the eu perspective of the covenant of mayors and energy ...rea-sjever.hr/rea/images/managenergy/ec...
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EnergyEnergySEAP workshop i Skanderborg, 23-24 nov 2011
The EU Perspective of the Covenant of Mayors and Energy Performance Contracting
By/Nils Daugaard, By/Nils Daugaard, EC NetworkEC Network
ManagEnergy EventKoprivnica, 26 March 2013
EnergyEnergy
► The Covenant of Mayors is a commitment of cities to go beyond the EU 202020 objectives in terms of reducing CO2 emissions.
► The EU Energy for a Changing World package, adopted in 2007,commits the EU to reduce CO2 emissions by 20% by 2020, as a result of:►a 20% increase in energy efficiency, and►a 20% share of renewable energy in the supply mix .
What is the Covenant of Mayors?
EnergyEnergy
CoM – the key steps
Baseline emissions inventory & SEAP development with stakeholders and citizens
Monitoring and reporting
SEAP implementering
STEP 1: Signature of the Covenant of Mayors
STEP 2: Submission of your SEAP
STEP 3: Regular submission of implementation reports (every 2 years)
Creation of adequate administrative structures
1st year
2nd year & beyond
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> 4,000 signatories in 46
countries
> 170 supporting regions, provinces and networks
Covenant Signatories:A growing community
EnergyEnergy
Today
5
... reaching 4000 signatories
... about 1700 SEAPs submitted
... responsible for 6 t CO2 eq./capita
... committed to reduce 28% CO2 by 2020
... comprehensive actions
... 159 million citizens
EnergyEnergy
SEAP – results per sector
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Note: The data refers to 1278 SEAPs (average 25% CO2 reduction target).
Breakdown of expected CO2 emissions reduction by sector by 2020
EnergyEnergy
Financial support is being put in place Energy saving companies (ESCOs): finance transition
European Regional Development Fund: access to funding
ELENA - EIB: develop large investment programmes
ELENA – KfW: develop medium-sized investment prog.
ELENA – CEB: develop investment prog. for social housing
European Energy Efficiency Facility: access to project funding
European Investment bank: access to loans
Municipal Finance Facility: access to loans
Intelligent Energy Europe: project funding
JESSICA & JASPERS: project funding
URBACT & Interreg: project funding
Sustainable Energy Initiative: access to funding
Yet it is a huge challenge to turn the many developed SEAPs into implementation.....
EnergyEnergy
And EU is not on track to meet it’s 20% energy savings target by 2020!
EnergyEnergy
A new impetus is needed!Therefore On 25 October 2012, the EU adopted the
Directive 2012/27/EU on energy efficiency.
EnergyEnergy
Highlights from the new EE Directive
The Directive brings forward legally binding measures to step up Member States’ efforts to use energy more efficiently at all stages of the energy chain – from the transformation of energy and its distribution to its final consumption.
Measures include the legal obligation to establish energy efficiency obligations schemes or policy measures in all Member States.
Exemplary role to be played by the public sector
A right for consumers to know how much energy they consume.
EnergyEnergy
Public sector to lead by example
Member states has to ensure that as from 1 January 2014, 3 % of the total floor area of heated and/or cooled buildings owned by their central government is renovated each year.
In addition, member states are to establish a long-term strategy for mobilising investment in the renovation of the national stock of residential and commercial buildings.
More systematic use of energy performance contracting
Energy Performance Contracting• EPC is a form of ‘creative financing’ which allows funding
energy efficiency improvements from cost reductions.
• Can be applied wherever energy is utilised; lighting, heating and cooling of buildings, street lighting and industrial applicaitions.
• Design, installation and project saving guarantee are provided by the ESCO.
Energy Performance Contracting – Third Party Financing Mechanism
ESCO CustomerFinancial
Institution
Contract
Paybackvia Savings
Loan
Payment
EnergyEnergy
Creating bankable projects – making projects attractive for the financing institutions
Involvement of ESCO Companies based on Energy Performance Contracting is considered as an essential tool for removal of project non-performance risks
A bankable project is a clearly documented economically viable project:
• The project includes well-proven technology well adapted to local needs
• The project is well documented in terms of technical analysis and design as well as with regard to economic feasibility
• The project components are properly identified and prioritized in relation to various development options
• There is a proper organization and management in place to ensure the implementation of the projects as well as to ensure proper operation and maintenance.
