SUSTAINABLE ENERGY WEEK13-17 June 2016

Innovative financing for sustainable energy in practice

Wednesday 15 June 20169:00 – 10:30

De Gasperi room, Charlemagne building

Speakers

Claude TURMESMember of the

European Parliament

Didier GAMBIERHead of Department

EASMEEuropean Commission

Paul HODSONHead of Unit

DG ENEREuropean Commission

Louise WHITEEuropean

Investment Bank

Peter SWEATMANChief Executive

Climate Strategy

James VACCAROHead of Corporate Strategy

Triodos Bank

Françoise RÉFABERT CEO

Vesta Conseil&Finance

Steven FAWKESSenior Adviser

Investor Confidence Project

Jessica STROMBACKChair

Joule Assets Europe

Paul HODSON

Head of Unit Energy EfficiencyDG ENER, European Commission

EIB Support to Sustainable Energy Finance

Louise White

European Investment Bank

Innovative Financing for Sustainable Energy Brussels

15 June 2016

European Investment Bank 5

The European Investment Bank (EIB)Long-term finance promoting European objectives

European Union’s long-term lending bank set up in 1958 by the Treaty of Rome.Shareholders: 28 EU Member States Governance– Board of Governors - EU Finance Ministers – Board of Directors - Member States & European Commission – Management Committee - EIB’s executive body – Audit Committee - independent, non-resident

One of its main Priority Objectives is Environment and climate

• EIB contribution to promote EE goes beyond lending: EE is mainstreamed in all projects it finances

• The Bank seeks to support all the RE technologies, while ensuring that the supported projects are economically sound

• Support to promoters & intermediaries to develop EE projects: • Technical Assistance and developing financial instruments• On its own behalf or in cooperation with EC or other entities

6European Investment Bank

EIB provides significant financingfor Sustainable Energy at EIB

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7European Investment Bank

Sustainable Energy support activities at the EIB

Lending• Loans (direct and intermediated)• European EE Fund (E-EEF)• Private Finance for Energy Efficiency (PF4EE)• European Fund for Strategic Investment (EFSI)

Advising

• ELENA (European Local Energy Assistance)

• JASPERS (Joint Assistance to Support Projects in European Regions)

• EIAH – European Investment Advisory Hub

Project example: EFSI and ELENAPICARDIE REGION “Picardie Pass Rénovation”

Picardie Region received a loan of EUR 25 million and also has an ongoing ELENA technical assistance programme

The works mainly consist of improving the insulation of the private housing -renovation of the buildings' heat generation and distribution system, including ventilation systems, small scale wood-fired boilers or solar thermal collectors

ELENA support to assist homeowners in the implementation of EE measures with initial advice, energy audit, defining the optimal set of EE measures

As of March 2016, the 112 ongoing building sites provide work to more than 400 local craftsmen and companies which participate in the Picardie Pass Renovation programme. The initiative is expected to create 650 jobs in the building sector by the end of the pilot phase (end of 2018) and more than 3,500 positions in the roll-out phase.

http://www.eib.org/attachments/documents/picardie_pass_renovation_factsheet_en.pdf European Investment Bank 8

Project example: JASPERS

Development of an investment programme for a scheme for energy efficiency renovation and use of RES in public and residential buildings, private service (tourism and industry) and manufacturing sectors , to use ESIF 2014-2020

Preparation of Applicant's guide, sample application forms and tendering documents for the scheme based on typical investment programme and funding arrangements for energy efficiency renovation and use of RES related to the potential funding programme.

Assignments in preparation of EE scheme (Romania, Slovakia, Croatia)

European Investment Bank 9

Thank you for your attention

Further information at www.eib.org

10

James VACCARO

Head of Corporate StrategyTriodos Bank

Françoise Réfabert

Vesta Conseil & Finance

Challenges in setting up integrated services for home renovation in France• Housing refurbishment market actors will not spontaneously

shift towards energy efficiency• Government and most of local authorities try to act as

catalysts, but…• market to-date has been developed on a “top-down” basis, driven

by incentives and subsidies• A sustainable business model for advising households on how to

carry-on an energy-efficient refurbishment is still not present• Energy transition Law (August 2015) allows regions to set up

'public services for energy efficiency' which encompasses: • advising and assisting households in designing the retrofit, • helping them find qualified professionals, • optimizing the funding plan for the renovation,• providing finance (loans)

Confidence in the quality of the works and Access to long term financing are essential drivers of households’ demand

Confidence in the quality of the works• Coordinate …

• National level: set standards, reshuffle tax incentives so as to channel consumers demand towards effective energy-efficient works

• Regional level: organize training, selection of professionals and control compliance of renovation works

• Involve construction insurance players in order to cover consumersagainst consequences of poor performance

• Involve potential prescribers : banks, realtors etc,

• … And package a national quality and performance brand • Example to follow: KfW Effizienzhaus brand

regional operators to build up locally offers based on quality and performance as a first step of a national branding

