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 Overview of JESSICA Joint European Support for Sustainable Investment in City Areas  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 European Investment Bank – JESSICA and Investment Funds General JESSICA implementation model EUROPEAN COMMISSION Structural Funds Grant (not repayable as long as EC Regulations adhered to) OTHER INVESTORS (Public & Private) MEMBER STATE Via a designated Managing Authority CITIES Holding Fund (HF) optional Contribution (repayable or non-repayable) URBAN DEVELOPMENT FUND (UDF) Investment (equity, loan or guarantee) IFIs/Public Agencies/ Banks Projects forming part of an Integrated Plan for Sustainable Urban Development European Investment Bank – JESSICA and Investment Funds 3 JESSICA in practice Lithuania European Investment Bank – JESSICA and Investment Funds LithuanianMinistries of Finance and Environment commitment of EUR 227m from Operational Programme: « Promotion of Cohesion 2007-2013 » JESSICA Holding Fund managed Heat subsidies for low income persons by EIB Contingent loans 15% grant from Climate Change Programme Urban Development Funds Project preparation and technical assistance Renovation Loans (l/term & preferential rates) – minimum level of energy savings of 20% and energy class D to be achieved PROJECTS: BORROWERS: Eligible energy efficiency projects in multiapartment buildings Individual owners of apartments in multi-apartment buildings / administrators of commonly used premises of multi-apartment buildings European Investment Bank – JESSICA and Investment Funds Housing and Urban Development Agency 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 London Energy Efficiency Fund • 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 Low cost financing in exchange for carbon reduction benefits • 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 Leveraging other EIB/EC products • The EIB managed ELENA facility is providing technical assistance for project preparation Cooling equipment European Investment Bank – JESSICA and Investment Funds Low carbon heating 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 OP.Pr Tech Assistance Spain Eur 5m 10 OP.Pr(ERDF+COF) Eur 127,6 m IDAE JESSICA HF F.I.D.A.E.( EIB) Eur 127,6 m TECHNICAL UNIT EIB Lot Lot UDF1 UDF2 Eur 5m Co-financing Senior lending Subordinated Debt \Equity… EE/RE projects EE/RE projects EE/RE projects European Investment Bank – JESSICA and Investment Funds Framework loan EUR 100m (bank risk) 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 12 European Investment Bank – JESSICA and Investment Funds 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 jessica@eib.org European Investment Bank – JESSICA and Investment Funds 13 ... 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... 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,... 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