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EIB financing for energy efficiency

Anton Rop, Vice-PresidentEuropean Investment Bank

ICPE Conference Ljubljana, 24 October 2012

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1678 Mtoe

20% objective

status today

1842 Mtoebusiness

as usual

2020

Projections from 2007

Projections from 2009

20% Energy saving objective

1474 Mtoe

* Gross inland consumption minus non-energy uses

Primary energy consumption*, Mtoe

1400

1450

1500

1550

1600

1650

1700

1750

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1850

1900

2005 2010 2015

The challenge of meeting the 20% Energy Saving Target

GAP

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Many challenges and opportunities remaining!

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The European Investment Bank (EIB) –European priority objectives

Within the Union:

Cohesion and convergence

Small and medium-sized enterprises (SMEs)

Environmental sustainability

Knowledge Economy

Trans-European Networks (TENs)

Sustainable, competitive and secure energy

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EIB in supporting the EU energy policy

Five priority lending areas:

- Renewable energy

- Energy efficiency

- RDI in energy

- Diversification and security of internal supply (incl. TEN-E)

- External energy security and economic development

EIB Energy Policy Document (currently being updated.)

EIB has substantial experience in energy technologies

Broad range of financial products

Technical Assistance available for project preparation

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EIB Lending in Energy in the EU 2008-2011

EIB lending for EE and RE, 2008-2011 in million EUR

Significant increase in lending between 2008 and 2010

In 2011, smaller but more projects supported than in 2010

Mainstreaming of EE in all EIB operations

In addition, JESSICA funds support over EUR 190m in EE projects

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EIB Lending in Energy Efficiency 2008-2011

Cumulated EIB lending in EE by sector 2008-2011

Projects in buildings represent 35% of EIB lending in EE

Large number of projects at local level (e.g. Bucharest, Chieti)

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EIB project example – Thermal rehabilitation of residential apartments in Romania

The objective of the project is to renovate 270 buildings (23000 apartments) from 2010 until 2012.

The project is expected to reduce the energy consumption of the buildings by around 50%.

The project supports national and European objectives related to improving energy efficiency and climate change and security of energy supply objectives.

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Summary of funding opportunities

EPEC – European PPP Expertise Centre to strengthen the organisational capacity of the public sector to engage in Public Private Partnerships transactions

Technical Assistance is available to develop large scale ESCO programmes (ELENA)

JASPERS – Joint Assistance to Support Projects in European Regions to prepare projects supported by EU Structural and Cohesion Funds

Structural Funds can also be used via JESSICA funds

Green for Growth Fund – Southeast Europe (GGF)

A new facility has been developed focussing especially on energy efficiency and support to ESCOs (European Energy Efficiency Fund – EEE-F)

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PPPs and Investment in Energy Efficiency & Renewables

Major challenges in achieving the EU 20% target for EE

PPPs : opportunities for leveraging public funding & risk transfer

PPPs and Energy Performance contracting models

Public sector requirement for long-term contract delivery

Need for integration of the build and operating phase

Proper maintenance and life cycle maintenance is key

Significant opportunities for combining Energy Efficiency with RE

PPPs provide for a variety of innovative funding models10

European Investment BankProvision of Technical assistance

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 - 2011: EUR 49m (allocations can be made until end 2013)Envisaged budget 2012: EUR 22m

European Local ENergy Assistance -- ELENA

Example: RE:FIT, London

ProposalRetrofitting of public buildings owned by several London Boroughs, Colleges, Universities and Hospitals

Planned investment: EUR 115m

Expected results: 4.69 GWh energy/year saved

Main TA feature:Project Development Unit, performance-based to ensure value for money

Current results (after 1 year of operation)14 mini competitions for ESCOs launched

Over EUR 12m invested in 150 buildings

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Example: Electrobus, Barcelona

ProposalBus fleet renewal: retrofitting 220 existing buses into hybrid buses and integrating electric and hybrid vehicles

Planned investment: EUR 164m

Expected results: 61.4 GWh of energy savings and a reduction of 16 400 CO2-eq [t] by the end of the three year project period

Main TA features: Technological studies on electric and hybrid buses

Support in the definition of tailored financial instruments to finance the bus fleet renewal

Current results (after 15 months of operation):TA on track

First investments scheduled for end 2012

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The Berlin Energy Saving Partnership…demonstrates how the PPP concept used successfully for energy efficiency

