Tenants in German residential buildings struggle with inefficient heating systems that inflate energy bills and increase the country's carbon footprint. PAUL Tech’s Internet-of-Things technology is a game-changer, because it can cut energy consumption by up to 40%.
However, many property owners are not able to finance these energy-efficiency upgrades themselves. To overcome this challenge, the Solas Sustainable Energy Fund, advised by Solas Capital, is providing €30 million in funding to PAUL Tech, enabling the company to offer its advanced heating solutions with no upfront costs.
It’s an innovative financing model that makes energy-efficient upgrades accessible and affordable, addressing the financial barriers that have long hindered progress.
"If we as a society take building renovation seriously, we need to proceed step by step to bring energy efficiency solutions and green energy into any property,” says Sascha Müller, PAUL Tech’s founder and chief executive. “We can achieve the energy transition in buildings.”
The path to sustainability
Energy consumption in residential buildings remains a major challenge for the sustainability goals of Germany—and the entire European Union. Half of the heating systems in German buildings are more than 30 years old. This leads to excessive energy consumption and high costs for residents. Worse, most German heating systems still rely on fossil fuels such as oil and gas, making the heat expensive and bad for the environment.
The result: the building sector remains one of the most difficult to decarbonise. The high upfront cost of energy-efficiency upgrades is central to this problem, alongside the complexity of retrofitting older buildings and the split in incentive between tenants and landlords.
PAUL Tech’s solution is based on Internet-of-Things (IoT) technology applied to energy efficiency investments, combining advanced artificial intelligence hardware and software with traditional energy efficiency applications such as valves, temperature sensors, and meters.
Here’s how it works. Sensors and motorised valves are installed in existing heating systems. These devices collect data continuously about the building’s heating needs. The AI software analyses this data in real time, adjusting the flow of heating water, so that each radiator receives only as much heating water as it needs. This process is called adaptive hydraulic balancing.
“This avoids unintended overheating of building parts and the waste of energy,” says PAUL Tech’s Müller. “It optimises the system’s efficiency and reduces energy consumption without requiring manual adjustments.”
“The bottom line is that energy efficiency leads to the reduction of carbon dioxide emissions, the goal of our time,” Müller says.
Finance for innovation
Solas Capital, an investment advisory firm based in Zürich that specialises in energy efficiency financing, is advising the Solas Sustainable Energy Fund. The fund is classified as "deep green”, meaning that it fulfils the highest green classification of the EU Disclosure Regulation on sustainable finance. By providing financing to energy service companies, equipment manufacturers and project developers, the fund accelerates the decarbonization of the economy.
“Our vision is to support the move to a carbon-neutral society through the development of innovative financing solutions for energy efficiency and renewable energy integrated in buildings,” says Sebastian Carneiro, Solas Capital’s chief executive. “By understanding both the funding needs of our project partners, and the requirements of institutional investors, our team of energy financing experts is able to bridge the gap between investors and projects.”
The European Investment Bank plays a central role in bridging the financing gap for energy efficiency projects. It’s financing for energy efficiency is part of its €45 billion commitment to REPowerEU, a European Commission plan to cut Europe’s dependence on fossil fuel and accelerate the green transition.
“The support of the European Investment Bank, through its direct investment in the fund and also through the European Commission’s LIFE-programme, has facilitated the flow of funds into state-of-the-art technologies such as those developed by PAUL Tech,” says Carneiro.
The Bank committed €30 million of equity in Solas Capital's Sustainable Energy Fund in 2020. The European Investment Bank’s involvement helped Solas raise €220 million for the fund, to ensure that innovative solutions like PAUL Tech’s heating systems can be implemented on a broad scale. The fund is supported by the Private Finance for Energy Efficiency (PF4EE) initiative, a financial instrument funded through the EU LIFE programme and set up by the European Investment Bank and the European Commission. PF4EE facilitates investment in energy efficiency technology in buildings and industry. In particular, it enables long-term debt financing for small and medium-sized businesses such as energy service companies. PF4EE also provides risk-sharing and expert support for increasing investments in energy efficiency projects in EU member states.
“This technical and financial support is essential to help specialized energy efficiency companies make these energy-efficient technologies accessible” says Marcos Tejerina, an energy efficiency expert at the European Investment Bank. “That contributes significantly to the reduction of energy consumption and the achievement of Europe’s energy efficiency and climate goals.”
Gap bridged
As a result, PAUL Tech’s systems have been deployed by over 150 real-estate management companies, covering hundreds of thousands of residential unity, improving energy efficiency and cutting costs. Tenants benefit from lower energy bills and better living conditions, and property values rise because of enhanced compliance with energy regulations.
