The workshop was convened by the Executive Agency for Small and Medium-Sized Enterprises (EASME), in cooperation with DG Regio and Dg Energy. During the workshop, project promoters from Europe’s cities and regions described local approaches to innovative financing solutions for sustainable energy projects. This is of particular importance in the context of the European Structural and Investment Funds allocation of EUR 40 billion to the low carbon economy.
According to Lieven Vanstraelen, Co-CEO, Inerginvest, Belgium, who will be speaking at ESCO Europe 2015, one of the most distinct trends in the European ESCO market today is that of aggregation. A growing number of projects are coming out, such as Gre-Liège, where aggregation is being used to kickstart the markets. This trend, which began two years ago, is even more accentuated today.
The cities of Gothenburg, London, Rotterdam, Genoa and Cologne have recruited 50 European cities to become members of the district heating and cooling project CELSIUS.
EUR 1 Billion available for energy efficiency investment
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Energy Performance Contracting is a form of ‘creative financing’ for capital improvement which allows funding energy upgrades from cost reductions. Under an EPC arrangement an external organisation (ESCO) implements a project to deliver energy efficiency, or a renewable energy project, and uses the stream of income from the cost savings, or the renewable energy produced, to repay the costs of the project, including the costs of the investment. Essentially the ESCO will not receive its payment unless the project delivers energy savings as expected.
The European Structural and Investment Funds (ESI)--formally known as the Structural Funds and the Cohesion Fund--are financial tools set up to implement the regional policy of the European Union. They aim to reduce regional disparities in terms of income, wealth and opportunities. Europe's poorer regions receive most of the support, but all European regions are eligible for funding under the policy's various funds and programmes.
Community finance means money raised from the local community: including individuals and households, businesses and customers (e.g. of a cooperative venture). Community finance may be coordinated with leadership from the local authority or community group. A community development finance institution (CDFI) is a financial institution which provides credit and financial services to markets underserved by mainstream banks. An example of a CDFI is a community bank - an independent, locally-owned commercial bank. It operates exclusively in and derives its funds from the community in which it is based.
A revolving loan fund is a source of money from which loans are made for multiple sustainable energy projects. Revolving funds can provide loans for projects that do not have access to other types of loans from financial institutions, or can provide loans at a below-market rate of interest (soft loans). The fund gets its name from the revolving aspect of loan repayment, where the central fund is replenished as individual projects pay back their loans, creating the opportunity to issue other loans to new projects.
A municipal bond is a bond issued by a local government, or their agencies. Potential issuers of municipal bonds include states, cities, counties, redevelopment agencies, special-purpose districts, school districts, public utility districts, publicly owned airports and seaports, and any other governmental entity (or group of governments).
The European Commission has set up a series of facilities funding Project Development Assistance (PDA) to support ambitious public authorities - regions, cities, municipalities or groupings of those - and public bodies in developing bankable sustainable energy projects.