SUSTAINABLE ENERGY TECHNOLOGIES AND LOCAL AUTHORITIES: ENERGY SERVICE COMPANY, ENERGY PERFORMANCE CONTRACT, FORFEITING

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1 SUSTAINABLE ENERGY TECHNOLOGIES AND LOCAL AUTHORITIES: ENERGY SERVICE COMPANY, ENERGY PERFORMANCE CONTRACT, FORFEITING VORONCA M.-M.*, VORONCA S.-L.** *Romanian Energy Efficiency Fund, Joann Strauss no. 2A, Bucarest, **C.N.T.E.E. Transelectrica S.A., Olteni no. 2-4, Bucarest Abstract - Te large majority of Local Autorities (LA) are facing budgetary restrictions despite a municipal agenda overcarged wit needs for intervention. Increasing public body energy bills is one of tem. In suc circumstances, Energy Services COmpanies () and LA migt enter collaboration troug an Energy Performance Contract (EPC) in order to promote te rational use of energy to local level. To extend suc type of action in te frame of a limited s creditwortiness, resulting EPC receivables are to be sold troug forfeiting. A specialised financial institution is to be involved. Tis paper proposes detailed concepts presentations, an overview on te used metodology, a relevant case of sustainable energy tecnology investment implying several actors and related furter developments. Keywords: sustainable energy tecnology, Local Autority (LA), Energy Performance Contract (EPC), Energy Services Company (), receivables, forfeiting. 1. INTRODUCTION Te ongoing process of deregulation witin te Romanian electricity market induces public body energy bills increase, Local Autorities (LA) seeming more and more financially over exceeded. Consequently te need for intervention is immediate and LA are presumably aware enoug. Te moderate economic activities relauncing determines budgetary restrictions, bot at central and local level and deepens financial difficulties. Te promotion of sustainable energy tecnologies at local level is listed as one of EU priorities [1]. In tis respect, te present paper proposes definitions, metodologies, calculations for a study case and recommendations, bearing in mind tat: LA financial stability is affected by te conjugate effects of bot energy bills increase and still modest revenues from economic activities taxation; due to a simultaneous priorities local agenda, LA indebtedness is close to te maximum in te context of a rater modest creditwortiness; as regards te promotion of adequate sustainable energy tecnology, LA seem to need assistance; relevant successful international experience renders possible te specialised private operators intervention aiming at te contractual-based promotion of sustainable energy tecnologies to local level; availability of financial operators for tird-party financing. 2. DEFINITIONS Energy service means te pysical benefit, utility or good derived from a combination of energy wit energyefficient tecnology [1]. Energy service is provided on contractual basis; verifiable, measurable or estimable energy efficiency improvement or primary energy savings is to result [2]. Energy Performance Contract (EPC) designates a contractual arrangement between te beneficiary (i.e. LA) and te energy service provider, were concerned investments are paid for in relation to a contractually agreed level of energy efficiency improvement and/or financial savings [1, 2]. Energy Services COmpanies () delivers energy services and/or oter energy efficiency improvement measures to a user s facility or premises, and accepts some degree of financial risk in so doing [2]. Te provided services correspondent payment is an eiter wolly or partially related-performance one, consisting in te acievement of energy efficiency improvements or in meeting of oter agreed performance criteria. Tird-party financing refers to a contractual arrangement involving a tird party - in addition to te energy services supplier and te beneficiary of te energy efficiency improvement measure - wic provides te capital for tat measure and carges te beneficiary a fee equivalent to a part of te energy savings acieved as a result of te energy efficiency improvement measure. Energy service companies () and energy performance contracting (EPC) are internationally recognised common tools to enance te sustainable enduse of energy troug promoting energy efficiency and renewable energy sources [2].

