EUROPEAN INVESTMENT BANK FINANCIAL INSTRUMENTS FOR SUSTAINABLE URBAN DEVELOPMENT Radostina NEDIALKOVA EIB Brussels office 20 March 2013 1
The (EIB) Long-term finance promoting European objectives European Union s long-term lending bank set up in 1958 by the Treaty of Rome Shareholders: 27 EU Member States Governance: BoG/BoD/Management Committee 2012 Key figures: Total signatures: EUR 52 bn Total disbursements: EUR 60 bn Subscribed capital : EUR 242.3 bn after capital increase 2
EIB: Supporting European priority objectives Objectives within the European Union: Convergence Small and medium-sized enterprises (SMEs) Environmental sustainability Knowledge Economy Trans-European Networks (TENs) Sustainable, competitive and secure energy 3
Typical EIB financing modes Direct Loan EIB provides financing directly to the customer alongside other lenders as appropriate. Credit risk is shared on an equal basis with other bank(s). Bank Guaranteed Loan EIB provides financing directly to the customer alongside other lenders as appropriate. Credit risk is born by the guarantor. Bank Intermediated Loans EIB lends to client s house bank(s) passing through its low funding cost. Credit risk is born by the com. bank. EIB Commercial Bank(s) EIB EIB Loan Loan Loan Guarantee Loan Commercial Bank(s) Commercial Bank(s) Loan(s) (< 12,5m) Customer Customer Customer e.g. Global Loan, Framework Loan 4
Financing Facilities EIB provides two main facilities: Direct Loans Large-scale projects (more than EUR 25m) Intermediated Loans Small and medium-scale projects (particularly to SMEs) via national and regional intermediary banks Lending decision remains with the financial intermediary But also Technical Assistance (TA) 5
EIB activities in EE & urban development financing In addition to its traditional lending activity, EIB is complementing its action towards the development of the EE financing market in the EU with a number of initiatives in cooperation with the European Commission (EC), notably: ELENA: EIB manages technical assistance to support the preparation of large scale investments (min EUR 50 m) initiated and/or implemented by local/regional administrations. EC contribution since 2010, EUR 49 m. EEEF: EIB co-invest with the EC in a dedicated fund for EE. EC contribution EUR 75 m. JESSICA: EIB structures and manages investment funds using structural funds which for urban development & in some cases to EE. EE Facilities (SME FF, MFF): Existing facilities for SMEs and municipal infrastructures in New Member States have been restructured to allow financing of EE investments. EIB channels EC subsidies together with EIB funding through banks. Current EC contribution EUR 28 m. EPEC: recently received a mandate from the EC to promote awareness on EE among local, regional and national authorities. 6
ELENA 7
European Local ENergy Assistance - ELENA (EE) EC-EIB cooperation to support local and regional authorities to reach 20-20-20 targets; Grant facility: managed by EIB; funded by EU budget (CIP/IEE programme). Application to Energy Efficiency; local renewables; clean transport. Market replication focus; Minimum investment leverage required Budget 2009-2012: EUR 71 M (allocations can be made until end 2014) Estimated budget 2013: EUR 22 M 8
ELENA: OVERVIEW ELENA (Project Development Services) Support to Final Beneficiaries with: Additional technical staff additional Technical studies additional Feasibility studies Procurement/tendering Financial structuring INVESTMENT PROGRAMMES/PROJECT EE and RES investment in public and private buildings, including social housing and street and traffic lighting; Urban transport to support increased energy efficiency and integration of renewable energy sources; Local energy infrastructure to support developments in previous sectors including smart grids, ICT, etc. 9
European Local ENergy Assistance - ELENA Opportunities: Energy and Climate Change goals require cities to invest in large-scale EE/RES programs Large investment potential at local level (buildings; transport; local energy) Reduce transaction costs: group together small projects and develop a standard approach Possibility to replicate investment programs Obstacles: cities often constrained by lack of Investment capacity; Technical expertise, administrative barriers. 10
ELENA: Eligible investment areas Public and private buildings, including social housing Street and traffic lighting, Integration of renewable energy sources (RES) into the built environment Investments into renovating, extending or new district heating/cooling networks including networks based on combined heat and power (CHP); Decentralised CHP systems (building or neighbourhood level); Urban transport to support increased energy efficiency and integration of renewable energy sources, such as: high energy efficiency buses, including hybrid buses, electrical or low-carbon propulsion systems; investments to facilitate the introduction of electric cars, investments to introduce new more energy efficient concepts to improve freight logistics in urban areas; 11
ELENA: Eligible promoters/ Final Beneficiaries Final beneficiaries of project development services: Local or regional authority or Other public body or Groupings of such bodies Implementation of investment programme: Local or regional authorities or other public bodies or entities like holder or operator of a concession or an ESCO (Energy Service Companies) 12
