European funding for sustainable energy investments

1. European funding for sustainable energy investments Adrien BULLIER, Project Officer – Intelligent Energy Europe programme Brussels, 3 July 2012

2. Meeting our “20-20-20 by 2020” goals Reduce greenhousegas levels by 20% Increase share of renewables to 20% Reduce energyconsumption by 20% 100% Current trend to 2020 Current trend to 2020 -20% -10% Current trend to 2020 20% 2

3. Leading role of local authorities 3487cities committed to reduce CO2 emissions on their territories by at least 20% by 2020 Is your city/region in?

4. EU support to investments in sustainable energy • Structural and cohesion funds (ERDF including JESSICA, Cohesion funds) • IEE project development assistance (PDA): • ELENA facilities (EIB, KfW, CEB and EBRD) • MLEI-PDA (managed by EACI) • European Energy Efficiency Fund (EEEF)

5. EU Structural and cohesion funds 2014-2020 • European Regional Development Fund (ERDF): Commission proposes a ring-fenced share for the transition to a low-carbon economy (under negotiation): • 6% in the less developed regions • 20% in other regions • Min. EUR 17 billion for low carbon economy in 2014-2020 (9.4 bn 2007-2013) • Additional allocations from the Cohesion Fund could be made to sustainable energy • Investment needs for energy efficiency measures in the EU by 2020: • EUR 850 billion 2011-2020 (EUR 60 bn per year for buildings) • The structural funds need to leverage private funding • The use of market-based instruments needs to be increased: • Energy performance contracting • Financial engineering instruments (such as Jessica) using ERDF money in revolving funds in the form of loans, guarantee funds, or equity • Grants will remain an essential instrument to tackle market failures

6. Example Kredex revolving fund for energy efficiency in housing in Estonia Source: Mirja ADLER, Kredex, Brussels 29 November 2011

7. Example Kredex revolving fund for energy efficiency in housing in Estonia • Grants (50%) are given to support the project development (soft costs: audits, design…) • Investment grants depend on the savings: • 15% grants for 20-30% savings, class E • 25% grants for 40% savings, class D • 35% grants for 50% savings, class E • Started 06/2009 • 11/2011: 355 contracts, 11,000 apartments • € 31 million in loans • € 6.4 million in grants • average saving 36% Source: Mirja ADLER, Kredex, Brussels 29 November 2011

8. Example An example of combining Jessica and EPC – RENESCO (Latvia) Source: www.renesco.lv

9. IEE Project development assistance – ELENA EIB, KfW, CEB, EBRD & MLEI • Designed to accelerate the implementation of investments identified in local energy/climate plans • Grants to cities, provinces, regions, entities acting on their behalf • For development of bankable sustainable energy investment programmes / projects: technical specifications, financial engineering, procurement of the investment contracts • Leverage factor required: 1€ from the EU must lead to 15 or 20€ invested; pay back clause in case of failure • Bundling EE & RE investments (economies of scale, reduced transaction costs) • Capacity building within local authorities • High replication potential – multiply investments

10. Minimum leverage effect of 15 (MLEI) x15= (for MLEI) Project development costs: • Technical specifications • Financial engineering • Procurement • Due diligence • … Investments 15€ MLEI funding = 75% of costs 1€ Co-funding = 25% of costs MLEI: minimum leverage of 15 for each Euro of eligible cost ELENA: minimum leverage of 20 for each Euro of EU grant

11. You are … A public authority planning to launch investments of… A financial institution aiming to support the development of energy investments of… An investor (public authority, ESCO, investment fund…) in a specific project Who ? EUR 6-50 M > EUR 50 M EUR 6-50 M Project size MLEI PDA EIB ELENA KfW ELENA EEE-F Potential PDA facilities CEB ELENA * CEB ELENA * EBRD ELENA * EBRD ELENA * * Country restrictions apply for CEB-ELENA and EBRD-ELENA

12. Example MLEI - PDACall 2011 - Examples PARIDE (under negotiation) • Province of Teramo, IT • Sector: Energy-efficient street lighting • Planned investment: €17.1m • Leverage factor: 15 • Summary: • Province of Teramo will bundle 34 small municipal projects on energy-efficient street lighting into a bankable investment project • Municipalities are gathered into 3 associations • Expected energy saving of 44%. • Innovation: bundling project

13. Example MLEI - PDACall 2011 - Examples Newin Retro (under negotiation) • Newcastle City Council, UK • Sector: Buildings • Investment: €31m • Leverage factor: 20 • Summary: • Delivery of a large scale, city wide, cross tenure housing retro fit programme of energy efficiency and renewable energy measures. • 5,000 homes to be retrofitted over the 3-year project period, with a financing model based on 10,000 to 15,000 homes and €90 million for 15,000 homes • Expected savings of 8,900 tCO2eq per year • Innovation: Pay-As-You-Save model (Green Deal)

14. The European Energy Efficiency Fund • Launched 1st July 2011 with • 265 M€ (EC, EIB, Cassa Depositi e Prestiti, Deutsche Bank) • Objective: addressing financial needs of commercially viable EE and RES projects in a local and public context • Scope: Energy efficiency, renewable energy and clean urban transport • Tailor made financing: Senior/junior loans, convertible debt, equity participation, forfeiting schemes… • Commercially managed fund (Deutsche Bank), operating under market conditions • Typical project size: up to 25M€ • € 20m grants for PDA to projects financed by the fund • Awareness raising activities through EPEC (European PPP Expertise Centre)

15. THANK YOUAND GOOD LUCK !