1 European Investment Bank / ELENA Facility ELENA: A PROJECT PREPARATION SCHEME Juan Alario, Associate Director European Investment Bank (EIB) Regions for Economic Change Brussels, DG REGIO 21 May 2010

2 European Investment Bank / ELENA Facility Summary 1. Why ELENA? 2. Issues to prepare a city energy programme 3. What is ELENA? 4. Conclusions

3 European Investment Bank / ELENA Facility

4 1.Why ELENA? Urban areas account for about 70% of the EU energy consumption and GHG emissions Substantial investments required to reduce GHG emissions, notably in EE/RE in buildings and sustainable urban transport. However, limited action at this stage. ELENA aims at accelerating development of this investment potential ELENA aims at developing more efficient ways to develop the potential, that can be replicated

5 European Investment Bank / ELENA Facility 2.1Conditions for launching a city energy programme 1.Willingness to embark on a challenging new task? 2.Prepare a plan: go for a large programme to reduce transaction costs and attract investors’ interest 3.Think how to make projects bankable right from the beginning 4.Dialogue with potential investors and financers from the beginning

6 European Investment Bank / ELENA Facility 2.2Sectoral focus of the city plan Buildings: Some RE can be developed in cities using existing support mechanisms to RE, such as PV Part of the EE potential can be developed without grants (around 20% EE gains), but for the rest (building envelope) grants are needed. Sustainable transport: Generally, substantial grants are needed, e.g. for high efficient buses or electric cars

7 European Investment Bank / ELENA Facility 2.3The approach Creation of a Project Implementation Unit, focusing on investment implementation The most promising approach seems to be using ESCOs Ensure access to financing: the availability of grants influences project scope

8 European Investment Bank / ELENA Facility 2.4Needs of technical assistance Additional staff for the Project Implementation Unit Technical studies: feasibility studies, energy audits,… ESCO approach and contractual aspects Preparation of tender specifications and tender negotiations

9 European Investment Bank / ELENA Facility 3.1 ELENA: Eligible entities Beneficiaries: local and regional entities, or other public entities or regroupings thereof, including signatories of the Covenant of Mayors. Eligible countries: EU, Norway, Iceland, Liechtenstein and Croatia Part or all of the programme can be implemented by other entities than the above-mentioned, including private companies.

10 European Investment Bank / ELENA Facility 3.2 ELENA: Eligible investments in buildings Public and private buildings, including social housing, Street and traffic lighting, RE in buildings, Heat and cooling networks based on CHP or RE Small CHP for buildings

11 European Investment Bank / ELENA Facility 3.3 ELENA: Eligible investments in transport Increase EE or integration of RE in urban transport: High EE buses, including hybrids, Electric cars, Investments to facilitate new, more energy efficient solutions to improve freight logistics;

12 European Investment Bank / ELENA Facility 3.4. ELENA: Eligible investments in local infrastructures to improve EE or use RE Smart electricity grids ICT EE urban equipment Inter-modal transport facilities Refueling infrastructure for alternative fuel vehicles, including charging infrastructure for electric cars

13 European Investment Bank / ELENA Facility 3.5 Investments not eligible for ELENA Investments related to industry; reductions of GHG emissions related to industrial relocalisations

14 European Investment Bank / ELENA Facility 3.6 Minimum conditions to apply for ELENA Need first to have identified an investment programme in the eligible areas Bankability of the potential investment programme The ratio between investment and ELENA assistance has to be minimum 25

15 European Investment Bank / ELENA Facility 3.7 Costs eligible for ELENA Additional staff hired by the beneficiary Feasibility studies Energy audits Tender and contract preparation Other TA needed to implement the programme, excluding hardware costs. ELENA funding can cover maximum 90% of TA costs

16 European Investment Bank / ELENA Facility 4.1 Conclusions (1) Need to explain how ELENA works as it is innovative ELENA has raised substantial interest At present most of the ELENA pipeline is in public buildings and using ESCOs Complementing ELENA with financing instruments to enlarge ELENA scope to other sectors: Transport projects Social and private buildings ELENA projects have substantial opportunities to be replicated and to help spread good practices

17 European Investment Bank / ELENA Facility 4.2 Conclusions (2) Few public entities have the willingness and capacity to implement large EE/RE city/regional programmes: need to exchange experiences To be effective TA has to be linked to implementation (investments) Project preparation support (botton-up) is a necessary complement to legislative and financing support (top-down)

18 European Investment Bank / ELENA Facility To get more information… Thank you for your attention