ELENA: ESCO Project Development supported Supporting cities: City of Paris Greater London Authority (RE:FIT, DEPDU) Villa Nova de Gaia City of Ljubljana Bristol Supporting provinces and small municipalities: Province of Barcelona (part of the programme) Province of Milan Province of Modena (part of the programme) Province of Chieti Region of Murcia 13
ELENA examples: Financing ESCO projects Province of Barcelona Intermediated loan with local Financial Institutions Provinces of Milan & Chieti Intermediated loan approved by the EIB Greater London Authority (RE:FIT) financing can be provided by the London Green Fund/LEEF (JESSICA) Projects can as well be supported under existing EIB Global Loans (credit lines to local FIs) or JESSICA UDFs 14
EEEF 15
EEEF: European Energy Efficiency Fund EUR 265 million the European Commission: EUR 125 million the EIB : EUR 75 million Cassa Depositi e Prestiti : EUR 60 million and Deutsche Bank: EUR 5 million Managed by Deutsche Bank (www.eeef.eu) Beneficiaries: Local & regional Public authorities, but PPPs are possible. Financing in form of loans, guarantees, forfeiting schemes (to finance ESCO projects) Technical assistance (grant) is available to structure projects (EUR 20 M). 70% of the investment shall be targeted towards Energy Efficiency 16
JESSICA 17
Overview of JESSICA Joint European Support for Sustainable Investment in City Areas A management and advisory programme, launched by the EU Commission in collaboration with EIB, to assist Member States and regions to invest Structural Funds in urban projects (including energy efficiency) Overall JESSICA objectives: Higher productivity of Structural Funds / public funds Increase efficiency and productivity of Structural Funds by making use of innovative and revolving financing instruments in the urban sector (complementary to grant financing) Leverage effect Mobilise additional public and private sector resources for the benefit of sustainable and integrated urban development (schemes) Expertise - new partnerships and synergies Utilise financial, managerial and project implementation expertise from private sector or international financial institutions such as EIB 18
General JESSICA implementation model OTHER INVESTORS (Public & Private) EUROPEAN COMMISSION Structural Funds Grant (not repayable as long as EC Regulations adhered to) MEMBER STATE Via a designated Managing Authority CITIES Holding Fund (HF) managed by the EIB optional Contribution (repayable or non-repayable) URBAN DEVELOPMENT FUND (UDF) Investment (equity, loan or guarantee) IFIs/Public Agencies/ Banks Projects forming part of an Integrated Plan for Sustainable Urban Development 19
Selection criteria and eligibility requirements To be eligible, projects should fulfill the following conditions: Be in line with the regional / local priorities Belonging to one of the following areas: Buildings: Public buildings, including social housing and private buildings (residential services). Industries: Companies of any size. Transport (public and private): both fleet and transportation infrastructures. Infrastructure of public services: Outdoor street lighting and traffic lights. Local infrastructure, including intelligent networks and information and communications technology (ICT) related to the priorities: energy efficiency, renewable energies and clean transport. Ensure an acceptable return on investment. Be included/in line with integrated plans for sustainable urban development. 20
JESSICA : urban development & EE JESSICA invests EU Structural Funds (SF) for sustainable urban development : includes Energy Efficiency investment Projects financed through Urban Development Funds (UDFs ) 18 Holding Funds (EUR 1.8 bn) with EIB as HF Manager ~ EUR 700 m allocated to Urban Projects related to EE Lithuania: EUR 225 m HF: EE in housing London: EUR 60 m UDF: EE and small scale RE in public buildings Sicily, EUR 52 m UDF: EE and small scale RE and transport projects Spain (HF EUR124 m) and Italy (HF EUR70m) (planned in 2012) - National UDFs for EE/RE 21
JESSICA interventions to date Holding Fund (HF) Urban Development Fund (UDF) 18 Jessica Holding Funds currently operating in 9 Member States, EUR 1.8 bn in commitments through Funding Agreement signed with Managing Authorities 1 3 2 2 3 1 4 5 1 5 7 1 2 1 2 3 6 1 5 JESSICA HF 36 agreements signed to date EUR 1.4 bn committed to UDFs Further agreements under negotiation JESSICA UDFs in Member States JESSICA Technical Assistance Main urban areas covered: ES: Andalucía : Sevilla, Málaga, Granada, Córdoba, (urban regeneration); 10 Autonomous Communities (EE) PT: Country-wide (urban regeneration, tourism, entrepreneurship) BG: 1 UDF for Sofia region; 1 UDF for 6 next biggest cities (all urban regeneration) UK: London (energy efficiency, waste management), Manchester & Liverpool (urban regeneration) NL: Rotterdam (Technical assistance program) PL: Warsaw, Katowice, Gdansk (urban regeneration) GR: Athens (urban regeneration) IT: Sicily, Campania, Sardegna (urban regeneration and energy efficiency ) 22
