Financing sustainable energy actions at local/regional level

Mobilising Local Energy Investments – Project Development Assistance

under the Intelligent Energy Europe II programme

Martin EIBL

Project Officer

European Commission, Executive Agency for Small and Medium-Sized Enterprises (EASME)

About EASME

�� Executive Agency for Small and MediumExecutive Agency for Small and Medium --sized sized EnterprisesEnterprises

� From 01 January 2014, EASME replaces EACI (Executive Agency for Competitiveness and Innovation)

� The Executive Agency has been set-up by the European Commission to manage EU programmes under Commission control and responsibility

� http://ec.europa.eu/easme/

2

Programmes managed by EASME

� Part of Horizon 2020, in particular: � Parts of the 'Societal Challenges' pillar:

� The Energy Efficiency part of ‘Secure, Clean and Ef ficient Energy’; � The fields on waste, water innovation and sustainable supply of raw material under the

challenge ‘Climate action, Environment, Resource Efficiency and Raw Materials’

� The SME instrument

� Some areas of the ' Industrial leadership ’ pillar: � Part of 'Leadership in Enabling and Industrial Technologies' (LEIT)

� The Sustainable Industry Low Carbon Scheme (SILC II)

� Innovation in SMEs

• The EU programme for the Environment and Climate action (LIFE)

� Most of the EU programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME)

• The European Maritime and Fisheries Fund (EMFF)

� The legacy of the Intelligent Energy – Europe programme and the

Eco-innovation initiative

3

Horizon 2020

FP 7 First application

Intelligent Energy Europe

R&D - Public Private Partnerships

Market uptake activities

Intelligent Energy - Europe: Delivers on …

EU policyon energy

efficiency and renewables

EU policyon energy

efficiency and renewables

EU policyon energy

efficiency and renewables

Real changeson the groundReal changeson the groundReal changeson the ground

>> Creating favourable market Creating favourable market conditionsconditions

>> Shaping policy development Shaping policy development and implementationand implementation

>> Preparing the ground for Preparing the ground for investmentsinvestments

>> Building capacity and skillsBuilding capacity and skills

>> Informing stakeholders and Informing stakeholders and

fostering commitmentfostering commitment

Policy support studies, Standards

Covenant of Mayors

Web portals

EUSEW

ELENA

Concerted Actions with

Member States

European Local EN ergy Assistance

IEE - a tailored package of activities additionalto projects

7

� Provide Project Development Assistance for public authorities to prepare, mobilise and launch investm ents in EE and RES

� Help overcome the lack of technical capacity for pa rticularly small and medium sized municipalities

� Bridge the gap between planning and implementation of bankable actions

� Accelerating public energy investment projects thro ugh shining examples of smart and replicable actions th at also demonstrate organisational innovation in mobilising the funds

IEE: Mobilising local energy investments – Objective s

MLEI PDA & ELENA – Filling the gap between action plans and implementation

Procurement

Technical and financial engineering

Signing the investment contracts

Pay As You Save, EPC

Investment funds

Loans, grants

Sustainable energy action plan

Mobilisation of local stakeholders

Setting up a financing scheme

IEE programme « main call »

National programmes

MLEI-PDA

ELENA facilities

Banks, ESCO’s, financial markets, grants…

EIB, EBRD, Jessica, EEEF…

8

� “Investment project” for the financial sector: • black boxes / standardized products• investment requirements and

associated cash-flows• predictable profitability and risks• minimum size to cover transaction costs

Financial markets

Projects developers

ESCO ?Innovative financing?

So

urce

: C. M

ilin,

EC

EE

E 2

01

3

� “Investment project” for many project developers: • specifically tailored to fit physical constraints• state-of-the-art technology• “no financing” = “no subsidy” ?

This presentation requires oral explanations9

A gap between finance and sustainable energy?

EU Structural and cohesion funds 2014 -2020

� European Regional Development Fund (ERDF): €23 bill ion for the transition to a low-carbon economy:

• 12% in the less developed regions / 15% in transitional regions and 20% in developed regions

• Big increase compared to €9.4 bn in 2007-2013

� Investment needs for EE and RES in the EU by 2020: EUR 115 billion per year (EUR 60 bn per year for EE in buildings)

� The structural funds need to leverage private funding

� The use of market-based instruments needs to be inc reased:• Energy performance contracting• Financial instruments using ERDF money in revolving funds in the form of loans,

guarantee funds, or equity (cf. Jessica) • Grants will remain an essential instrument to tackle market failures

� The local/regional level will be key to proper impl ementation

10

Alternative financing schemes: public authorities have a key role to play

� Alternative finance: any approach which does not re ly only on public grants

� Develop new supply of finance: • Soft loans, revolving investment funds with public money • Guarantee funds to leverage in private financing (loans, but also bonds or equity)• Attract new sources of funding: citizen financing, financial markets

• Limited investment capacity calls for third-party financing / investment

� Develop a pipeline of projects: • Mobilisation of energy users (building owners, public authorities, companies,

households…)• Assistance to develop bankable projects: technical maturity & critical size

• Aggregation of small individual projects• Standardisation of contracts• Setting up local financing mechanisms

This presentation requires oral explanations11

MLEI PDA – State of play

IEE supports 22 MLEI projects in 12 Member States

� Bundling / EPC projects: • Paride (IT), Accelerate (ES), ENSAMB (NO), BEAM-GRAZ (AT), GLEE AM (PT), MARTE (IT),

2020TOGETHER (IT)

� Investment funds, citizen financing: • L-CIF (UK), OTR (UK)

� On-bill finance / PACE schemes: • NewInRetro (UK), PadovaFIT (IT), PSEE Alsace (FR)

� District heating: • BOWEN (NL), Energy4flexibility (NL), HUKMREGE2012 ( HU), Efidistrict (ES

� Public ESCO schemes: • POSIT'IF (FR), ESCOLIMBURG (BE), ESCOSC (NL)

� Other: • Solrod (Biogas, DK), ZagEE (municipal buildings, HR), SOLANOVA (condominiums, HU)

� €487 million investments plannedThis presentation requires oral explanations

12

Thanks for your attention

13This presentation requires oral explanations