2 and EPC elp to overcome financial constraints to investments and pay off initial costs troug te energy cost savings coming from te reduced energy demand. provide an opportunity to curb increasing energy demand and control CO 2 emissions wile exploiting market benefits for customers by decreasing te energy costs of teir clients and making profit for temselves [2]. NPV NPV + a min IRR a max a 3. METHODOLOGY 3.1. Subsequent Metods Te relatively complex approac used for te elaboration of tis paper requires a step-by-step overview. Te following subsequent metods were considered: determination of sustainable energy tecnology performance indicators using te cas-flow based net present value metod [3, 4]; business origination by ; establisment of EPC terms and conditions for bot LA and ; forfeiting origination by LA and wit a specialised financial institution Sustainable Energy Tecnology Performance Indicators Te notations are a - discount rate, - year of expenditure or earning; d - duration of erection works; D - lifespan of investment; V - annual revenue in year ; C - annual expenditure witin year, I - annual investment in year [3, 4]. Te first relevant indicator is te discounted cas flow CF wic depicts te annual situation of revenues and expenditures for every year from te interval 1, d+d: [V (I + C )] CF, 1, D d. (1) = = + a) Te quicker tis indicator becomes positive te more interesting is te implementation of sustainable energy tecnology for te present paper purpose. Te net present value NPV designates te net discounted revenues over te entire period of time 1, d+d [3, 4]. Te relation is: = NPV CF > 0, = 1, D + d. (2) As tis indicator is positive and gets greater values as te investment is of ig priority. Te internal rate of return IRR indicates te economic strengt of te furter implementation of sustainable energy tecnology and designates tat value of te discount rate for wic te net present value NPV becomes null (NPV=0). As indicated in [3, 4], te value of IRR can be analytically obtained using te relation (3): IRR = a min + (a max a min NPV+ ) NPV + NPV or grapically [3, 4], as suggested in fig. 1. +, (3) NPV - Fig. 1. Grapic determination of te internal rate of return (source: Malamatenios, C., Vezirigianni, G., Grepmeier, K., Renewable Energies & Energy Efficiency: training guidebook, NicVox Publising House, ISNB (13) , Bucureşti, 2007). Te gross payback time GPT: GPT = 1 [ V (I + C )] = 0 I GPT =. (5) V C Te discounted payback time DPT [3,4], designates te period after wic troug te discounted cas flow released by investment operation, te total size of investment was entirely paid back. Additionally, a discounted cas flow determined based on te value of te discount rate can be obtained, too. Te relation for te calculation of te discounted payback time is: V (I + C ) = 0. (6) (1 + a) DPT = 1, (4) designates te period after wic, troug te cas flow released by after investment commissioning, te total size of investment was entirely paid back [3, 4]. If te annual cas flows ave uniform values, te gross payback time is to be determined wit te relation: If te annual cas flows ave uniform values, te discounted payback time depends on GPT witin te relation: ln(1 GPT * a) DPT =. (7) ln(1 + a) Te determination of te discounted payback time is also based on te exact definition of te zero time moment, wic is normally associated to te investment commissioning Business Origination by In principle, migt be a small or medium sized enterprise, capable to deliver energy services or oter energy efficiency improvements measures. In line wit te provisions of te Directive 2012/27/EU [1], wen entering negotiations wit LA as energy service provider,

3 sould ave te following professional profile to rely on: expertise to obtain accurate information about LA existing energy consumption profile, capabilities to identify and quantify cost-effective energy savings opportunities; detailed knowledge on te promotion and implementation to LA of most favourable sustainable energy tecnology; appropriate capacity for installation or equipment operation, maintenance and control; adequacy for monitoring, verification, evaluation and reporting. Energy Bill Initial EPC Final Energy Performance Contract between LA and d 2 3 Revenues E time Fig. 2. Energy Performance Contract between LA and (source: M.-M. Voronca-Coordinator, T. Constantinescu, M. Cruceru, A.M. Fodi, A. Marin and S.