De-risking energy efficiency investments to unlock climate action in emerging markets

What if energy efficiency investments could be implemented faster by increasing confidence in the expected energy savings? A few years ago, Econoler initiated a project to assess opportunities for energy efficiency investments among a specific segment of SMEs in India, Mauritius, and Türkiye. Selected by the Agence Française de Développement (AFD), we were tasked with exploring how Energy Saving Insurance (ESI) programs could de-risk projects and give confidence in energy savings to investors and clients.

Building on the successful pilot testing of the ESI model across several Latin American countries, Econoler assessed how this proven approach could be tailored to new markets. Leveraging AFD’s well-established SUNREF (Sustainable Use of Natural Resources and Energy Finance) platform, which supports financial institutions in financing sustainable energy projects, and the Fonds Français pour l’Environnement Mondial’s (FFEM) commitment to climate innovation, the study examined how the ESI model could be adapted to the targeted countries. The analysis focused specifically on its relevance, applicability, and potential impact for a defined segment of SMEs.

When risk stands in the way of energy efficiency

As countries intensify their efforts to combat climate change, energy efficiency remains one of the most cost-effective and underutilized solutions. Yet, in many emerging markets, uncertainty around actual energy savings continues to hinder investment—particularly for SMEs. Recognizing this challenge, the Global Innovation Lab for Climate Finance identified Energy Savings Insurance as a high-potential instrument to de-risk energy efficiency projects. Building on successful pilot programs launched by the Inter-American Development Bank in Latin America, our client AFD sought to adapt and deploy ESI mechanisms in India, Mauritius, and Türkiye. This initiative was closely aligned with AFD’s SUNREF program, which mobilizes local financial institutions to support sustainable energy investments. To enable implementation, the FFEM objectives was to support the ESI model with subsidies, for development of this innovative solution.

Adapting a global solution to local market realities

The AFD is looking to implement ESI program in three new high‑potential markets, Mauritius, India, and Turkey, where it has already demonstrated strong impact through the successful rollout of its Sustainable Use of Natural Resources and Energy Finance (SUNREF) initiative.

In India, despite the vast energy‑efficiency potential and strong interest from ESCOs and AFD‑eligible banks, launching an ESI program remained challenging due to the absence of suitable insurance products. While the mechanism could help build trust between ESCOs and SMEs and ease access to finance, energy‑savings guarantee products were not yet authorized by the insurance regulator at the time.

In Mauritius, the ESCO market is still emerging and remains limited, with only partial energy‑efficiency activities integrated into company portfolios. Although the ESI concept could strengthen this developing ecosystem, it was at the time too sophisticated for market needs and for SMEs, whose priorities lie elsewhere. Larger conglomerates would be more relevant early adopters. Nevertheless, key enablers, such as market interest and the availability of guarantee‑type insurance, are already in place.

Turkey offers strong potential for energy efficiency, and the ESI mechanism could significantly accelerate the growth of the ESCO sector. Guarantee insurance products are available and could be adapted easily to the model. However, the monetary crisis created uncertainties at the time that affected the political and economic environment and limit the deployment of a green credit line required for ESI implementation.