively. It does not have to be that difficult.”

From his perspective, the energy transition needs to broaden. Instead of being seen as an internal issue within the property sector, it should become a shared business between the energy industry, property stakeholders and the financial market. Even though the measures take place in individual buildings, they affect and are affected by the energy system as a whole. New business models and smarter financing solutions therefore become decisive.

“There is a risk of too much property focus. Buildings represent a large share of energy use, but energy companies need to be part of this. And the financial market has a major role to play,” he says.

Clima Energy Nordic – where energy, property and capital meet

Jesper Jonsteg also points out that this type of collaboration rarely has a natural arena.

“There are many conferences for the financial market, and many for the technology industry and property owners. But this could be a place where they actually meet and have discussions about challenges and solutions,” he says.

A meeting place such as Clima Energy Nordic can function as a catalyst, according to Jonsteg. Not only by highlighting new technology, but by bringing together actors who need to find each other in order for investments to move from plans to reality. When energy companies, property owners, investors and installers meet, it becomes easier to see which projects are ready, how risk can be shared and how financing can be structured.

“We will not solve this by saying that someone else should take the hit. We need to solve it together,” concludes Jesper Jonsteg.

Clima Energy Nordic is the Nordic region’s new meeting place for sustainable and energy efficient buildings and facilities. With a focus on efficient energy use in heating, ventilation and cooling for indoor climate, property owners, investors, installers, suppliers, consultants, researchers and decision makers come together to drive the development towards sustainable buildings, facilities and profitable investments.

About Clima Energy Nordic