-L. Voronca, FINANŢAREA INVESTIŢIILOR ÎN EFICIENŢĂ ENERGETICĂ, Editura AGIR, Bucureşti, ISBN , 2008) Establisment of EPC terms and conditions for bot LA and As previously indicated, EPC connects LA and, te former as beneficiary of an energy service and te latter as service provider. Troug EPC, concerned investments are paid for in relation to a contractually agreed level of financial savings coming from energy efficiency improvement [1, 2]. In fig. 2, basic information on ow is constructed an EPC is empasised. To enter suc contractual arrangement, is firstly required to determine te LA s initial amount of energy annually consumed (line 1-2). After coosing te most promising energy saving opportunity, assess te furter amount of energy consumption (line 1-2 ) and enter negotiations wit LA in order to mutually establis te EPC virtual one (line 1-2 ). EPC stated tat, for a commonly agreed period of time (between te investment commissioning d and by parties negotiated EPC completion noted E in fig. 2), LA pays bills in accordance wit EPC virtual energy consumption level (line 2-3 ) and not wit te furter one (line 2-3 ). In suc conditions, commits to provide performance guaranteed energy services against regular LA payments necessary to cover all required D investment costs Forfeiting origination by LA and wit a specialised financial institution. capacity to perform EPC is often limited by te availability of long term capital to finance investments under suc contractual arrangements. Te reason migt be a moderate creditwortiness of just entering EPC business, and consequently, a modest appetite for borrowing, too. Suc situations are usually encountered on an emerging EPC market, as it is te case of Romania. To overcome suc limitations, could explore various options, forfeiting being one of tem. Forfeiting is te term generally used to denote te purcase of obligations falling due at some future date, arising from goods and services, witout recourse to any previous older of te obligation [5]. Forfeiting is a financial transaction involving te purcase of EPC receivables. More precisely, witin a period jointly agreed wit LA after implementation noted F (fig. 3), could financially exit te contractual arrangement before EPC completion E, by selling EPC receivables to a specialised financial institution called Forfeiter. Energy Bill Initial EPC Final Energy Performance Contract between LA, and Forfeiter d Revenues E F Forfeiter Revenues time Fig. 3. Energy Performance Contract between LA, and Forfeiter In suc financial transaction, commits to be paid witin, for instance, a year from commissioning wit a price covering all investment costs and a part of up to te EPC end profit (fig. 3), against te Forfeiter and LA wo commit to perform and finis EPC wit regular LA payments in te benefit of te Forfeiter. After forfeiting, te same energy service is provided by to LA, wic continues to pay accordingly, tis time to te Forfeiter. obtains quicker tan foreseen, against a smaller profit, te capital to enter new EPC business. Te Forfeiter collects a margin as long as te price paid to is a discounted one. Using for te forfeiting transaction te discount-toyield annually compounded metod [5] to determine te payment amount due by te Forfeiter to for EPC receivables purcase, te following indicators values are to be obtained: D 4

4 n representing te total number of days between disbursement F and te EPC contract completion E; value adjustment for non-working days and value addition for grace days; a n representing te number of wole year periods calculated from N; o d representing te number of odd days witin te remaining partial year period; r representing te Forfeiter s annual yield rate (Forfeiter s interest rate in % p.a.); f representing te Forfeiting Base Fee (% p.a.) obtained wit formula (8): f D = 360 ( n t = f + m F = L O + r )* [1 n * 360 * t r *o d ) r *365 a n ) 360 ]; (8) t representing te Forfeiting Tax (% p.a.) obtained wit formula (9):, (9) were m is te Forfeiting Margin (% p.a.); compared to FBF wic is correlated to te Forfeiter s interest rate, FM as a negotiable value wic indispensably quantifies te Forfeiter risk exposure [6, 7]; L O representing te value obtained by summing investment costs and up to te EPC end profit (fig. 3); F D wic designates te Forfeiting Discount, determined wit formula (10): ; (10) nitrate vapours lamps wit rated power 250 W, 67 units are ig-pressure nitrate vapours