Energy Efficiency in Buildings: Combining New Financial Instruments with the MFF docx

Energy Efficiency in Buildings: Combining New Financial Instruments with the MFF The example of JESSICA Frank Lee Head of Holding Funds and Advisory, Northern Europe JESSICA and Inve

Energy Efficiency in Buildings: Combining New Financial

Instruments with the MFF The example of JESSICA

Frank Lee

Head of Holding Funds and Advisory, Northern Europe

JESSICA and Investment Funds

European Investment Bank

March 2012

European Investment Bank – JESSICA and Investment Funds 2

in collaboration with EIB, to assist Member States and regions to invest

Structural Funds in urban projects (including energy efficiency)

 Higher productivity of Structural Funds / public funds

Increase efficiency and productivity of Structural Funds by making use of

innovative and revolving financing instruments in the urban sector

(complementary to grant financing)

 Leverage effect

Mobilise additional public and private sector resources for the benefit of

sustainable and integrated urban development (schemes)

 Expertise - new partnerships and synergies

Utilise financial, managerial and project implementation expertise from private

sector or international financial institutions such as EIB

Overview of JESSICA

Joint European Support for Sustainable Investment in City Areas

EUROPEAN COMMISSION Structural Funds

MEMBER STATE Via a designated Managing Authority

Holding Fund (HF)

URBAN DEVELOPMENT FUND (UDF)

Projects forming part of an Integrated Plan for Sustainable Urban Development

Grant (not repayable as long as EC Regulations adhered to)

optional

OTHER INVESTORS (Public & Private) CITIES

IFIs/Public Agencies/ Banks

Investment (equity, loan or guarantee)

Contribution (repayable or non-repayable)

General JESSICA implementation model

European Investment Bank – JESSICA and Investment Funds JESSICA in practice

Lithuania

JESSICA Holding Fund managed

by EIB

Contingent loans

Renovation Loans (l/term & preferential rates) – minimum level of energy savings of 20% and energy class D to be achieved

Urban Development Funds

PROJECTS:

Eligible energy efficiency projects in

multi-apartment buildings

LithuanianMinistries of Finance and Environment

commitment of EUR 227m from Operational Programme:

« Promotion of Cohesion 2007-2013 »

Housing and Urban Development

Agency

BORROWERS:

Individual owners of apartments in multi-apartment buildings / administrators of commonly used premises

of multi-apartment buildings

Heat subsidies for

low income

persons

15% grant from

Climate Change

Programme

Project preparation and technical assistance

European Investment Bank – JESSICA and Investment Funds 6

National plan to refurbish 24,000 apartment block buildings by 2020

− JESSICA target: 1000 renovation buildings between 2010 – 2015 So far almost 200 buildings have taken

“decision” to participate in the programme – circa 60 of these have already procured contractors and in

negotiations with the financial intermediaries for loan financing…

Average energy savings for a single building are estimated to be circa 50 %

Multi-apartment renovation projects support national and European objectives related to

improving energy efficiency and security of energy supply

In addition, programme launched in 2009 seen as a major economic stimulus package for

construction industry and job creation/retention

Significant social benefits from energy efficiency investment in low income housing, including

eradication of energy poverty and improving quality of life

Programme promotes the establishment of housing associations, stimulating social

inclusion and community participation

JESSICA in practice

London

European Investment Bank – JESSICA and Investment Funds

• As a provider of cheap debt, return expectations

for the fund are low, but the private sector finance

provider still makes a commercial return, and the

fund manager has a significant component of fees

linked to maximising carbon reduction and energy

efficiency impacts

Insulation Building management

technologies

Cooling equipment Low carbon heating

• A GBP 100m UDF, with co-financing from Royal Bank of Scotland, blended with

London Green Fund monies to provide cheap loan financing for retrofit and low

carbon heating projects in local authority, university, hospital, social housing and

other public buildings

London Energy Efficiency Fund

• The EIB managed ELENA facility is providing

technical assistance for project preparation

Low cost financing in exchange for carbon reduction benefits

Leveraging other EIB/EC products

LEEF Investment Strategy

Output targets:

• £1500/tonneCO2

• 20% carbon dioxide saving

• 20% energy saving

•Eligible technologies:

• Building energy efficiency

• Building integrated low and zero carbon technologies

•Any locations within 33 London Boroughs:

•Borrowers can be public, private or JV entities

•Broad definition of „Public Sector Building‟

•Open choice of procurement and delivery routes; RE:FIT and EPC optional

European Investment Bank – JESSICA and Investment Funds JESSICA in practice

Spain

IDAE

JESSICA HF F.I.D.A.E.( EIB)

Eur 127,6 m

EE/RE projects

UDF2

10 OP.Pr(ERDF+COF) Eur 127,6 m

TECHNICAL

UNIT

Eur 5m

EIB

Co-financing Senior lending

EUR 100m (bank risk)

EE/RE projects

EE/RE projects UDF1

OP.Pr Tech Assistance Spain

Eur 5m

Subordinated Debt \Equity…

European Investment Bank – JESSICA and Investment Funds

12

Selection criteria and eligibility requirements

To be eligible, projects should fulfill the following conditions:

 Be in line with any of the Op P of the 10 Autonomous Communities (CCAA)

 Belonging to one of the following areas:

 Buildings: Public buildings, including social housing and private buildings

(residential services)

 Industries: Companies of any size

 Transport (public and private): both fleet and transportation infrastructures

 Infrastructure of public services:

 Outdoor street lighting and traffic lights

 Local infrastructure, including intelligent networks and information and

communications technology (ICT) related to the priorities: energy efficiency, renewable energies and clean transport

 Ensure an acceptable return on investment

 Be included/in line with integrated plans for sustainable urban development

For more information please contact:

European Investment Bank JESSICA and Investment Funds Division

100, bd Konrad Adenauer, L-2950 Luxembourg

www.eib.org/jessica +352 4379 83069