Access to long term financing

• Public Third Party financing companies are paving the way

• LT Financing proposed to households and condominiums for refurbishment works

• Include in financing the cost of prior advice and follow-up aftercompletion of works

• Build a track record of cost of risk and measured energy savings

• Experimentation phase should allow to share this trackrecord and build-up a loan portfolio large enough to structure long-term green bonds issuance

• Need to structure a debt aggregation vehicle, funded and guaranteed by public sector at inception

• Regions would like to use structural funds to set up guaranteemechanism

• Energy Transition Law provides for a national guarantee fundwhich is presently directed to lowest income households

• Debt aggregation vehicle would allow third-party financingcompanies to act as originators and reduce their balance sheetsize

• Could induce banks to extend their lending offer

Refinancing

Third-party financing

companies

Long termloans

Debt Fund(Securitization

entity)

Labelled Funds

Green bond

issuance

Repayment

Public guarantee

(State, regions)

Energy renovation

projectEnergy

renovationproject Energy

renovationproject

Assignment of receivables

The Investor Confidence Project

Dr. Steven FawkesBrussels

15th June 2016

The sole responsibility for the content of this presentation lies with the author. It does not necessarily reflect the opinion of the European Commission, which is not responsible for any usethat may be made of the information contained therein.

Lack of standardization in EE results in:

Greater performance riskUncertainty limiting demand

Higher transaction costsDifficult to build capacity

Difficult to aggregate

Investor Confidence Project Protocols

BASELINING

• Existing Building • Drawings• Weather File• Energy Usage• Energy Rates• Occupancy

SAVINGS

• Model File

• Calibration Data

• Bid Packages

• Certifications

OPERATIONS

• BMS Points

• Fault Plan

• Maintenance Plan

MEASUREME

• M&V Model • Regression

Model• Adjustments• Impact• Baseline

Adjustments

COMMISSION

• Cx Plan

• Cx Authority

• Test Procedures

• Facilities Req.

Cx

Protocols standardize best practice in project development

and documentation

ICP EU Protocols

Large

Standard

Targeted

Whole building retrofit, dynamic modeling

Whole building retrofit, no dynamic modeling

Single or limited number of EE measures

ApartmentTertiary

6 European Protocols available now and being applied to a

range of projects and programmes across Europe

Reducing Transaction Costs for Sustainable Energy Asset Investments

Jessica StrombackJune 15, EUSEW

Innovative Financing for Sustainable Energy in Practice

The sole responsibility for the content of this presentation lies with the author. It does not necessarily reflect the opinion of the European Commission, which is not responsible for any usethat may be made of the information contained therein.

The Challenges of the Financing Gap

Project valuation difficulties: lack of standardised, independent, project valuation tools, which are needed to assess the return on investment (RoI) easily and at a low cost, and would allow small to mid-sized projects to find easier access to financing;

Difficulties in project optimisation: EU regulations on SEA projects are often highly complex and fragmented across Member States. Many projects miss important revenue streams as a result;

A communication gap between contractors and investors leading to a lack of trust: it is often difficult for SMEs to present projects in a manner, which allows a financier to easily evaluate risks and benefits – in other words the financeability of the project;

A lack of standardization in the process used for underwriting or management of energy performance risks, leading to lack of clarity and comparability in the project assessment and therefore to increased costs for all parties involved.

03/02/16

The project will combine the following existing functionalities:

1. Valuation: (JOULE) Robust independent ex-ante automatic valuation of SEA projects for both SEA contractors and SEA investors in different market environments against current market data;

2. Risk Assessment: (HSB) Initial audit of the project’s technical risks, including the proposal of risk transfer mechanisms such as insurance of equipment, business interruption or asset performance to increase investors’ trust level in a project;

3. Standardisation: (ICP, JOULE) SEA project optimisation through e.g. identifying additional revenue streams and providing partnering options;

The project aims to enable the finance of sustainable energy assetsby deploying independent, standardised project evaluation and project optimisation tool.

Making Finance Easy

Project Goal

4. Finance: Facilitation of the communication and cooperation

between investors (ourselves or others) and contractors, allowing the

matchmaking between investors and contractors with search and filter

functions.

Final Outcome

Thank You!

Jessica StrombackChairman

Joule Assets Europe ABMobile +358 449066821

jstromback@jouleassets.com

Speakers

Claude TURMESMember of the

European Parliament

Didier GAMBIERHead of Department

EASMEEuropean Commission

Paul HODSONHead of Unit

DG ENEREuropean Commission

Louise WHITEEuropean

Investment Bank

Peter SWEATMANChief Executive

Climate Strategy

James VACCAROHead of Corporate Strategy

Triodos Bank

Françoise RÉFABERT CEO

Vesta Conseil&Finance

Steven FAWKESSenior Adviser

Investor Confidence Project

Jessica STROMBACKChair

Joule Assets Europe

Claude TURMES

Member of the European Parliament

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