lamps wit rated power 150 W, 19 units are ig-pressure nitrate vapours lamps wit rated power 70 W, 95 units are incandescent lamps wit rated power 100 W and 15 units are fluorescent lamps wit rated power 36 W. 78% Energy 22% Maintenance Fig. 4. Structure of annual LA expenditures for outdoor public ligting system operation in year 2009 (source: ttp://free.org.ro) Te total installed capacity of te ligting system amounts to 80.1 kw e. Te total annual energy consumption of te system was MW e /year, i.e. te equivalent of 31,136 /year (V.A.T. included). An annul lump sum of 8,918 /year (V.A.T. included), due to maintenance interventions is to be added. Fig. 4 sows te related sares from te total of annual expenditures for te system operation. P A wic designates te payment amount due by Forfeiter to, determined wit formula (12): P A = L O F. (12) D Witin te origination of forfeiting, a detailed identification and assessment of risk exposure is to be performed. Against LA and wic sares a common exposure to tecnical risk, te Forfeiter is alone facing all oter kind of risks. As long as EPC terms and conditions foreseen obligations for tecnical risk treatment, te Forfeiter is on is own assuming te rest. And FM is taken it into consideration. 4. PROJECT HIGHLIGHTS 4.1. Presentation of business opportunity Among different interventions tat LA may perform, te refurbisment of outdoor public ligting is one of tem. For te purpose of tis paper, a real case of a small municipality operating a public outdoor system of 335 ligting sources is taken into consideration. Te related inventory sows tat from te total, 82 units are Norris lamps wit rated power 400 W, 56 units are ig-pressure Fig. 5. LED-tecnology outdoor public ligting system in Mociu, Cluj County (source: EnergoBit Screder Ligting S.R.L.) A simple observation of te situation is enoug to get te conviction of an interesting business opportunity dealing wit te public ligting system refurbisment. Te investment is tecnically simple and financially acceptable, te implementation is rapid and te improvement of cas-flow comes immediately after Sustainable energy tecnology performance indicators migt easily face te previously mentioned business opportunity. Being aware of te best available tecnology in te field of ligting, would probably propose to LA te refurbisment of outdoor public ligting using LED-tecnology as it was te case of te first municipality in Romania, Mociu Local Council (fig. 5).

5 Assuming tat as opted to invest in LEDtecnology, it is reasonable enoug to consider tat te public outdoor system of 335 ligting sources will be equipped wit 175 units LED-lamps wit rated power 50 W and 160 units LED-lamps wit rated power 30 W. 87% Energy 13% Maintenance Fig. 6. Structure of annual LA expenditures for refurbised outdoor public ligting system operation (source: ttp://free.org.ro) Te total installed capacity of te ligting system will amount to 14.2 kw e. Te total annual energy consumption of te system will be 51.9 MW e /year, i.e. te equivalent of 5,306 /year (V.A.T. included). An annual lump sum of 797 /year (V.A.T. included), due to maintenance interventions will be added. Te considered total investment size for te ligting system refurbisment is 159,408 (V.A.T. included). After project implementation, te financial benefits will amount to 33,951 /year (V.A.T. included), witout taking in consideration te favourable effect of electricity price increase. In order to determine te sustainable energy tecnology performance indicators values, te following simplified input data were considered as relevant [8]: te discount rate is a = 12%; te duration of erection works is d = 2 monts; te lifetime of investment is D = 20 years; te amount of net revenues is V = tousands a year; te amount of annual revenues is constant; te amount of annual expenditure is C = 0; te total investment size is I = tousands ; for any oter year from te interval d, D + d is null. Under suc premises, a workseet in MS Excel as been created. Output data are sowed in Table 1. Table 1 Investment Performance Year = 1, D + d d = 0 = 1 = 2 = 3 = 4 = 5 k k k k k k Indicators I V C V (I + C ) /(1 + a) CF a 12 % I V C V (I + C ) /(1 + a) CF a 12 % GPT 4.7 years DPT 7.3 years NPV k IRR 21 % 4.3. Business Origination by After examining te LA existing energy consumption profile, as observed tat for te operation and maintenance of te outdoor ligting system, an annual energy