JESSICA in Italy today Region Holding Funds FA data of signing UDF Manager AO data of signing Transferre d Fund (EUR) Expected Cofinanc (EUR) Focus Projects Types (Exemples) Underground parking center Sicilia Jessica Holding Fund Sicily 19 November 2009 Equiter (Intesa SanPaolo) Nov 11 90m 90m Urban Regeneration Renovation of the Town Hall Theatre- Old People Home completion and new functions Upgrading and completion of university buildings Iccrea Banca Impresa Jen 12 53m 80m Energy Efficiency and Renewable Energy Public Lighting - LED technology Biodigestion MSW plant (biogas) Sardegna Jessica Holding Fund Sardinia 20 July 2011 Banco di Sardegna Equiter (Intesa SanPaolo) Jul 12 33m 99m Urban Regeneration Set 12 33m 70m Energy Efficiency New maritime station Port expansion and upgrading Public Lighting - LED technology Biodigestion, Renewable Energy Campania Jessica Holding Fund Campania 25 March 2010 Banco di Napoli - Equiter Iccrea Banca Impresa Dic 12 64m 60m Dic 12 32m 30+40m Urban Regeneration Urban Regeneration Parking, redevelopment of brownfield sites, urban mobility, energy efficiency Parking, redevelopment of brownfield sites, urban mobility, energy efficiency Totale 305m 469m Urban Regeneration, Energy Efficiency and Renewable Energy 23
Fondi di Sviluppo Urbano in Italia Regione Gestore Data Firma Importo conferito (EUR) Potenziale cofinanz. (EUR) Focus Tipologia di Progetti (esempi) Parcheggio sotterraneo centro storico Equiter (Intesa SanPaolo) Nov 11 90m 90m Rigenerazione Urbana Ristrutturazione di palazzo comunale -Teatro RSA completamento e rifunzionalizzazione Sicilia Riqualificazione e completamento strutture universitarie Illuminazione pubblica tecnologia LED Iccrea Banca Impresa Gen 12 53m 80m Efficientamento energetico e rinovabili Illuminazione pubblica tecnologia LED Impianto biodigestione RSU (biogas) Sardegna Banco di Sardegna Lug 12 33m 99m Equiter (Intesa SanPaolo) Rigenerazione Urbana Sett 12 33m 70m Efficientamento energetico Nuova stazione marittima Ampliamento e riammodernamento porto Illuminazione pubblica tecnologia LED, biodigestione, energia rinnovabile Banco di Napoli - Equiter Dic 12 64m 60m Rigenerazione Urbana Parcheggi, riqualificazione di aree dimesse, mobilità urbana, efficientamento energetico Campania Iccrea Banca Impresa Dic 12 32m 30+40m Rigenerazione Urbana Parcheggi, riqualificazione di aree dimesse, mobilità urbana, efficientamento energetico Totale 305m 469m Rigenerazione urbana ed efficientamento energetico 24
JESSICA Examples Palermo: Underground Parking in old town centre Multilevel parking in an old town area owned by the municipality Surface of about 1800 m2 Loan of mid-to-long maturity to Local Entity* Third-party resources equivalent to approximately 15% of the total investment* * Financial structure to be determined 25 25
JESSICA Examples Palermo: completion of University facilities for research and services to students Restructuring of the campus library, increase number of studying rooms and Administrative Offices and additional research laboratories Library and studying rooms equal to 3000m2 in addition to further 600m2 for offices Third-party resources equivalent to approximately 20% of the total investment* * Financial structure to be determined 26 26
JESSICA Examples Gonone Olbia: enlargement and modernisation of the touristic and commercial harbour The operation concerns enlargement of the dock, about 214 new berths new grade-level parking places rationalization and requalification of existing squares and quays Completely public-owned area Dimensions of about 4 hectare of ground and 5 hectares of water JESSICA resources in form of equity and debt* Third-party resources equivalent to approximately 70% of the total investment * * Financial Structure to be determined 27
JESSICA What comes next : Focus on energy efficiency investments Investments Intelligent electric networks Information and communication technology Urban infrastructure for EE Examples of operations Termical isolation Installation of renewable energy systems Substitution of air-conditioning installations Transition from diesel oil to methane boilers Installation of luminous flux regulators Transition to energy efficient light fixtures and lamps (e.g. Traffic lamps of 300 mm diameter (100 W) to LED) Clean transport Infrastructure for ecological vehicles Renovation of the fleet and infrastructure Intelligent Public Transport Systems Acquisition of green products: high technology and low environmental impact 28
Summary Technical Assistance is available to develop large scale ESCO programmes (ELENA) Currently ELENA supports ESCO project development in excess of EUR 500 million potential investment opportunities EIB financing is available for larger and smaller projects Structural Funds can be used via JESSICA funds The European Energy Efficiency Fund (EEE-F) has been developed focussing especially on energy efficiency and support to ESCOs (EEE-F) Further targeted products are under development Still significant non-technical barriers exist 29
Thank you Contacts Radostina NEDIALKOVA Policy Officer - Brussels, Institutional and Operational Policies within the EU r.nedialkova@eib.org ELENA contacts EIB: elena@eib.org JESSICA contacts EIB : ITALY Andrea BUA : bua@eib.org Loreto SAN ANTONIO ALONSO: l.sanantonioalonso@eib.org http://www.eib.org 30