The European Investment Bank has implemented a number of processes in support of energy efficiency programme development.
European Investment Bank (EIB) eligibilities have been reformulated after public consultation in 2013. Basically all economically viable energy efficiency investments are eligible and some more detailed rules need to be followed which basically apply the cost-optimum refurbishment level for buildings and criteria for combined heat and power (CHP).
EIB loans have been provided for energy saving companies’ (ESCO) projects which have been supported under the ELENA facility in the province of Milan to name one example. Similar facilities are in place in other countries and in addition, EIB is invested in the European Energy Efficiency Fund (EEEF) which has also provided funding for ESCO projects.
In an exclusive interview with Ralf Goldmann, Deputy Technical Advisor, Energy Efficiency & Small Scale Energy Projects Division, Energy Department, European Investment Bank (EIB), who will be presenting at the upcoming ESCO Europe, we asked about the Bank’s involvement in project aggregation and its support of energy efficiency programmes.
He explains that since December 2009, the bank implemented the ELENA facility which helps public promoters to aggregate small projects into larger programmes. In addition, the Bank manages several JESSICA (Joint European Support for Sustainable Investment in City Areas) funds under which energy efficiency plays a role (i.e. housing refurbishment) and pipelines or projects are prepared. Besides this, the Bank gives credit lines to banks and other possible intermediaries which can be used to finance small projects.
When it comes to an ESCO’s role in attracting private funding to projects, Goldmann points to two main characteristics for projects:
In public sector buildings, ESCOs can raise the financing, thereby creating a fully commercially financed project. If required, EIB resources can be channeled via intermediaries.
ESCOs should usually guarantee the projected savings which enables banks to finance the savings. The guarantee can also be enhanced via an appropriate insurance product.
With regards to challenges that ESCOs face, Goldmann says these relate to the ESCO’s balance sheet if loans are given as corporate loans only (this could potentially be overcome by the sales of receivables) and by a mistrust or the inappropriate assessment of the risk-profile of the underlying project.
“The EIB is working on both of these issues and has developed a new instrument with the European Commission which could give confidence to banks by providing a partial risk-guarantee on their energy efficiency portfolio.”
In conclusion, we asked Goldmann what conversations he would like to hear at ESCO Europe and he said that he looks forward to a critical self-assessment of the industry especially the lessons learned in the last decade. He would also like to hear an open discussion about the main contract models and markets for ESCOs.