Boosting the Energy Efficiency in EU by financial tools for preparation and implementation of bankable Energy Efficiency Projects (EEPs)

Transcription

1 Boosting the Energy Efficiency in EU by financial tools for preparation and implementation of bankable Energy Efficiency Projects (EEPs) European Energy Network Thinking Group Meeting October 2018

2 Our team expertise Mattig-Levercom Management Partners Ltd. (MLMP) is the Bulgarian subsidiary of the Swiss Consulting Group Mattig. Mattig Management Partners (MMP) along with Mattig-Suter Treuhand forms the Mattig Group, one of the ten largest consultancy companies in Switzerland. The Energy Efficiency Financing Solutions are separated in other company Leverex Ltd. Our Expertise: Investment Projects Structuring and Financing Financial Management 3-year financial consultants of the biggest ESCO in Bulgaria 5-year financial consultants of EBRD on KIDSF project Opening the market for private ESCOs, managed by EBRD in an international consortium Consultant of the NTEF BG for financing of EEPs trough blending EPC scheme with grant, KIDSF project. 2

3 Energy Efficiency Projects Implementation Balance Regulative, Legislative and Institutional Framework Technical expertise Best engineering solution/investment Financial Expertise preparation; financing; financial management Legal Expertise 3

4 Energy Efficiency (EE) Financing Major barrier for development of the EE market. Only 6% of the EEPs are financed with private funds, because of: Lack of knowledge and motivation the private financial sector to participate actively in EE funding. Lack of capacity in ESCOs to prepare bankable EEPs to be financed by the banks. EPC potential underdeveloped quality, efficiency, responsibility, mutual control between the participants in the scheme. Ineffective disbursement of the public funds for EE, which hinders the development of the EEPs market oriented financing and implementation on the basis of only technical, administrative and political criteria. 4

5 Financial Solutions for Development of the whole EE Eco System Public Funds Effective use Financial Institutions More financed projects Energy Consumers Obligated Parties Execution of obligations with motivation for a profitable business niche 5

6 The Financial Solutions*: 1) Financial model for evaluation of EEPs for financing, to be used by the banks, revealing the philosophy and the specifics of the EEPs (EPC). 2) Financial model for blending of private with public financing, for more effective utilisation of the public funds for EE and attracting more private funds trough improvement of the EEPs bankability. 3) Calculation tool for preparation of bankable EEPs for financing, by ESCOs. How the Obligation Scheme (EU EE directive) to become a profitable business niche for the obligated parties, instead of being perceived as a burden. *Applied, oriented toward the actual EEPs implementation practices: 6

7 More effective utilization of the public funds for EE (1) The European funds for grant financing of the EE - not enough effective for faster development of the EE market The public authorities and private entities should be more active in implementation of EEPs with all the existing financial mechanisms. Instead of that, they are passive and wait for grants to implement their EE programs, which deteriorates the EE market and slows its development. In this respect Europe needs of change. Necessity for new approaches for use of the public funds for EE financing, which to accelerate the EE. The more effective use of the grants will attract more private funds to finance and more EEPs will be implemented. 7

8 More effective utilization of the public funds for EE (2) Concept: Blending of market-oriented financial instruments with grants with fair and grounded criteria for grant funding, per each EEP, depends on its cost efficiency. Methodology for grant allocation at a single EEP level, based on strong requirements coverage and smart financing decisions. Calculation Tool for determination the necessary grant amount (EUR and % of the project investment) for a single EEP, in order to become bankable and attractive for all the project participants. Goal: Mixing of public and private financial instruments under clear and transparent conditions will foster development of the EE activities in EU. 8

9 How to be financed EE in EU in order to increase the number of the implemented EEPs The public funds to be invested only in economically and financially not enough feasible projects. The grants should be treated as a financial instrument. We defined 4 main groups of EEPs : Group Type of EEP Economic& Financial Viability of the project, based on a number of criteria* Risk Profile Private Financing (PF) Risk sharing facilities Grant / Subsidie s Group 1 Projects with high viability and low risks High Low 100 % private financing No No Group 2 Projects with good viability and medium risk profile Good Medium 100 % private financing Possible, but not imperative No Group 3 Group 4 Projects with low viability and high risks Projects without viability (lean heavily) Average/Low Very Low High Very High Partial private financing No Yes No Partial Grant 100 % Grant 9

10 Financial Tool for preparation and Implementation of EEPs for obligated parties (EED)* (1) Goal: To establish a profitable EE business trough: Effective financing of the EE activities Effective financing of each EEP To mobilize in these activities less own funds To reduce the EEPs preparation and implementation time and efforts of the team To reduce the transaction costs per EEP Effective financial management of the EE projects Effective financial management of the EE business for sustainable development *To support the Energy Efficiency Obligation Schemes implementation. Article 7. of the Energy Efficiency Directive - EED 10

11 Financial Tool for preparation and Implementation of EEPs for obligated parties (EED)* (2) Features and Advantages: Calculation tool for fast, efficient and at lower costs preparation of EEPs for financing, by the obligated parties with: Interaction between the technical and economic aspects of each EEP for Investment and O&M stages - Investment: Savings : Scheme for financing : Scheme for realization : Profit & Loss Individual treatment and calculations for EE Investment measures (EEM) and non EE measures (NEEM) Structuring of the most appropriate financing scheme for each EEP, depends on the project specifics technical & economic and on the creditworthiness of the project participants. A single EEP preparation can include one or several objects - buildings, SL lots etc. (packaging) Different schemes of implementation of EEPs, including EPC Automatic scenarios preparation for grounded decision making for financing and implementation of each EEPs by the obligated parties. Fast analysis of the scenarios for choosing the best one 11

12 Financial Tool for preparation and Implementation of EEPs for obligated parties (EED)* (3) How the tool works? Demonstration: a project with 3 buildings provided by SEDA BG - Envisaged total Investment BGN (EEM) and BGN(NEEM) - Envisaged Savings - 349,572 kwh/y or BGN/Y - Payback Period 5.5 Years - Project Duration 7 Years - Implementation EPC scheme - Scheme for financing 20 % Equity, 80 % Loan - Profit BGN - Profitability ratio 7.28 % Y1 - IRR % for the own capital mobilized in the project by ESCO 10,41 % 12

13 Effects of the financing solutions on the EE market in EU The tools will support development of the whole energy efficiency ecosystem for expansion of the EE activities in EU: Trough Mobilizing more private financing. The bankable EEPs to be financed only by private financial institutions. Trough increase the capacity for preparation and implementation of EE projects by the obligated parties (EE obligation schemes - EED) and effective financial management of their EE activities. Through more effective utilization of the public funds for EE with using the grant as a financial instrument for financing of only less financially viable EEPs. Trough decrease the projects transaction costs for the EE sector stakeholders. 13

14 Financial Tools Users: Private financial institutions, including banks: advisory services for energy efficiency projects (EEPs), risk assessment; trainings. ESCOs: structuring, preparation and financing of EEPs; financial management of portfolio of EEPs, financial management of ESCO`s Official authorities, engaged with public financing of energy efficiency and their effective allocation and utilization. Cities (municipalities) preparation of long and short-term strategies for financing of climate change-related projects and financial management of EEPs. 14

15 Thanks for your attention! Contacts: Zoya Vassileva, CEO MLMP via Leverex Ltd Telephone: SOFIA, Bulgaria 15