EIB Financing of Energy Efficient Lighting Elisabetta Cucchi Policy Officer Institutional Strategy Department Brussels 10 December 2013
The European Investment Bank (EIB) Long-term finance promoting European objectives EIB was created by the Treaty of Rome in 1958 EIB is a not-for-profit, policy driven institution EIB is 100% owned by the 28 EU Member States EIB signed loans amounting to EUR 52bn in 2012 (90% in EU) EIB uses its special expertise and resources to make a difference to the future of Europe and its partners by supporting sound investments which further EU policy goals Economic and Social Cohesion and Convergence Implementation of the Knowledge Economy Development of Trans-European Networks (TENs) Support for Small and Medium Enterprises (SMEs) Environmental sustainability Supporting Sustainable, Competitive and Secure Energy 2
EIB support to Energy Efficiency EUR bn EIB lending to energy efficiency averaging EUR 1.3bn/year since 2008 Focus on buildings (50%), energy (30%) and industry (15%) Recent EIB Energy Review prioritises “no regrets” sectors : energy efficiency, renewable energy, networks and RDI 3
EIB 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 4
Joint Financial and non-Financial Instruments 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, notably: EEEF: European Energy Efficiency Fund JESSICA : Joint-European Support for Sustainable Investments in City Areas. ELENA: European Local Energy Assistance EPEC: European PPPs Expertise Centre DEEP Green : Debt for Energy Efficiency Projects Green platform (under discussion) RSFF : Risk-Sharing Finance Facility 5
Focus on Lighting Lighting usually financed as part of broader investment programmes SSL/LED is one EE technology choice Issue of high initial cost vs. long-term savings One option for this could be Energy Performance Contracting / use of ESCO business model LED lighting in buildings could be one of the technology choices by the ESCOs 6
European Energy Efficiency Fund (EEEF) EUR 265M (EUR 125M EERP, EUR 75M EIB, EUR 60M CDP and EUR 5M DB) Managed by Deutsche Bank (www.eeef.eu) • 70% of the investment shall be targeted towards Energy Efficiency • 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 20M). • Results to date: 6 projects (EUR 79M) + 8 TA operations (EUR 6.3M) approved • 7 7
EEEF - Eligibility and project structures 8
EEEF Case study: Building retrofit University of Applied Sciences - Munich, Germany 9
JESSICA at a glance Joint European Support for Sustainable Invest. 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 Use of innovative financial instruments allowing for the • To increase Structural Funds’ reutilization of resources invested in the urban sector efficiency and productivity Mobilize public/private resources for investments in • To increase leverage projects being part of an integrated urban development scheme • To exploit new partnerships Use of managerial, financial and implementation and synergies competencies of the private sector and IFIs such as EIB 10
JESSICA structure EUROPEAN COMMISSION EUROPEAN COMMISSION Structural Funds Structural Funds OTHER INVESTORS MEMBER STATE OTHER INVESTORS MEMBER STATE (Public & Private) Via a designated Managing Authority (Public & Private) Via a designated Managing Authority optional CITIES Holding Fund CITIES Holding Fund URBAN DEVELOPMENT FUND URBAN DEVELOPMENT FUND IFIs/Public IFIs/Public Agencies/ Banks Agencies/ Banks Investment (equity, loan or guarantee) Projects forming part of an Integrated Plan for Sustainable Urban Development 11
JESSICA state of play Holding Funds (HFs) Urban Development Funds (UDFs) � 18 JESSICA HFs � 42 agreements signed to date � currently operating � EUR 1.5bn committed to UDFs in 10 Member States 1 5 � EUR 1.8bn in JESSICA HF in the Member States 3 7 18 1 5 7 commitments 1 2 JESSICA UDFs in the Member States 39 1 2 1 3 3 6 JESSICA Technical Assistance / Fund and 2 2 2 1 Structuring Services 1 5 12
JESSICA: focus on energy / EE Possible types of JESSICA energy projects: JESSICA track-record in EE to date: Renewable Energy Out of the 18 Holding Funds (EUR1.8bn) with EIB as HF Manager/ ~ 35% potentially • Solar, biomass, wind allocated to EE related Urban Projects: Clean Transport • Lithuania, EUR 227M HF: EE in housing • Electric vehicles, including automobiles, • London, EUR 48M UDF: EE and small scale RE motorcycles and bicycles in public buildings • Fleet management (improvement of • Italy, EUR 86M UDF: EE and small scale RE energy efficiency) and transport projects Energy Efficiency, Co-generation and Energy • Spain, EUR128M HF: National HF for EE/RE Management • Renovation or extension of existing • EE projects may also be financed through as district heating or cooling networks; part of urban regeneration investments in high-efficiency combined heat and “traditional” UDFs (e.g. Portugal, Bulgaria, power Scotland, Poland) • Energy savings/energy efficiency in buildings 13
JESSICA project example: Public Lightning Replacement in Ponferrada (Spain) Background: Replacing street lighting in the city of Ponferrada to improve energy efficiency, in accordance with the national Energy Efficiency and Savings Plan 2011-2020 Market gap Best practice because… Current solution: Significant reduction in inefficient, expensive to energy consumption and maintain, high light in CO2 emissions pollution Introduction of new Long-term project – 12y technology Preferential interest rate – Cost savings of approx. 50% JESSICA EUR 1 mil. in the first year contribution alone 14
ELENA at a glance 15
ELENA – eligibility and activities 16 16
ELENA - ESCO Project Development 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 • Province of Milan • Province of Modena • Province of Chieti • Province of Padova • Region of Murcia • Lisbon Region 17
EPEC and Energy Efficiency The European PPP Expertise Centre (EPEC) is a unique cooperative initiative of the EIB, the EC as well as EU Candidates and MS. EE Mandate: To raise the awareness of local, regional and national authorities in the areas of energy efficiency and renewable energy improvements in housing and other types of buildings Goes beyond EPEC’s usual focus on PPPs Knowledge-sharing Materials: guidance Events Specific activities in and factsheets •EE in buildings •Dedicated website •Workshops •Street-lighting •www.eib.org/epec/ee •Roundtables •Cohesion Policy •Case-study database •Seminars •ESCOs and EPC •Contacts database •Conferences •Information on •Stakeholder cooperation financing for EE 18
DEEP Green DEEP Green Initiative Banks ESCOs Public sector Utilities Compartment Compartment Compartment Compartment • D ebt for E nergy E fficiency P rojects Green Platform (DEEP GREEN Platform). • Structured in four different lines of products (“compartments”) to cover the diverse financing needs of the key players involved in the EE market. • Targets aggregation and de-risking of EE projects, key barriers to the financing of the EE market • Aim at increasing financing availability for EE projects by further developing EIB and commercial bank lending activity to EE Focus on 1 st compartment as a first step • 19 19
Risk Sharing Finance Facility (RSFF) RSFF [up to EUR 10bn EU assuming leverage of 5.0x ] Direct Lending Indirect Lending / Financing 1 Corporate / Project Financing Financial Intermediaries 2 (extend lending capacity) Senior Loans (pari passu) Risk Sharing Subordinated Debt Co-financing Aaa Aa A (Baa3) Ba B RSFF Value Added Proposition Competitive terms and pricing Strong technology/industry expertise Long Maturities of up to 10 years No cross selling / Take and hold strategy Large single loan sizes (< EUR 300m) Signaling Effect: EIB as quality stamp 20
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