European City Facility

The new pan-European City Facility is set up under the Horizon 2020 Framework Programme for Research and Innovation of the European Union: tailor-made, rapid and simplified financial support (in the form of  EUR 60,000 lump sums) and related services will be provided to a large number of cities and municipalities in the European Union to enable them to develop relevant investment concepts.

Cities and municipalities play a key role in a sustainable European energy transition. They have a tremendous potential to build comprehensive sustainable energy investment programs (i.e. investments in energy efficiency and renewable energy). They also play a key role in pooling smaller projects into larger investment portfolios and in mobilizing the significant financial resources required for the energy transition.

Although the potential is immense, there are fundamental obstacles. In many cases, there is a lack of credible, robust and sufficiently mature investment concepts (including identification of the potential project pipeline, legal analysis, governance analysis, basic financing strategy, and roadmap for implementation). However, such investment concepts are an initial prerequisite for access to different sources of funding.

In this context, the Facility addresses two fundamental barriers for sustainable energy investments:

• Financial and legal capacity of local authorities to transform their long-term energy and climate strategies (e.g. SEAPs, SECAPs etc.) into appropriate investment concepts.
• Lack of aggregation of fragmented smaller projects (for example in the building sector) and thus lack of attractiveness for the financial sector.

The resulting investment concepts will represent an initial step towards a fully-fledged business and financial plan and – in this way – facilitate the subsequent mobilization of (local) investment in energy efficiency and renewable energy. Sources of funding may come from the private sector, but also from other EU-funded instruments such as the European Fund for Strategic Investments (EFSI), the European Structural and Investment Funds (ESIF), various Project Development Assistance (PDA) facilities, such as the ELENA facility of the European Investment Bank, or various national investment platforms.