Energy Efficiency: EU legislative framework - Concrete actions

Challenges related to Energy Efficiency financing #EEFIG

• Lack of knowledge and

information

• Lack of performance data

• High upfront investments

• Fragmentation/transaction costs

• Complexity of financing

• Sometimes long payback periods

• The market is not "readable"

• Financing products do not reflect

the EE fundamentals

To bridge the investment gap, we need:

Projects and projects promoters

Large scale capital and investors

Functioning market

Driving the demand for finance

Driving the supply of finance

Investment-friendly legislative framework

Project Development Assistance (PDA)

Topic EE 22-2016

Scope

Target group: public and private project promoters (e.g. public authorities or their groupings, public/private infrastructure

operators and bodies, energy service companies (ESCOs), retail chains,

estate managers and services/industry)

Aim:

• Launch of concrete sustainable energy investment projects and innovative financing solution schemes (focus: capturing untapped high energy efficiency potentials)

• Building technical, economic and legal expertise

Proposals should: Lead to investments launched before end of the action,

i.e. signed contracts (or launched tendering procedures as appropriate)

Every million Euro of H2020 support should trigger investments worth at least EUR 15 million (1:15).

Have an exemplary/showcase dimension in their ambition (i.e. reduced energy consumption and/or investment size)

Deliver organisational innovation in financial engineering (e.g. on-bill financing schemes, guarantee funds, factoring funds) and/or mobilisation of investment programme (e.g. bundling, pooling)

• Demonstrate high degree of replicability and include clear action plan to communicate across EU towards potential replicators

Further issues: Focus on existing public and private buildings, street lighting,

retrofitting of existing district heating/cooling, energy efficiency in urban transport, energy efficiency in industry and services

Size of investment portfolio: EUR 7.5 million – EUR 50 million

Innovation should be demonstrated taking into account the state-of-the-art

Proposals from 1 single entity are eligible for this topic.

Expected impacts Delivery of sustainable energy investment projects and

innovative financing schemes Leverage of 1:15

Triggering of primary energy savings, renewable energy

production and sustainable energy investments during project duration (on territory of participating parties)

Demonstration of innovative and replicable investment

financing solutions (documenting feedback/uptake form potential replicators)

Project examples H2020 PDA RESCOOP MECISE (EU)

• Portfolio of RES projects in Belgium, Spain, France, UK • EEF measures in public buildings/lighting • Facilitation of EEF (and RES) investments in member homes • Establishment of dedicated financing structure (e.g. revolving

fund) or financing facilitation service to enable pooling of resources by "rescoops" for large-scale (bundled) RES/EEF projects

• EUR 111 million investment after 48 months • Energy savings: 16GWh/a, renewable energy: 180 GWh/a

MLEI 2020TOGETHER (IT)

• Refurbishment of public 47 buildings (envelope, boiler exchange) and 5,000 streetlighting points in the City of Torino and municipalities in the Region of Piedmont using an Energy Performance Contracting (EPC) model

• Building capacity in the administration

• Development of “network procurement” as a model to reduce time and cost of administrative tender procedures.

• Setting up a regional guarantee fund for first losses of EPC projects using Structural Funds (ERDF)

• EUR 9.4 million investment

12

Major results and successes: As of February 2016, 22 contracts were signed

with condominiums in the Ile-de-France Region, representing 3,442 housing. 7 more condominiums were to vote in 2016.

POSIT'IF has been selected as the first project to benefit from a EUR 400M support programme for energy refurbishment in France set up under the European Fund for Strategic Investment (ESFI) that will provide a guarantee for a EUR 100M loan from the EIB that Energies POSITIF has already negotiated and which it will use to establish its finance pillar and provide finance to condominiums.

POSIT'IF (Ile-de-France Region, FR) Promote, Organize, Support, Imagine the Energy Transition in Ile-de-France http://www.energiespositif.fr/

EE-24-2016 Making the energy efficiency market

investible

The challenge

• Lack of trust of investors and financiers in the financial viability of energy efficiency measures.

• Banks, institutional investors and asset managers lack the skills and operational tools to effectively assess sustainable energy investments and integrate energy efficiency in their investment strategies.

• Access to the capital markets for energy efficiency investments is hampered by the lack of standardisation of assets.

The scope

1. Frameworks for the standardisation and benchmarking of energy efficiency investments

2. Gathering, processing and disclosing large-scale data on actual financial performance of energy efficiency investments,

3. Targeting institutional investors

1. Frameworks for the standardisation and benchmarking of EE investments

• Development, demonstration and promotion

• Frameworks could be (not limited to): • labelling schemes, • project rating methodologies • risk assessment tools, • standardised legal and financial structures of assets (loans,

guarantees, energy performance contracts etc.)