• The lenders must document a good financial performance
• The level of project risks are thoroughly assessed
Effects of Financial Crisis
• The financial crisis and economic regression period have created significantimpacts, both positive and negative, on the ESCO projects:• The economic regression caused unstable ESCO customers, reducing their
activity, increasing the difficulty in ensuring energy savings and raising the risk of insolvency. This situation also created more flexible contracts.
• In other respects, the financial crisis and economic limitations have created targets on cost reductions through energy efficiency measures and profit from the flexible financing mechanisms offered by ESCOs. In order to counterbalance the economic crisis, a number of projects have been implemented in the public sector with financial incentives for private sector project.
EnergyEnergy
Energy Performance Contracting (EPC)
Campaign
Directorate-General for EnergyEnergy Efficiency
EnergyEnergy
Aims of the EPC Campaign
• To highlight awareness of EPC at national, regional and local levels
• To hold a series of practical workshops to- Increase knowledge- Build confidence- Share experience
• Three pillars working to complement each other: EPEC, ManagEnergy and Covenant of Mayors
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EnergyEnergy
EPC Campaign Structure NationalEPEC
RegionalManagEnergy
LocalCovenant of Mayors
2012-13 – series of national events planned
Targeting key policymakers at national level
Focus on implementation of EPC frameworks, use of cohesion policy funds, and practical examples of EPC benefits
2012-14 – 42 events planned
Aimed at regional authorities and energy agencies
Focus on forthcoming changes to regulatory framework and potential replication of EPC projects
2012-14 Webinar events
Capacity building events for local stakeholders
Focus on barriers encountered, solutions, and practical ways to roll-out more EPC projects locally
EnergyEnergy
Key Stakeholders
• National Administrations, including Ministries of Finance, Energy, Environment, Public Works
• National Energy Agencies• Financial Community• Municipalities• ESCo's• Energy Services Industry (products, technology, energy management
systems)
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EnergyEnergy
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The EPC Opportunity• New Regulatory Frameworks provide an opportunity to develop the EPC
market
• Multi-annual Financial Framework- Use of Structural and Cohesion Funds to provide financing for EPCs- Potential to develop MS policy to reflect the EPC opportunity
• Energy Efficiency Directive- Article 3 – required renovation of 3% of central government buildings- Article 7 – energy efficiency obligations 1.5% target to be met- Article 19 – removal of barrier to energy efficiency in accounting rules- Article 20 – Maximising the benefits of multiple financing schemes
EnergyEnergy
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The EPC Opportunity• New Regulatory Frameworks provide an opportunity to develop the EPC
market
• Multi-annual Financial Framework- Use of Structural and Cohesion Funds to provide financing for EPCs- Potential to develop MS policy to reflect the EPC opportunity
• Energy Efficiency Directive- Article 3 – required renovation of 3% of central government buildings- Article 7 – energy efficiency obligations 1.5% target to be met- Article 19 – removal of barrier to energy efficiency in accounting rules- Article 20 – Maximising the benefits of multiple financing schemes
Key Factors of EPC Development in EURegulatory framework
The European Commission have been long promoting EPC and ESCOs through energy efficiency directives. However, there are still significant barriers in the regulations of many EU countries.
Financing conditions- Third Party Financing
-ESCO Financing
-Energy-user / Customer Funding Source
Local authoritiesIn many countries of EU local authorities have been actively supporting EPC, however also in many countries there are significant lack of awareness.
ESCOMany ESCOs have been founded either by large companies or as subsidiaries of large companiesor originated from equipment manufacturers and suppliers, public sector agencies or public-private joint ventures.
EPC projects-Mainly in public sector-The most common projects are in co-generation, public lighting, heating,ventilation, and air-conditioning (HVAC), and energy management system
Relation: Incresing support from goverments, but there are still budget restrictions
Relation:TPF is the most common model for EPC projects
Relation:Mostly private third
party financing is encouraged by the
goverments
Relation:There is still a high level of mistrust in the ESCO model some countries.
