Horizon 2020 Energy EfficiencyInformation Day

Finance for sustainable energy

Topics EE 19 | EE 20 | EE 21

12 December 2014

Agenda14:00 Welcome and Introduction

Anette Jahn, Head of Sector, EASME14:10 The policy framework for financing energy efficiency

Roman Doubrava, Policy Officer, DG Energy14:15 Overview of the funding area Finance for sustainable energy

Adrien Bullier, Project Officer, EASME14:20 EE19: Improving the financeability and attractiveness of sustainable energy

investments Christof Marx, Project Officer, EASME

14:30 EE21: Development and market roll-out of innovative energy services and financial schemes for sustainable energyStephan Renner, Project Officer, EASME

14:40 EE20: Project development assistance Martin Eibl, Project Officer, EASME

14:55 Questions and answers

Finance and sustainable energyTrying to match squares and circles?

3

“Investment project” for the financial sector: • technical black box • standardized product • cash-flows, IRR, NPV • predictability of risks • transaction costs

Financial sector

Projects developers

ESCO?Innovative financing?

Adapted from C. Milin, ECEEE 2013

“Investment project” for many project developers: • technical design tailored to

physical constraints• state-of-the-art technology• energy payback times • “no financing” = “no subsidy” ?

We’ve got money, but… we’re looking for projects!

We’ve got projects, but… we’re looking for money!

> 6,100 signatories of Covenant of Mayors

+ all other stakeholders committed to climate and energy goals

Green bonds market forecast at USD 40bn for 2014 (BNEF)

This presentation requires oral explanations

EE19

EE19

EE21

EE19

Finance and energy efficiency investments: filling the gap through EU programmes

This presentation requires oral explanations 4

Financial sector

Project developers

Innovative financing?

ESCO ?

Adapted from C. MILIN, ECEEE 2013

Risk-sharing schemes

Equity provision

Dedicated credit lines

EU structural and investment

funds

IEE & Horizon 2020

Benchmark investments

Awareness of investors

Organise dialogue

Capacity building

National funding

Project dvpt assistance

EPC facilitation

Local financing schemes

We’ve got money, but… we’re looking for projects!

We’ve got projects, but…

we’re looking for money!

EE21EE21EE20

Green bonds market forecast at USD 40bn for 2014 (BNEF)

+/- €85 bn/year add''l investment required in EE

Horizon 2020 Energy EfficiencyInformation Day

Improving the financeability & attractiveness of sustainable

energy investments

Topic EE 19

ScopeFoster dialogue with and between financial market actors, standardisation and valuation entities, industry, public authorities, consumers and property owners.

Three sub-topics 1. Develop frameworks for the standardisation and

benchmarking of investments2. Target public institutional investors3. Create EU / national sustainable energy financing platforms

ConsortiaMin. of 3 independent legal entities from 3 countries, except for national platforms where 1 entity is sufficient.

EE 19: Overview (1/2)

Indicative budget€0.5 – €2.0 million

Expected impact (depending on the projects)• Reduced uncertainty - increased investors' confidence and

trust • Innovative (and relevant) asset valuation methodologies

agreed by the market • Standardised descriptions of sustainable energy

investments or measures/contracts • Labelling schemes or harmonised frameworks for

sustainable energy investments • National strategies for financing sustainable energy

investments

EE 19: Overview (2/2)

• For example:• Labelling and standardisation of sustainable energy

investments or portfolios • Valuation techniques integrating the 'green value' of

buildings

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

1. Develop frameworks for the standardisation and benchmarking of investments

• Public institutional investors (e.g. public or semi-public pension schemes)

• Increase the share of their funds invested in sustainable energy

• Develop specific funds or investment products.

2. Target public institutional investors

• Bridge the gap between the financial sector and the sustainable energy sector: • organise dialogue between all relevant stakeholders• develop roadmaps• propose improvements in the legal frameworks • develop template documents and contracts leading to

a better understanding of the market.

• Proposals from 1 single entity are eligible

• The mechanism for knowledge sharing between countries will be established by the Commission services

3. Create EU and national sustainable energy financing platforms

• Develop valuation techniques and norms that recognise EE in the valuation of residential property. Use property value increases in asset backed mortgage structures.

• Develop protocols to standardise project development and documentation for commercial buildings and get commitment from investors that they will demand the use of these protocols by project developers seeking finance.

• Establish a common practice for professional risk assessment based on technical and financial due diligence for PV installations financed by professional investors.

• Develop a framework to assess the ‘climate performance’ of assets and investment portfolios and integrate the framework in databases and portfolio optimisation tools used by investors and in mandates of asset managers.

• Set up an a labelling and benchmarking framework for energy performance contracts on commercial buildings, in order to build trust in the financial sector

• Establish a national financing platform and develop a standardised investment instrument with the capacity of channelling capital market resources into on-farm RESs.

EE 19: Project examples (Call 2014)

Horizon 2020 Energy EfficiencyInformation Day

Energy services and financial schemes

Topic EE 21

• Further EE improvements needed

• Public budgets are limited

• Improvement of legal & financial framework for energy services needed

• Large-scale roll-out of innovative energy services and financial schemes

The Challenge

1. Roll-out of business models for innovative EE services

• Monetise energy savings

• Energy performance contracting (EPC)

• Specify clearly your business model

• Example: IEE-Project 'EESI2020'

The Scope (1/3)

2. Replication of successful innovative financing solutions

• Proven solutions (implemented!)