bill of 40,054 /year is to be allotted from te LA budget (fig. 7). Having identified te energy saving opportunity represented by te outdoor ligting system refurbisment (a gross payback of 4.7 years and an internal rate of return of 21%), will enter discussions wit LA in order to propose te overall conditions for a furter mutual collaboration: te already identified energy saving potential; furter financial benefits from a 10% reduction wit of LA annual energy bill (28,038 over 7 years) by promotion of LED-tecnology ligting; no financial pressure on LA budget as long as an off balance seet investment is envisaged; no responsibilities in ligting system installation, operation, maintenance and control; a determined contractual arrangement time ( exits after 7 years); collection of entire financial benefits amounting to 441,363 (over 13 years) and free of carge installation property rigt transfer wen exits. Energy Bill ( /year) Energy Performance Contract between LA and ,054 36, , ,363 d = 2 monts Revenues 209, E = 86 monts time D = 242 monts Fig. 7. Investment Financial Benefits sared between LA and troug Energy Performance Contract 4.4. Establisment of EPC terms and conditions for bot LA and After bot LA and committed to enter a contractual arrangement, all terms and conditions of collaboration under an Energy Performance Contract are to be establised. Te following provisions are relevant: LA is te beneficiary of energy services; LA is contracting from energy services for a period of 7 years long from investment commissioning; guarantees a 10% discount from te annual energy bill corresponding to te existing LA public outdoor ligting system operation and maintenance; based on te energy savings potential of investment, LA agrees to be awarded wit 10% discount i.e. te equivalent of 4,005 /year, from te annual energy bill of 40,054 /year corresponding to te existing LA

6 public outdoor ligting system operation and maintenance; is responsible for te refurbisment of te LA public outdoor ligting system; te considered total investment size amounting to 159,408 ; is responsible for investment financing; is responsible for all-inclusive operation and maintenance during entire investment lifespan; LA agrees tat sell and a tird-party purcases te EPC receivables in case of an earlier exit from EPC contract; in tis last case, te tird-party is responsible for covering all-inclusive maintenance and operation costs up to te EPC end Forfeiting origination by LA and wit a specialised financial institution Considering option to sell EPC receivables after 12 monts from commissioning, it is wort noting tat only 29,946 from te total of 209,619 in 84 monts are s revenues (fig. 8). In conclusion, te remaining amount of 179,673 will represent te Forfeiter s revenues in 72 monts. Energy Bill ( /year) Energy Performance Contract between LA, and Forfeiter ,054 36, , , ,946 Forfeiter 179, d = 2 F = 14 E = 86 D = 242 monts Fig. 8. Energy Performance Contract between LA, and Forfeiter As mentioned in capter 3.5, te Forfeiter s payment sould cover all investment costs and a part of up to te EPC end profit (fig. 3). Investments costs are referring to te total investment size and te debt service (principal and interest) of up to F. In capter 4.2 te total investment size for te ligting system refurbisment was indicated to be 159,408 (V.A.T. included). As s own financial participation is 20% (normally required by any lender), it migt be assumed tat te difference of 127,526 would be a bank loan Determination of s up to te EPC end profit Te up to te EPC end profit is obtained for EPC complete execution. An overview of annual revenues and expenditures is presented in Table 2. To complete te financing sceme, it migt be presumed will borrow te amount of 127,526 under te following conditions: interest rate of 4.5% p.a.; loan reimbursement in 7 years; no grace period; quarterly based payments of principal and interest. Table 2 Revenues and Year = d, E = 1 = 2 = 3 = 4 k k k k Expenditures LA Annual Payments Debt Service Lending Cost Energy Bill Maintenance % Own Contribution EBIT LA Annual Payments Debt Service Lending Cost Energy Bill Maintenance % Own Contribution EBIT will reimburse te 7-year loan of 127,526 in 28 equal quarterly payments of 4,555 eac, and will pay a lending cost over 7 years of 20,876. Te EPC revenues would amount to 252,340 (annual energy bills of 36,049 paid by LA to over 7 years). Apart