The workshop was convened by the Executive Agency for Small and Medium-Sized Enterprises (EASME), in cooperation with DG REGIO and DG ENER. During the workshop, project promoters from Europe’s cities and regions described local approaches to innovative financing solutions for sustainable energy projects. This is of particular importance in the context of the European Structural and Investment Funds allocation of EUR 40 billion to the low carbon economy.
Vincent Berrutto, Head of unit Energy at EASME, welcomed workshop participants and set the context for the event. Upscaling investments in the building and heating and cooling sectors is essential to meet the EU’s energy targets for 2020 and 2030, and with estimates of EUR 100 billion per year required for buildings renovation, new approaches to investment involving also private sector funds are required. Local and regional authorities can influence the building value chain through policies and projects layered over national and EU regulations. The use of European Structural and Investment Funds (ESIF), mobilising stakeholders, developing project pipelines and clear business cases for attracting private investment are essential to stimulate significant building refurbishments. ‘Let’s use ESIF funds to trigger mass scale investment,’ said Berrutto.
The keynote speech was given by Colin Wolfe, Head of Unit Smart and Sustainable Growth at DG REGIO. Wolfe focused on three aspects regarding ESIF funds – firstly the funding itself, of EUR 40 billion for the low carbon economy (LCE) between 2014 and 2020. This is twice as much as was available in the last programming period, and shows that energy is a very high priority at European level, but also that enthusiasm for sustainable energy is demonstrated by Europe’s cities and regions whose response to the LCE offer in terms of matched funding was 50 % higher than anticipated.
Secondly, Wolfe focused on the use of financial instruments – and cited good examples from Estonia and Lithuania. ‘We need political commitment and everyday practical commitment to make this kind of funding available’, said Wolfe. ‘Let’s make the most of it with financial instruments’. The Juncker Plan aims at 20 % use of financial instruments.
Thirdly, Wolfe focused on the territorial approach of cohesion funding. ‘Territorial means a place-based approach – we can look at this collectively with many different partners, we can facilitate easily through our different programmes the exchange of best practice. Collective action, and the exchange of best practice, bringing operational and policy levels together – all this can be done with Cohesion Policy,’ he said.
Paul Hodson, Head of Unit Energy Efficiency, DG Energy, said, ‘This is an area where it makes sense to invest.’ He described energy efficiency investments as belonging to three categories: payback in two years or less, payback in four to ten years, and long-term payback such as deep renovation of buildings. In particular in the first two categories market-based financing of projects should be emphasized. Hodson also referenced the valuable work of the Energy Efficiency Financial Institutions Group (EEFIG) and explained that DG Energy is focusing on three aspects: de-risking (meaning standardisation and benchmarking), aggregation (project development assistance), and supporting a market-based culture (for which the legislative framework is an important ‘pull’ factor for investment).
Next up was Robert Pernetta, Policy Analyst Financial Instruments, DG REGIO, to demystify the use of ESIF financial instruments for energy efficiency. In an upbeat and inspiring presentation, Pernetta was refreshingly direct: ‘To use financial instruments, you have to work with bankers. Also you must know, what is the market need? And what is the market willing to accept?’ He cited examples from Latvia and Nord Pas de Calais. Pernetta also mentioned that financial instruments are not suitable for all types of projects. When projects are not bankable, the use of grants might still be required (e.g. some deep renovation projects). In other cases the use of financial instruments in combination with grants is also an alternative.
More plain speaking came from Joan Josep Escobar, Head of Energy Management division at the Catalan Institute of Energy, Generalitat de Catalunya. He cited the Covenant of Mayors and the Intelligent Energy Europe program as key supports, but also said that EU funding was often difficult to understand and that at local level capacity and funding were real barriers to progress. Mr Escobar also pointed out that the application of models based on Energy Performance Contracting (EPC) is limited if reflected as debt in the accounts of public authorities.
Björn Zapfel, Project Adviser Energy, EASME, gave an overview of instruments available for facilitating innovative financing and, in particular, of the project development assistance (PDA) mechanism. He described the practical examples of ZagEE, POSIT'IF and EIB-ELENA Greater Manchester and highlighted that so far approx. €100m have been provided to more than 80 projects which are expected to trigger more than €4 billion investments in sustainable energy.
Kamila Gejdošová, Housing Policy and Urban Development Division (Ministry of Transport, Construction and Regional Development, Slovakia), explained the motivation for setting up an ESIF financial instrument and applying renovation loans. ‘To renovate our buildings, EUR 13 billion investment is required. With owner-occupancy at 93 percent, the responsibility to renovate lies with the owners - but they lack the financial means to do so.’
Cinzia Colangelo, Project Manager, Marche Region (Italy) described the MARTE PDA project facilitating energy performance contracting on hospitals, combined with an ESIF Financial Instrument.
Bartosz Dubínski, President, Mazovia Energy Agency, Poland, gave an account of the region’s very positive experience with the JESSICA funding instrument. ‘We wanted to gain experience in financial instruments for the future,’ he said. He encouraged the audience to explore the possibilities of using the ESIF for the setting-up of financial instruments for three reasons compared to pure grant support schemes: availability of multiple funding options (e.g. revolving funds), leveraging of private capital and enhancement of investment effectiveness.
Marie-Thérèse Tetteroo-Mathijsen, Policy Advisor, District heating company of Purmerend (SVP), The Netherlands, gave a very clear explanation of organising, financing and delivering investments for the energy efficient retrofitting of an existing district heating system. An impressive financial leverage factor of 32 was achieved through the project, and thrillingly, the Dutch king visited for the inauguration of the new system. She too described difficulties in navigating the funding maze, but said that the DHC platform had proved very useful.
In wrapping up, Berrutto noted that political commitment at local and regional level was necessary to use financial instruments. With leverage factors of 40 and more, good examples must be widely promoted. ‘It is time for replication,’ he said.