EIB and Energy Efficiency Lending EU Instruments for EE. Snezhina Kovacheva Ljubljana, 26 September 2013

Transcription

1 EIB and Energy Efficiency Lending EU Instruments for EE Snezhina Kovacheva Ljubljana, 26 September 2013

2 Presentation index 1. The EIB and Energy Efficiency (EE) Financing 2. JESSICA 3. EEEF 4. DEEP GREEN 2

3 EIB and EE Financing 3

4 The EIB and Energy Efficiency (EE) Financing Investing to reduce energy consumption is the most cost-effective way for the EU to meet its energy and climate objectives EIB is at the front-run of energy efficiency lending averaging EUR 1.3bn/year since EIB EE financing has focused in industry (48%) and buildings (43%) over the last 5 years. EIB offers direct loans for large projects above EUR 25m, and intermediated loans for small and medium-scale projects (including SMEs) via national and regional intermediary banks EIB supports EE also through technical assistance (ELENA), in cooperation with the EC (EEEF), and through financial engineering (JESSICA). EIB to further develop its EE lending through the DEEP Green initiative. 4

5 What is JESSICA? 5

6 JESSICA at a glance JESSICA: Joint European Support for Sustainable Investment in City Areas Objective: invest Structural Funds in a revolving way to urban projects, including EE Initiative of the EC (DG REGIO) launched in 2006 together with EIB and CEB to establish a common approach for financing urban development and strengthening the urban dimension in cohesion policy through repayable assistance Investments in sustainable urban transformation (brownfields/city regeneration, renewable energy, energy efficiency, clusters development, transport, tourism/public service infrastructure) Overall JESSICA objectives To increase Structural Funds efficiency and productivity To increase leverage To exploit new partnerships and synergies Use of innovative financial instruments allowing for the reutilization of resources invested in the urban sector Mobilize public/private resources for investments in projects being part of an integrated urban development scheme Use of managerial, financial and implementation competencies of the private sector and IFIs such as EIB 6

7 JESSICA structure EUROPEAN COMMISSION Structural Funds OTHER INVESTORS (Public & Private) MEMBER STATE Via a designated Managing Authority CITIES Holding Fund optional URBAN DEVELOPMENT FUND Investment (equity, loan or guarantee) IFIs/Public Agencies/ Banks Projects forming part of an Integrated Plan for Sustainable Urban Development 7

8 JESSICA state of play Holding Funds (HFs) Urban Development Funds (UDFs) 18 JESSICA HFs currently operating in 10 Member States EUR 1.8bn in commitments agreements signed to date EUR 1.5bn committed to UDFs JESSICA HF in the Member States JESSICA UDFs in the Member States 2 JESSICA Technical Assistance / Fund and Structuring Services 8

9 Possible types of JESSICA energy projects and added value Renewable Energy Solar, biomass, wind Clean Transport Electric vehicles, including automobiles, motorcycles and bicycles Fleet management (improvement of energy efficiency) Energy Efficiency, Co-generation and Energy Management Renovation or extension of existing district heating or cooling networks; high-efficiency combined heat and power Energy savings/energy efficiency in buildings EIB may provide: Management of JESSICA Holding Funds including extensive implementation support to regional/national MAs and the UDF managers Fund and Structuring Services (in case EIB is not appointed as HF manager), including support for establishing a system of Urban Development Funds (UDFs) Technical Assistance, such as studies to establish viability of implementation of Fis Co-financing opportunities (EIB and other) where possible and appropriate Supporting horizontal studies to promote JESSICA rollout throughout the EU 9

10 Project example- Lithuania EE in housing Market gap Widespread low energy efficiency in housing Lack of investors Background: JESSICA assists the national strategy aiming at the upgrade of multi-apartment blocks inhabited by the majority of the population Subsidized loans to private individuals Best practice because Significant enhancement of energy efficiency and living standards Energy safety - energy savings reduce dependence on imports Paradigm shift: from grants to financial instruments Incentive structure 15% loan refund when the energy efficiency level is met European Investment Bank 10