Source : Berliner Energieagentur Gmbh

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The Berlin Energy Saving PPP – Key success indicators

1,300 buildings refurbished/ improved

EUR 60m invested in energy efficiency improvements 25% energy saving (EUR 2.4/year) saving

C02 = 60,000 t/year reduction

Further saving potential = ~30%

refurbished/ improvedQuelle : Berliner Energieagentur Gmbh

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JESSICA Joint European Support for Sustainable Investment in City Areas

Joint initiative of EC and EIB since 2006, supported by CEB– Support the establishment of a system of Urban Development

Funds (UDFs) across the EU

– Utilising resources of EU Structural Funds through financial engineering; revolving instruments

UDF as an “impact fund for territorial transformation” Policy-driven, geographically-focused and planning-led

investment vehicle supporting transformation processes of cities

EIB role - TA, feasibility studies, management of UDFs– Managing contributions from Operational Programmes on behalf of

MAs;

– Arranging selection of / establishment / investments into UDFs,

– which subsequently invest in Urban Projects eligible under Ops

– Possible co-investment into or alongside UDFs

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JESSIC JESSICA A

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Green for Growth Fund - Southeast Europe

Investments in financial institutions

Investments in non-financial institutions

Investments in RE Projects

• founded December, 2009 with committed capital of EUR 128m

• initiators: EIB & KfW; additional founding investors - EBRD, IFC, EC, BMZ; TA donors: EC, BMZ, OeEB

• current committed capital: EUR 201m (includes FMO and NIF)

• target size: EUR 400m within 4 years

• Mission: Foster energy efficiency and renewable energy in Southeast Europe, including Turkey, and the European Neighborhood region, resulting in a reduction in energy consumption and/or CO2 emissions of at least 20%

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Green for Growth Fund - Southeast Europe

More information:

www.ggf.lu

• target partners (countries of operation): 13

• year-end 2012 portfolio: EUR 143m

• works with Financial Institutions to finance EE & RE measures, and makes direct investments into RE projects

• provides Technical Assistance to its partners to build green energy capacity in the local finance sectors, and to bring international best practices to small-scale renewable energy projects in the region

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European Energy Efficiency Fund (EEEF)

What is EEEF?

Why EEEF?

Objective

— EEEF aims to provide market based financing for commercially viable public energy efficiency (EE) and renewable energy (RE) projects within the European Union

— It contributes with a layered risk/return structure to enhance EE and foster RE in the form of a targeted private public partnership, primarily through the provision of dedicated financing via direct finance and partnering with financial institutions

— … amendment of the European Energy Programme for Recovery Regulation (a)

— … commitment of the EU member states to achieve the 20/20/20 goals, cutting GHG emissions by 20%, increasing RE usage by 20%, and cutting energy consumption through improved EE by 20%

— … substantial potential for EE and small scale RE in the European public sector

(a) Regulation (EU) No 1233/2010 of the European Parliament and of the Council amended the European Energy Program for Recovery

Regulation (EC) No 663/2009 establishing a program to aid economic recovery by granting Community financial assistance to projects in the field of energy. Uncommitted funds will be used for the creation of the EEEF.

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EEEF : Key Acctivities

Fund registered in Luxembourg

initial capitalisation of EUR 265m :

European Commission: EUR125m

European Investment Bank: EUR 75m

Deutsche Bank: EUR 5m Cassa de Depositie: EUR 60m

additional commitments planned to raise targeted fund size to approx. EUR 800m

geographical focus on EU 27 member states

Key data of EEEF Primary target countries

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Energy saving and EE investments:

— Public and private buildings

— Investments in high energy efficient combined heat and power

— Local infrastructure, including efficient lighting, electricity storage solutions, smart metering, and smart grids,

— Investment in innovation for better outcomes in energy efficiency and renewables

Investments in RE sources:

— Distributed generation from local RE sources, to medium and low voltage (110kV and lower) distribution networks

— Smart-grids enabling higher RE sources uptake

— Energy storage to allow storing part of the energy produced from intermittent sources during low-consumption hours and feeding this energy back at times of peak-demand

— Decentralised energy sources can also be the injecting of locally produced biogas into the natural gas network and

— Microgeneration from RE sources

Investments in clean urban transport:

— Clean urban transport to support increased EE and integration of RE sources

EEEF: Portfolio Strategy

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For more information…

http://www.eib.org

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