debt service and lending cost, oter expenditures tat migt occur after te investment implementation are te LA annual energy bills, te maintenance costs and te own contribution of 20% to close te financing sceme. In conclusion, in te case of EPC complete execution, te s up to te EPC end profit tat would be obtained amounts to 29, Determination of te payment amount due by te Forfeiter to for EPC receivables purcase Taking into account tat forfeiting will occur at te time F=14 monts (fig. 8), te amount of 127,526 is to be borrowed by under te new conditions: interest rate of 4.5% p.a.; loan reimbursement in one year; no grace period; quarterly based payments of principal and interest. will reimburse te one-year loan in 4 equal quarterly payments of 4,555 and te final payment of 109,308 to time F and will pay a lending cost over one year of 5,460. To determine te payment amount due by te Forfeiter to for EPC receivables purcase, te discount-to-yield annually compounded metod [5], is used for. Te determination of values associated to te indicators n, a n and o d from capter 3.5. is below presented: n = E F = 2, = 2,168 days ; (13) n 2,168 a n = Int( ) = Int( ) = 5 years ; (14) n a n * 365 o d = Integer ( + 1) = 2. (15) 2,168 5 * 365 = Integer ( + 1) = Forfeiting means one s own internal costs and r represents te Forfeiter s annual yield rate (Forfeiter s

7 interest rate in % p.a.), accordingly. For tis present paper te used value is: r = 3.47% p.a. f (16) Introducing te values of te indicators n, a n, o d and r in formula (8), f gets te value: * ) = ( + )*[ ] = 2, * ) = ( )*[1 ] = 3,46%. ( ) 5 (17) 5. RESULTS AND DISCUSSIONS By comparing te results form Table 2 to tose in Table 3 it is easy to notice tat in te case of forfeiting, gets profit quicker tan witout forfeiting. But te price paid is te Forfeiting Discount. Te distribution of EPC revenues amounting to 252,340 (annual energy bills of 36,049 paid by LA over 7 years) is presented in fig. 9. As expected, te total investment size sare is te largest one (63%). Te 7-year energy bill balances te financing costs (15% eac) and te earnings sare is 7% (bot for and Forfeiter profits). Considering te Forfeiter s risk exposure assessment [6, 7], materialised troug a Forfeiting Margin (% p.a.) wit te value: m = 1.3 % p.a., (18) te resulting Forfeiting Tax (% p.a.) gets te value: t = f + m = 3.46% + 1.3% = 4.76%. (19) Bearing in mind tat L O represents te sum of investment costs (wic includes te total investment size and te lending cost over one year) and up to te EPC end profit: L O = 159, , ,335 = 194,203, te Forfeiting Discount from formula (10) is: 2,168 * 4.77 F D = 194,203 = 55,701 (20) 360 *100 Finally, te payment amount te Forfeiter owes to from formula (12) is: P A = 194,203 55,701 = 138,502.. (21) Table 3 depicts te financial situation for forfeiting. Table 3 Revenues and Year = d, E = 1 = 2 = 3 = 4 k k k k Expenditures LA Annual Payments Forfeiting P A Maintenance Debt Service Lending Cost % Own Contribution EBIT LA Annual Payments Forfeiting P A Maintenance Debt Service Lending Cost % Own Contribution EBIT In conclusion, in te case of forfeiting, te s profit tat would be obtained amounts to 8,362, of wic 4,377 witin year 2 and 3,985, during te next 5 years. Fig. 9. Distribution of revenues for a 7-year Energy Performance Contract Cas - Flow Projection wit Forfeiting Wit regard to te amount of 8,362 representing te profit, at te forfeiting moment, all revenues from maintenance could be collected, if te Forfeiter agrees so. Compared to te initial capital of 31,882 invested by, te financial efficiency over one year gets a remarkable value of 26%. Te Forfeiter s profit amounts to 8,436. As its own initial capital put into business was 138,502, te financial efficiency over 6 years is 6%. But observing te Forfeiter s capital cost of 32,735 wic migt be considered as revenues too, te financial efficiency over 6 years rises up to 30% EPC Cas-Flow quarters Unique EPC Cas-Flow Multiple EPC Cas-Flow Fig year Energy Performance Contract Cas - Flow Projection witout and wit Forfeiting LA pay smaller energy bills by 28,038 in 7 years and by 441,363 over te lifespan of investment. In fig. 10, te EPC cas-flow projection for two situations was considered: (i) a unique EPC witout forfeiting and (ii) five EPCs wit forfeiting, all

