More than funding: how innovative financing empowers local and regional authorities

At a recent Committee of Regions ENVE Stakeholder Consultation, Diana Prsancova, Senior Project Officer at FEDARENE, discussed how local and regional authorities can mobilise public and private resources for an effective follow-up on the Clean Transition Dialogues. The discussion highlighted the vital role of energy agencies in de-risking investments and ensuring programmes meet local needs.

Why Public Funds Aren’t Enough

Achieving climate neutrality by 2050 requires massive investment. By 2030, the energy efficiency sector alones faces an estimated €1.85 billion investment gap, highlighting the need to go beyond public financing. Yet, local and regional authorities continue to rely heavily on grants and subsidies. Why?

Key barriers include limited awareness of financing options, insufficient expertise, legal and administrative complexities, staff shortages, and reluctance to adopt alternative models. Overcoming these challenges requires targeted strategies to build confidence and competence in innovative financing.

Energy Agencies as Enablers

This is where local and regional energy agencies come in. As independent, non-profit organisations with a public mandate, they bridge the gap between policy ambition and practical implementation. They provide technical expertise, tailor financing models to local needs, and de-risk investments by acting as trusted intermediaries between public authorities and private investors.

In Slovenia, the Energy and Climate Agency of Podravje (ENERGAP) has led Energy Performance Contracting (EPC) projects, securing €350,000 to upgrade streetlighting. Meanwhile, the SmartEPC project led by the North-West Croatia Regional Energy and Climate Agency (REGEA), demonstrates how bundling energy efficiency services with additional revenue streams can enhance financial viability.

Unlocking Investments through Capacity Building and Peer Learning

The transition to climate neutrality requires not more than financing – it demands strong governance, capacity-building, and a shift in mindset. Peer-learning initiatives such as ManagEnergy, and PROSPECT+ play a crucial role in equipping cities, regions and their energy agencies with the skills and knowledge needed to unlock investments.

For example, between 2017 and 2020, ManagEnergy trained 150 energy agencies staff through Master Classes and Expert Missions, helping generate over €750 million in investments. Amongst the alumni is the Extremadura Energy Agency (AGENEX) in Spain, which developed the HousEEnvest project to address financing gaps in residential building renovations and establish a regional guarantee fund that attracted €35 million in investment. Similarly, the Energy Agency of Savinjska, Šaleška and Koroška in Slovenia (KSSENA) leveraged insights from ManagEnergy to develop an energy renovation programme that mobilised €4 million for public building renovations through the ELENA facility.

Real-World Impact Across Europe

Across Europe, energy agencies are delivering tangible results:

• The City of Zagreb, with support from REGEA, launched a large-scale public building retrofit programme, leveraging over €150 million through the LIFE CROSS project and ELENA’s ZA-GREEN initiative. The city is now negotiating a €170 million European Investment Bank (EIB) Framework Loan to further its sustainability efforts.
• Auvergne-Rhône-Alpes Energy and Environment Agency in France (AURA-EE) secured €30 million for eco-mobility solutions in remote communities through energy-saving certificates, aligning financial incentives with social inclusion.
• One-Stop Shops (OSS), such as the Porto Energy Hub (supported by the Porto Energy Agency) and Ireland’s SuperHomes, are streamlining the retrofit process by facilitating private investment and citizen engagement, making sustainable home renovations more accessible.

Scaling Up for a Sustainable Future

The success stories from local and regional energy agencies across Europe reveal a clear path forward: with the right support, local and regional authorities can leverage innovative financing to drive the clean energy transition. However, achieving large-scale impact requires continued investment in capacity-building programmes and a stronger recognition of the critical role energy agencies play in mobilising investment.

We have the tools, the expertise, and the success stories to inspire action. Now, we must scale up our efforts to meet our climate ambitions. The future of our energy transition depends on it.