11 Project example - United Kingdom TEG Facility Background: Construction of a 21m organic waste TEG facility in the Sustainable Industries Park in Dagenham, London, UK s largest concentration of environmental industries Best practice because First such plant in London lighthouse effect Brings new life and work prospects to the remote brownfield area Part of the largest urban regeneration scheme in Europe Market gap + solution Shortage of clean-tech growth in London JESSICA provides equity acting as a catalyst for loans European Investment Bank 11

12 Project example Spain Public Lightning Replacement in Ponferrada Background: Replacing street lighting in the city of Ponferrada to improve energy efficiency, in accordance with the national Energy Efficiency and Savings Plan Best practice because Significant reduction in energy consumption and in CO2 emissions Introduction of new technology Cost savings of approx. EURD 1 mil. in the first year alone Market gap Current solution: inefficient, expensive to maintain, high light pollution Long-term project 12y Preferential interest rate 50% JESSICA contribution

13 What is EEEF? 13

14 EEEF at a glance EEEF stands for European Energy Efficiency Fund EEEF is dedicated to mitigating climate change through market-based financing in the EU Member States Its aim is to support all EU Member States to achieve the ambitious EU climate targets (20/20/20) How: Financing Energy Efficiency (EE) and Renewable Energy (RE) projects in the public sector at the local level Beneficiaries: Municipalities, local or regional authorities; public and private entities acting on their behalf (i.e. utilities, public transportation providers, social housing associations) What: Investments split into three project categories: Energy Efficiency Renewable energy Clean Urban Transport 14

15 Structure of the Fund EEEF capital Initial capital of euro 265 M European Commission: 125 M (initiator) European Investment Bank: 75 M (founding investor) Cassa Depositi e Prestiti: 60 M (founding investor) Deutsche Bank: 5 M (investor and investment advisor) Technical Assistance (TA) facility of EUR 20m provided by the European Commission Form: SICAV, investment in forms of loans, guarantees or equity. Bankable projects. No grants. 15

16 Advantages of EEEF compared to other market instruments Innovative financing according to needs: junior loan, convertible debt, equity participation, tailormade senior loan (longer duration or grace periods), EPC as collateral to secure a loan, forfeiting scheme. Fund can also operate as sole investor Long maturity: flexible, up to 20 years for debt Technical Assistance (TA): euro 20 M in total grant for project development phase, up to 90% of eligible costs. Linked with EEEF funding. Based on ELENA model. Fast & flexible procedures : no more than 6 months from pre-screening until financing 16

17 Eligible Investment Several eligibility criteria must be met General eligibility criteria such as: Municipal link Commitment of municipality to mitigate climate change (i.e. Covenant of Mayors initiative) CO2 emission savings of at least 20% Use of proven technologies Furthermore, each technology may have its own specific eligibility criteria Projects shall be preferably between EUR 5 and 25 m / smaller project sizes reviewed case by case Alignment with relevant EU legislation Eligibility check online available here, 17

18 Potential project structures 18

19 Forfeiting structure guaranteed savings from the ESCO Source EEEF 19

20 Funding via special purpose vehicle (SPV) Source EEEF 20

21 Potential project structures 21

22 Case Study I: Energy efficiency upgrade for the University Hospital S. Orsola Malpighi - Bologna, Italy 22

23 Case Study II: Combined Heat and Power Plant (biomass) City of Orléans, France Location 23

24 Case Study III: Building retrofit for the University of Applied Sciences - Munich, Germany 24

25 What is DEEP GREEN? 25

26 DEEP GREEN BASICS New EE products Aggregation and derisking More lending to EE Debt for Energy Efficiency Projects Green (DEEP Green) is an EIB initiative that aims at developing a suite of new financial products for four key groups of players in the EE market, namely, banks, public sector, ESCOs and utilities. DEEP Green targets aggregation and de-risking of energy efficiency (EE) projects, which are key barriers to the financing of EE investments These new products will increase debt financing availability for EE projects by further developing EIB and commercial bank lending activity to EE. 26

27 European PPP Expertise Centre Twitter: EpecNews Telephone: Fax: Title of the presentation 27