8 presumptions form te present work being kept. Te following observations are important: witin 16 quarters te unique EPC cas remains negative as long as tree EPCs wit forfeiting were concluded; witin 28 quarters, oter two EPCs wit forfeiting are possible; to te end of 28 quarters, multiple ECPs wit forfeiting seems to be more profitable; in te multiple EPCs case, te revenues collection is considerably greater tan 28 quarters. In tis paper, no reference to additional lending conditions (borrower creditwortiness) as been made, eiter no reference to additional costs for risk exposure treatment [6, 7]. But working wit moderate values for interest rates and margins, it could be assumed tat is creditworty well enoug. 6. CONCLUSIONS Sustainable energy tecnology promotion at local level is a national energy policy priority. Te context is represented by te gradual increase convened between Romania and te International Monetary Fund (IMF) for electricity and natural gas prices. Te related pressure on te municipal budgetary execution as induced arrears. Now, te same IMF confirms tat for a new prolongation of te Stand-by Agreement te arrears reduction up to teir total removal is required. Sustainable energy tecnology implies existing and certain energy consumption [3]. Savings obtained troug te entire cut of energy consumption (i.e. te case of public outdoor ligting systems) sould be considered quite similar wit a black-out, wic is an unusual situation [3]. Sustainable energy tecnology deals wit energy savings. Its promotion migt be a win - win - win situation as described in te present paper. Investments in sustainable energy tecnology are igly replicable. Sustainable energy tecnology could elp local autorities to regain teir financial stability. Initiation and a continued preoccupation for an appropriate financial resources management deals wit te promotion of suc tecnologies. As sustainable energy tecnology performance indicators get iger values as te financial benefits are more significant. As already mentioned in [3], sustainable energy tecnology implementation requirements are (i) a well defined demand for energy use to cover, (ii) an appropriate connection wit tat part of energy demand wic is almost time invariant. Sustainable energy tecnology promotion at local level needs (i) appropriate legal framework for energy performance contract based energy services, (ii) public procurement rules for local autorities in contracting suc services, (iii) elpful assistance of energy services companies provided to local autorities, in order to overcome teir cronic lack of financing, (iv) possible implication of specialized financial institutions to assist energy services companies in overcoming teir limited creditwortiness (v) appropriate risk management and (vi) rigorous financial discipline. REFERENCES [1]. *** Directive 2012/27/EU of te European Parliament and of te Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC, Official Journal of te European Union L315, Volume 55, ISSN , pp [2]. A. Marino, P. Bertoldi, S. Rezessy and B. Boza-Kiss, Energy Service Companies Market in Europe - Status Report 2010, Institute for Energy, Joint Researc Centre, European Commission, JRC 59863, EUR EN, ISBN , Luxembourg, 2010, pp [3]. M.-M Voronca, S.-L. Voronca and M. Cruceru, Could te Sustainable Tecnology Help Overcoming Crisis? Case Study: Installation of a Cogeneration Unit witin a Cemical Company, Journal of Sustainable Energy, Volume II - nr. 1, ISSN: , Editura Universităţii din Oradea, 2011, pp [4]. M.-M Voronca, S.-L. Voronca and M. Cruceru, Promotion of te Organic Rankine Cycle based Cogeneration: Opportunities and Callenges, Journal of Sustainable Energy, Volume III - nr. 1, ISSN: , Editura Universităţii din Oradea, 2012, pp [5]. *** Description of Forfaiting Transaction, Website of te Association of Forfaiters in Switzerland, ttp:// [6]. S.-L. Voronca, An Overall Perspective on Enterprise Risk Management, 14 t Conference of Energy Engineering, Analele Universităţii din Oradea, Fascicula de Energetică, Vol. 14, Editura Universităţii din Oradea, 2008, pp [7]. S.-L. Voronca, Te Main Design Principles for Effective Risk Governance and Control, 14 t Conference of Energy Engineering, Analele Universităţii din Oradea, Fascicula de Energetică, Vol. 14, Editura Universităţii din Oradea, 2008, pp [8]. M.-M. Voronca (coordinator), T. Constantinescu, M. Cruceru, A.M. Fodi, A. Marin and S.L. Voronca, FINANŢAREA INVESTIŢIILOR ÎN EFICIENŢĂ ENERGETICĂ, Editura AGIR, Bucureşti, ISBN , 2008.