This paper evaluates a Sustainable Energy Efficiency Business Model (SEEBM) for small and medium sized enterprises (SMEs) in the European industrial sector. The sustainability-oriented model, developed by the authors, combines Energy Performance Contracting (EPC), Energy Supply Contracting (ESC), and Energy Saving Insurance (ESI) within a unified framework to support industrial decarbonisation. The study identifies key performance indicators and translates them into a System Dynamics model using a Design-Based Research approach. The model is built from secondary data drawn from 45 SME case studies in the European SMEmPower project and is validated through extreme condition testing and behavioural sensitivity analysis. Results indicate that the integrated model significantly enhances financial performance, reducing the average payback period from average 36 months to 10 months. Sensitivity analysis highlights the influence of contract duration, energy saving rates, and energy prices on both payback and emissions reduction outcomes. This research introduces a novel dynamic framework integrating EPC, ESC, and ESI, enabling time-based evaluation of investment viability and environmental impact. It offers a replicable decision support tool for policymakers and market actors seeking scalable, low risk pathways to SME decarbonisation. Overall, the model provides practical insights for improving investment decisions while accelerating the transition toward sustainable industrial systems across Europe.