• Specify clearly the financing mechanism

• Get expertise on financing on board

• Example: IEE-Project 'Infinite Solutions'

The Scope (2/3)

3. Large-scale capacity building for public authorities & SMEs

• Set-up or use innovative financing schemes for sustainable energy

• Active involvement of financial insitutions / financing expertise

The Scope (3/3)

• Savings of at least 25 GWh/year for every 1 million Euro of EU support;

• Larger investments in renewable energy & energy savings;

• Better implementation of energy-efficiency policies, number of policy makers influenced;

• Number of people with increased skills;

• Number of people changing their behaviour.

Be clear about the expected impacts!(depending on specific project objectives)

• Map and customize best practices ESCO markets and implement capacity building applying the “training of trainers” concept.

• Introducing innovative financing models (revolving funds, Energy Performance Contracting, Third Party Financing, cooperative models) in 3 pilot regions.

• Develop a cooperation platform to stimulate the establishment of SME partnerships for energy services and engage local supply side actors to offer standardized energy service packages.

• Develop new business and financing models to implement comprehensive refurbishment in public buildings using energy performance contracting (EPC).

EE21: Project Examples (Call 2014)

Horizon 2020 Energy EfficiencyInformation Day

Project Development Assistance (PDA)

Topic EE 20

The Scope of EE20:

Project development assistance will be provided to public and

private project promoters such as public/private infrastructure

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

cities and SMEs/industry, leading to innovative, bankable and

aggregated sustainable energy investment schemes and

projects of EUR 6 million – EUR 50 million.

Proposals must

• Lead to investment at the end of the action: Every million Euro of H2020 support must trigger investments worth at least EUR 15 million (1:15).

support is conditional on mobilised investments (pay-back clause!)

• demonstrate a showcase dimension in terms of delivering organisational innovation in the mobilisation of the investments and/or the financial approach.

• Have a high degree of replicability including a clear action plan to communicate across Europe towards potential replicators

• Activities supported by PDA include to mobilise relevant stakeholders, draw up investment inventories, develop feasibility studies, set up financial engineering instruments, address legal and procurement issues. Actual hardware investments, basic research or technology development are not covered!

• Focus on existing public and private buildings, retail energy market infrastructure, commercial and logistic properties and sites.

• Innovation should be demonstrated taking into account the situation in the targeted country.

• Proposals from 1 single entity are eligible for this topic.

22 MLEI projects supported under Intelligent Energy Europe from 2011- 2013 http://ec.europa.eu/energy/intelligent/files/mlei-projects-2011-12.pdf

• MLEI Energies Posit'if (France)• Low-energy refurbishment with guaranteed energy

savings in 32 condominiums as well as 8 social housing and public buildings

• Developing extended Energy Performance Contracting services to condominiums beyond normal market standards

• Minimum 60% energy savings targeted • €40 million investment after 36 months www.energiespositif.fr

Project examples

• H2020 Call 2014 – EE20• Bundling 8 public buildings (mostly schools) for

energy refurbishment through Energy Performance Contracting

• Spreading use of EPC concept within the region

• Average 60% energy savings targeted

• €7.5 million investment after 30 months

Project examples

• H2020 Call 2014 – EE20• Low-energy refurbishment with guaranteed

energy savings in 80 multifamily buildings in the Baltics

• Addressing the cash-flow problems of ESCOs through developing a forfeiting fund

• Minimum 60% energy savings targeted

• €30 million investment after 36 month

Project examples

• What is the concrete outcome expected from PDA projects?

• What if my project fails to deliver the investment?

• How does PDA relate to the ELENA Facilities?

please consult the FAQs for ENERGY EFFICIENCY - MARKET UPTAKE PDA (published next week) on the Horizon 2020 Participant Portalhttp://ec.europa.eu/research/participants/portal/desktop/en/opportunities/h2020/calls/h2020-ee-2015-4-pda.html

Some FAQ's

• EE19 http://ec.europa.eu/research/participants/portal/desktop/en/opportunities/h2020/topics/2379-ee-19-2015.html

• EE20http://ec.europa.eu/research/participants/portal/desktop/en/opportunities/h2020/topics/2381-ee-20-2015.html

• EE21http://ec.europa.eu/research/participants/portal/desktop/en/opportunities/h2020/topics/2380-ee-21-2015.html

More information: Participant Portal

• EASME Energy Efficiency webpage: http://ec.europa.eu/easme/en/energy

• Horizon 2020 work programme 2014-2015 Secure, clean and efficient energy challenge

Energy Efficiency call Section D: Finance for sustainable energy

Topics EE19, EE20, EE21

• http://ec.europa.eu/research/participants/data/ref/h2020/wp/2014_2015/main/h2020-wp1415-energy_en.pdf

• Practical information on H2020: http://ec.europa.eu/programmes/horizon2020/en/how-get-funding

Horizon 2020 – Energy Efficiency callDeadline 4 June 2015 17:00 CET - Online resources

For all questions:EASME-Energy@ec.europa.eu

National Contact Points:http://

ec.europa.eu/research/participants/portal/desktop/en/support/national_contact_points.html

Thank you for your attention!

@H2020EE