European Investment Bank – JESSICA and Investment Funds Energy Efficiency in Buildings: New financial instruments Frank Lee Head of Holding Funds and Advisory, Northern Europe JESSICA and Investment Funds European Investment Bank May 2012

European Investment Bank – JESSICA and Investment Funds EIB/EC collaboration for energy efficiency financing Energy efficiency projects +  Holding Funds  Urban Development Funds  Technical assistance  Technical assistance for Public Private Partnerships (PPP) development  Technical assistance for feasibility studies Structural & Budgetary Funds investment

European Investment Bank – JESSICA and Investment Funds EIB lending in energy sector EIB’s lending in energyBreakdown of lending in energy in 2010

European Investment Bank – JESSICA and Investment Funds ELENA – European Local ENergy Assistance  ELENA is a technical assistance facility providing grants to finance feasibility studies of investment programmes that fight against climate change  covering up to 90% of eligible costs  Only Public Bodies from IEE* countries can apply  Area: Renewable energy in the built environment, energy efficiency, district heating, transport  3 years to implement the programme  Minimum leverage factor of 25 (to be verified at the end of the financing period)  Replication potential - minimum project size of 50 MEUR  The funds available are: EUR 15 mln for EUR 15 mln for EUR 19 mln for Some energy efficiency projects, using EPC models have been supported… *EU-27 + Iceland, Norway, Lichtenstein and Croatia

European Investment Bank – JESSICA and Investment Funds 5 5 EUROPEAN COMMISSION Structural Funds EUROPEAN COMMISSION Structural Funds MEMBER STATE Via a designated Managing Authority 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) 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 Case study Lithuania

European Investment Bank – JESSICA and Investment Funds 7 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 » 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 8 National plan to refurbish 24,000 apartment block buildings by 2020 − JESSICA target: 1000 renovation buildings between 2010 – 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.

European Investment Bank – JESSICA and Investment Funds Case study Spain

European Investment Bank – JESSICA and Investment Funds 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 Lot 1 Lot 2 Framework loan EUR 100m (bank risk) EE/RE projects UDF1 OP.Pr. Tech. Assistance Spain Eur 5m Subordinated Debt \Equity…

European Investment Bank – JESSICA and Investment Funds 11 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:  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.

European Investment Bank – JESSICA and Investment Funds Lessons learnt for next CSF period  There is a clear need for long term, affordable funding in this sector.  Need for technical assistance to go alongside project investment funding.  Baseline audits, project preparation and implementation strategies, procurement, contracting, verification  Grants should be used “sparingly” and strongly incentivise energy saving and/or carbon reduction.  Knowledge dissemination needed re ESCOs and EPC – amongst public sector promoters and banks.  Standardise public accounting/statistical rules around balance sheet treatment of EPC contracts.  Consider the need for state aid clearances where private sector buildings are being targeted - Social housing?

European Investment Bank – JESSICA and Investment Funds 13 For more information please contact: European Investment Bank JESSICA and Investment Funds Division New Products and Special Transactions Department 98, blvd. Konrad Adenauer, L-2950 Luxembourg