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

European Investment Bank – JESSICA and Investment Funds


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
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 A management and advisory programme, launched by the EU Commission
in collaboration with EIB, to assist Member States and regions to invest
Structural Funds in urban projects (including energy efficiency)
 Overall JESSICA objectives:
 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

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3
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
European Investment Bank – JESSICA and Investment Funds
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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
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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.
European Investment Bank – JESSICA and Investment Funds
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
European Investment Bank – JESSICA and Investment Funds
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
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
EE/RE projects
UDF1
OP.Pr. Tech. Assistance Spain
Eur 5m
Subordinated
Debt \Equity…
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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.
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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