• Develop securitisation and rating models for energy efficiency based financial products, to allow access to secondary markets.

• Proposals integrated in a broader approach such as socially responsible investment should focus on the energy component.

2. Data on financial performance of energy efficiency investments

• Create a track record for energy efficiency in different sectors (buildings, industry, transport, etc.).

• Gathering, processing and disclosing large-scale data on actual financial performance of energy efficiency investments

• Further integrating the 'green value' of buildings in property valuation through • collection of market data across the EU • actions targeted to the key actors in the sale or lease process

(e.g. real estate agents, property valuers, notaries, etc.)

3. Targeting institutional investors

• Engaging with institutional investors (e.g. public pension schemes)

• The objective is that investors will: • increase the share of their funds invested in energy efficiency,

• or develop specific funds or investment products.

• Supporting the integration of energy efficiency in portfolio management strategies for institutional investors and/or fund managers, including through re-definition of fiduciary duties.

The expected impact

• Reduced uncertainty as regards investments into energy efficiency and increased investor confidence;

• Frameworks, standardisation, benchmarking, standardised descriptions and data evidence of financial returns of energy efficiency investments agreed and accepted by the market;

• Higher allocation of institutional investments to energy efficiency; standardisation of assets enabling securitisation; development of a secondary market for energy efficiency assets.

Relevant projects examples (call 2014)

• Investor Confidence Project Europe (ICP Europe): • Increase investor confidence and reduce transaction costs

through standardisation • Joint development with the finance sector of protocols for

process and data management in building energy retrofit projects

• Replicates a US initiative in 5 European countries.

• SEI Metrics: • Develop an assessment toolbox that will enable to measure

the performance of investors' portfolios vis-à-vis climate and energy scenarios.

• Create visibility on the market in order to monitor the impact of investment portfolios.

Relevant projects selected in 2015 (contract in preparation)

• ET RISK • Methodology to assess the risks associated to an Energy

Transition scenario for institutional investors. • Equity valuation models and credit risk models will be integrated

into the products of mainstream service providers such as Standard & Poor's.

• SEAF • IT based framework for valuation and benchmarking of smaller

sized sustainable energy projects (energy efficiency, demand response, distributed renewable generation etc.),

• reduction of transaction costs and risks and enhancement of bankability

• enhance investors' confidence, through innovative and relevant asset valuation methodologies accepted by the market and standardized descriptions of sustainable energy investments.

EE-25-2016 Development and roll-out of

innovative energy efficiency services

The Challenge

• Scaling up of EE investments needed (~100 bn€/a)

• Tapping private investments

• Monetise energy savings to create revenues of EE measures

• Support for new funding approaches and business models to reach full market potential

The Scope

• Developing, demonstrating and standardising new types of energy efficiency services and business models

• In all sectors (incl. mobility)

• New types of actors and/or new market segments

• Business models for implementation of energy audit recommendations in industrial and service companies (with focus on high thermal demand)

The Expected Impact

• Viability of innovative energy efficiency services.

• Investments in sustainable energy (in million Euro of investments per million Euro of EU funding)

• Primary energy savings triggered by the project within its duration (in GWh/year per million Euro of EU funding)

• Renewable energy production triggered by the project within its duration (in GWh/year per million Euro of EU funding)

Intelligent Energy Europe (IEE) Project Examples

• EESI2020: Training of EPC market facilitators http://eesi2020.eu

• Transparense: Country-specific Code of Conducts for EPC project developers www.transparense.eu

• Streetlight EPC: support public authorities to develop EPC projects in street lighting www.streetlight-epc.eu

Horizon 2020 projects (Call 2014)

• EPC+: standardized technical and contractual solutions for specific market sectors, training of clusters of companies, EPC platform http://epcplus.org/

• Trust EPC South: financial valuation tool for EPC on commercial buildings based on Green Rating methodology, tailored capacity building activities.

• EnPC-INTRANS: large-scale capacity building for local public authorities and SMEs on EPC in less developed markets www.enpc-intrans.eu

Horizon 2020 projects (Call 2015)

• GuarantEE

• Development of model contracts to overcome split incentives dilemma in buildings

• Project development with tripple-win approach • EPC trainings • Coordinator: Berlin Energy Agency (BEA)

THANK YOU FOR YOUR ATTENTION

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