Financing the energy transition: discover how regions are leveraging third-party investments – Key takeaways from this PROSPECT CUBE webinar

How can regions create the conditions for third-party investment to become a practical tool for accelerating the energy transition? This question was at the heart of the webinar “Financing the energy transition: discover how regions are leveraging third-party investments”, organised within the framework of the PROSPECT CUBE project, with insights from SEFA and a practical example from AREC Occitanie.

Bridging the delivery gap: creating the conditions for investment

Lina Konstantinopoulou, Executive Director of SEFA, addressed one of the main challenges facing the energy transition: the gap between available capital and projects that are ready for investment.

For many SMEs, preparing energy efficiency and decarbonisation projects is costly and complex. Individual projects may also be too small to attract investors, while fragmented responsibilities and unclear delivery arrangements create additional uncertainty. That’s why project aggregation offers a way forward. Organise a programme with common technical preparation, standardised documentation, coordinated procurement and a suitable financing arrangement reduce transaction costs and improve viability and visibility of the investment pipeline.

In this case, de-risking investments involves more than providing financial guarantees, subsidies or loans. De-risking must extend to the entire delivery chain, from project identification and preparation to implementation, financing and performance monitoring.

That’s where local and regional authorities and their energy agencies can play an important role. Their contribution to the energy transition goes beyond funding and supporting individual projects: they become “market makers” and organise the market in ways that make private investment more accessible and effective

Finance does not make a project investable. We need correct mechanisms in place. And here, a regional energy agency can play an important role in coordinating that system by bringing at the table the right stakeholders, aggregating demand, promote standardisation, coordinate technical assistance and connect suitable financing mechanisms.

— — Lina Konstantinopoulou, Executive Director of SEFA

FITEO: making industrial decarbonisation more accessible

FITEO, presented by Charles-Xavier Sockeel from AREC Occitanie, is a a third-party investment scheme developed to help companies, particularly industrial businesses, implement decarbonisation measures without bearing the full upfront investment cost.

The scheme responds to a common challenge for companies: investments in energy efficiency can be difficult to prioritise when capital is needed for productive processes. SMEs may also lack the time and expertise to identify appropriate suppliers, assess technical solutions and negotiate financing arrangements. FITEO’s approach is therefore designed to address these barriers by reducing the initial investment burden on companies and organising financing and implementation through a dedicated structure.

FITEO reduces the impact on the cash slow by reducing at 0 the Capex for companies, who will then make lease payments under an agreed contractual arrangement. The objective is to reduce the immediate impact on the company’s cash flow, with lease payments designed, where possible, to remain close to the energy savings generated by the investment. At the end of the contract, ownership of the asset is transferred to the beneficiary.

The stories from a ceramic company and a wine-sector cooperative shows how third-party investment can help businesses implement energy transition measures that might otherwise be postponed because of upfront costs or competing investment priorities. The ceramics company benefited from a financing arrangement designed to reduce upfront capital expenditure by around 40%, with lease payments aligned as closely as possible with expected energy savings, while the wine-sector cooperative invested approximately €6 million in a biomass heating system to replace natural gas consumption.

With more than €50 million in projects already invested in and approximately €150 million in projects under consideration, FITEO offers a practical illustration of how a regional actor can help businesses overcome investment barriers and integrate decarbonisation into their modernisation plans.

Key takeaways from the webinar

• Prepare projects before seeking finance. Investors need well-developed projects, credible business cases and clear implementation arrangements. Building an organised investment pipeline is therefore essential.
• Use aggregation to reduce risk and costs. Coordinating multiple projects can make investments more attractive, particularly for SMEs and other beneficiaries with limited technical and financial resources.
• Strengthen the regional delivery ecosystem. Regional authorities and energy agencies can connect stakeholders, coordinate technical assistance and facilitate access to suitable financing mechanisms. This requires appropriate expertise, governance and institutional support.

The webinar showed that mobilising private capital is not simply a matter of finding the right financing product. It also requires the structures, partnerships and project pipelines that make investments viable.

Through its peer-learning and capacity-building activities, PROSPECT CUBE helps local and regional authorities explore these solutions and learn from practical experiences across Europe.