JESSICA - Financing residential energy efficiency renovations in Latvia

Transcription

1 JESSICA - Financing residential energy efficiency renovations in Latvia March 2012 European Investment Bank JESSICA and Investment Funds 1

2 Overview of JESSICA 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 forming part of an integrated plan for sustainable urban development (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 2

3 General JESSICA implementation model OTHER INVESTORS (Public & Private) EUROPEAN COMMISSION Structural Funds Grant (not repayable as long as EC Regulations adhered to) 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

4 State of play of existing JESSICA mandates As of the end of 2011, EIB is managing 19 Holding Funds totaling EUR 1.75 bn of Structural Fund commitments from Managing Authorities in 9 Member States. 1 Holding Fund was set up with a national financial institution (Estonia), investing in 2 Urban Developments Funds. 3 Urban Development Funds were established without Holding Fund (Brandenburg/DE, East Midlands/UK and Wales/UK) In total nearly 20 Urban Development Funds are already in operation, having a primary investment focus on urban regeneration, as well as energy efficiency and renewable energy investments in the urban environment. European Investment Bank JESSICA and Investment Funds 4

5 Reasons for JESSICA Study Limited amount of funds are available under the current grant based renovation programme (Structural Fund grant allocation for multi apartment block renovations are expected to be fully allocated towards the middle of 2012; ERDF funding for multi apartment block renovations is close to the 4% limit imposed by the Structural Fund Regulations). Real need to renovate multi apartment buildings: the housing to be renovated only in Riga is 6,000 buildings with total area of 12 million m 2. Based on 2010 costs, it would require LVL 50 per m 2, which is approx. LVL 615 millions (Riga City Sustainable Energy Action Plan for ). average household energy consumption per residential area in 2009 was 285 kwh/m 2, but average household energy consumption for heating per residential area was 193 kwh/m 2. These numbers are higher than generally in Europe (Second energy efficiency action plan, 2011). Improvement of the energy efficiency of residential buildings is both a Latvian and EU priority objective (Proposed EU Directive on energy efficiency). Reduce energy bills for citizens, improved energy independence for the country, and significant potential for job creation in the energy services and construction sectors. European Investment Bank JESSICA and Investment Funds 5

6 Potential JESSICA loan product for Latvia Establishment of a Pilot UDF, by selecting a financial intermediary, to provide loans for energy efficiency in the housing sector at least until Benefits of JESSICA loan product: Revolving fund more efficient way of using scarce public sector grant funding; Long repayment periods and low interest rates; Attract additional or complementary financing from financial institutions; No financial gap between current and next Structural Funds period; To assist transition from grant to loans, preferential terms and complementary grant funded incentives could be included; Building companies familiar with financing issues; Energy service companies (ESCOs) could improve quality of energy efficiency renovation works. JESSICA loans product could be offered to: building managers for the benefit of apartment owners (building manager association, co-operative society, limited liability company); or energy service companies (ESCOs) based on guaranteed/shared savings model. European Investment Bank JESSICA and Investment Funds 6

7 Loan Product 1 - Building Managers Parameter Product Borrower Preconditions Payment frequency Security Prepayments Loan write-off Implementation of the project Measures eligible for financing Self financing Description Fixed interest loan and/or other preferential terms Building manager, which is not an authorised entity, but acts for the benefit of the community of apartment owners o Decision of the community of apartment owners o Agreement with the building manager in an acceptable wording o Energy efficiency measures project based on an energy audit report, prepared by an appropriate specialist and approved by competent state or municipal institution o Multi-apartment residential building complying with certain criteria: the building divided into apartments, non-residential area does not exceed 25% of the total area, one owner does not own more than 20% of the total number of apartments Monthly - Public commercial pledge on the accounts receivables from the apartment owners to the building management company; - In relation to building managers, which are not entities registered with the commercial register, a deposit and assignment agreement No restrictions or added fees To be discussed oenergy efficiency measures project reviewed by an energy auditor; oconstruction process supervised by a construction supervisor and field supervisor, both with professional civil liability insurance Measures included in the project and approved by the energy audit report prepared by an appropriate specialist and measures included in the technical design or simplified renovation documentation that ensures sustainability of those energy efficiency measures and approved by a competent state or municipal institution Certain minimum down-payment could be required European Investment Bank JESSICA and Investment Funds 7

8 Loan Product 2 - Energy Service Companies (ESCOs) Parameter Product Borrower Preconditions Payment frequency Security Prepayments Re-financing Loan write-off Implementation of the project Measures eligible for financing Self financing Description Fixed interest loan ESCO o Decision of the community of apartment owners to enter into EPC o EPC between the building management company, ESCO and lending institution, representative of apartment owners o Energy efficiency measures project approved by a competent institution Monthly Public commercial pledge on the accounts receivables from the apartment owners to the building management company and on the assets of ESCO To be discussed To be discussed None o Energy efficiency measures project approved by an energy auditor; o Construction process supervised by a construction supervisor and field supervisor, both with professional civil liability insurance Measures included in the project and approved by the energy auditor and measures included in the technical design or simplified renovation documentation that ensures sustainability of those energy efficiency measures and appropriate state and municipal institutions 10 20% of the loan amount European Investment Bank JESSICA and Investment Funds 8

9 Contact JESSICA and Investment Funds European Investment Bank Bvd Konrad Adenauer, L-2950 Luxembourg Lina DRECHSEL Holding Fund Officer, Northern Unit Tel: Mob: l.drechsel@eib.org DISCLAIMER: The views expressed are purely those of the presenters and may not fully coincide with an official position of the European Investment Bank European Investment Bank JESSICA and Investment Funds 9