Policy Recommendations on Innovative Financing Schemes in Local and Regional Energy Efficiency Policies

Members of FEDARENE – European regions supported with their regional and local energy agencies give the following recommendations to European Commission:

1. Easier access and smarter use of ESI Funds: Even though most Member States can be considered as experienced with the use of EU Structural Funds project developers often face barriers in form of complex set of rules and legal framework imposed by Member States themselves which results in difficulties in spending (absorbing) these funds. Simplification of administrative procedures and a more open dialogue with project developers on this matter must be considered.
2. A more energy efficiency – considerate interpretation of public debt rules: Public accounting rules do not take into account the benefits of energy efficiency investments, only their cost. The European methodology on national debts (EUROSTAT) includes energy efficiency projects in the calculations for public debts. The interpretation of public debt rules should not be an additional obstacle for regional and local authorities. There should be a distinct and specific category for this type of projects, especially when they serve goals enshrined in the Sustainable Energy Action Plans. An exemption from applicable debt caps would alleviate the regional and local authorities’ missions.
3. An improved and multiplied offer of Project Development Assistance: In order to tackle the regulatory and financial requirements in the shortest time frame and in a systematic manner, support and guidance in the form of legal advice and/or technical financial advice is needed for market-based financing schemes. In-house capabilities of local authorities are limited when it comes to setting-up new “finance related” instruments. The European Commission should continue promoting initiatives such as ELENA and multiply its offer of Project Development Assistance.
4. Energy prices need to be transparent and predictable within a completed and regulated EU internal energy market: The rise of the energy price is a major political concern and a significant driver for energy efficiency. However, if energy prices are not transparent (or subsidised) this may also become a significant barrier for energy efficiency projects (e.g. in street lighting or industry). The European Commission should make all EU countries implement the relevant EU legislation in order to complete the internal energy market and maintain energy price fully transparent.
5. Maximizing the use of the European Fund for Strategic Investments: The decision to initiate the European Fund for Strategic Investments in order to be able to capture riskier projects and engage in activities that are of greater strategic interest is a welcome move towards attracting private sector investors. In order to maximize the use of and access to the EFSI, the European Commission should encourage and support the creation of regional platforms aiming at aggregating small energy efficiency projects (of the same type) in order to reach the €25 M eligibility cap.
6. Creation of a unified European legal framework for crowdinvesting: European level policy action in the field of citizen inclusion is needed to enable easier participation of small investors and address the risks associated with this type of project financing. New rules could offer a harmonised and functioning framework for crowdinvesting, tackling issues such as obligation to disclose investment risks or right to refund. Such regulation could catalyse more and larger investments. European legislative initiative is therefore needed in order to protect this type of investors but also provide easier access to finance for business start-ups.
7. Raised awareness at the decision making level: Strong political support is a fundamental success factor for effective financing of energy efficiency projects. The lack of awareness at the decision making level of the benefits of and opportunities for energy efficiency projects is hindering the success and multiplication of these initiatives. The European Commission should henceforth develop a more active promotion of these concepts and the need for support during meetings and summits of decision makers on different levels. Such fora could become an opportunity to ignite willingness to lead in this domain.
8. Dissemination of successful projects to support replication: The share of successful methods of innovatively financed projects is determinant for replication of tested and proven implementation models leading to improvement of financing mechanisms. The creation of helpdesks assembling experts on these schemes could be an effective way of centralizing access to information and utilizing feedback from successful projects. The European Commission should continue investing in and supporting initiatives that aim at sharing good practices whilst promoting standardized procedures and practices crucial for project success.
9. Capacity building and standardization in Energy Efficiency innovative financing: Given the complexity of alternative financing schemes and their method of deployment both public and private sector are in need of capacity building and better understanding of risk management. The European Commission should renew and multiply its offer of capacity building on innovative finance models in both public and private sector focusing on the effective use of financing opportunities whilst promoting standardization.
10. Encouraging adaptation of public procurement procedures: Rules on public procurement present considerable hurdles for the implementation of energy efficiency projects. The high costs of tender processes are barriers to investments. The European Commission should encourage an adaptation of public procurement procedures to Energy Efficiency policies.