What has worked and what needs to be improved? The new EPC accounting rules for the public sector one year after: What has worked and what needs to be improved?

Application of EPC guide Scope of document Translates general statistical rules and principles of “economic ownership” into contractual terms and concepts Endorsed as official Eurostat guidance and the reference point for Eurostat advice and decisions on EPCs Eurostat rules relate to statistical treatment in government accounts - not to accounting rules/practices and budgeting Does not address value for money or bankability considerations More information in the webinar: http://eiah.eib.org/publications/webinar/WEBINAR_a_Practitioners_Guide_on_the_ Statistical_Treatment_of_Energy_Performance_Contracts

What does the Eurostat guide imply? Key changes Government payments to the ESCO proportional to savings achieved Energy savings must exceed total amount of payment of government to ESCO Maintenance cost are included in calculation, maintenance savings are not Savings are shared between government and private party (1/3 and 2/3) Minimum contract duration is 8 years EU funds are neutral in accounting treatment Revenues from renewable energy generation count as savings

Implementation of EPC guide Progress - one year after “Maastricht neutral” model contracts approved by Eurostat for Slovakia, Slovenia* “Maastricht neutral” model contracts in preparation or consulted with national statistical offices (as far as we know): at least 12 Member States are working on model contracts or already consulting the national statistical office “Maastricht neutral” pilot project in process of preparation in Belgium. Standards set by EPC guide are adopted across different EPC sectors

Implementation of EPC guide Remaining barriers National budget rules do not allow for (“Maastricht neutral”) EPC Problems with accounting rules Existing contracts and market practise not compatible with “Maastricht neutrality” Existing bank financing to ESCOs not compatible with “Maastricht neutrality” National support (grants, loans, guarantees) schemes may lead to on-balance sheet treatment Difficulties to bring ESIF grants and financial instruments into EPC

Implementation of EPC guide What has the EIB done so far? Review of the Slovak EPC model contract regarding balance sheet treatment Financial analysis of street lighting project in Vilnius supported Smart cities study including EPC in Croatia and Hungary Feasibility study on using EPC for a large scale central government building renovation programme in Latvia Setting up an Investment Platform for EPC financing with ESIF support in Czech Republic Developing a “Maastricht neutral” model for EPC financing with ESIF for DG REGIO

Mobilising EPC market What can the EIB do for you? Further awareness raising on the benefits of EPC and its financing Awareness sessions on the Eurostat rules Information on supporting EPC through ESIF grants and financial instruments https://www.fi-compass.eu/news/2019/02/firece-project-fi-compass-support-energy-efficiency-and- renewable-energy-financial Technical support for EPC projects Support for preparing model contracts (but no legal advice) Market demand analysis Technical assistance through ELENA facility Sustainable financing of EPC projects Dedicated financial instrument or investment platforms using resources from ESIF, EFSI and EIB own financing

EIB Advisory Services: Laurent Bender Robert Pernetta http://www.eib.org/infocentre/publications/all/guide-to-statistical-treatment-of-epc.htm EIB Advisory Services: Laurent Bender Robert Pernetta l.bender@eib.org r.pernetta@eib.org European Investment Advisory Hub https://eiah.eib.org/