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Increasing Capacities in Cities for Innovative Financing in Energy Efficiency

Periodic Reporting for period 1 - CITYnvest (Increasing Capacities in Cities for Innovative Financing in Energy Efficiency)

Reporting period: 2015-02-01 to 2016-07-31

The most sustainable and the cheapest source of energy is the one that is not consumed. This is why the European Union has set itself ambitious targets for energy efficiency for the coming decades. Buildings account for 40% of the European final energy consumption and 36% of the EU CO2 emissions. Energy consumption in buildings need to be reduced by 80% to reach the EU 2050 targets and most of these efforts will focus on the existing building stock. Reducing energy consumption of buildings does not only help reach the EU’s targets to mitigate climate change, it also increases the Union’s energy independence and resilience, and boosts local economies since money spent on retrofitting buildings mostly stays with local craftsmen. Besides these environmental, geopolitical and economic benefits, increasing energy efficiency also has a social impact: reduced energy consumption means reduced energy bills and is therefore a powerful tool to combat energy poverty.

In order to reach the European energy efficiency target by 2020, the investment needs are estimated at €100 billion annually. Notwithstanding the European efforts and initiatives to spur the mobilization of energy efficiency investments via technical assistance and public funds, local authorities need additional support and incentives for the rollout of their own financing mechanisms for energy efficiency measures. With adequate capacities, they can initiate and facilitate a movement bringing together the private and public stakeholders for larger-scale renovation programs. When local authorities reach an in-depth understanding of why certain financing models where effective in another region, an incentive is created to deploy suitable business models on their own territories.

Local authorities act as catalysts to mobilise the necessary value chain for implementing innovative financial models addressing energy efficiency programs. First, they can plant the seed by acting on their own buildings and thereby lead by example as well as open the market for energy efficiency and mobilise local SMEs, industry and the citizens. By showing the bankability of energy efficiency financing models using mechanisms such as local revolving funds, citizen-based financing models and energy performance contracting, local authorities are creating a snowball effect that will accelerate the rate of investment to its necessary levels. Innovative financing models to unlock the necessary capital and implement energy efficiency measures are being developed and tested in a number of locations in Europe, with local authorities often playing a frontrunner role. However, they are not being widely implemented all over the EU. A lack of capacities and knowledge in many local authorities when it comes to these innovative schemes is one of the major reasons for this, as well as often a need to improve national and EU legislation. This is why the objectives of CITYnvest are to:

- Introduce innovative financing models in three pilot regions in Belgium (Liège), Bulgaria (Rhodope) and Spain (Murcia). In those regions, dedicated structures and teams are set up which act as knowledge centers, supporting local authorities in planning and implementing retrofitting projects. By the end of the project, their efforts should result in signing three investment commitments worth more than 110 million euros. Those investments will bring substantial primary energy savings (133,4 GWh).
- Enhance local authorities’ and other stakeholders’ capacities through a large scale capacity building programme. Thanks to a series of workshops more than 650 local authorities and 300 other stakeholders in 10 focus countries (Austria, Belgium, Bulgaria, France, Hungary, Italy, Latvia, Lithuania, Romania, and Spain) are being trained.
- Monitor investments that have been triggered in the frame of CITYnvest by collecting and analysing data from local authorities in three pilot regions. This allows determining key success fac
A comparison report providing an overview of the state of the art of 24 operational and financial models enabling large-scale energy efficiency programs from 11 different European countries was drafted and published. All the models involve public authorities working closely with the private sector and/or their citizens. The selection of models also covers the full range of public authorities, ranging from small municipalities to national governments, through the regions, provinces, large cities and county councils. This analysis allowed identifying core elements common to the different models, which served as key to the structuring and classification of the models into sub-models. The different identified schemes were used to compare the examples with each other and understand their implications on a contractual, operational and financial level.
A first set of guidance material was derived from this work, which helps local authorities build their action plan for an energy efficiency programs by structuring key questions, providing guidance on how to overcome certain barriers, and proving case studies of similar examples.

In the three pilot regions, the activities started gathering the support and engagement of the stakeholders which are needed to put the energy efficiency programs planned under CITYnvest in place. In collaboration with the CITYnvest experts, action plans for each pilot region for the concrete implementation of the programs were prepared and teams of staff dedicated to the implementation are being set up.

The capacity building program kicked off with national workshops in Latvia, Lithuania, Hungary and Italy. The follow-up of these events, which mobilized a large number of representatives of local authorities and other stakeholders, is under preparation in order to ensure a long-lasting engagement of the concerned actors and beyond.

Materials developed as part of all these activities are made available on the CITYnvest website with the aim to serve as tools for local authorities which are interested in implementing these innovative financing solutions themselves. Thanks to additional insights from the pilot regions and focus countries which are gathered as the project progresses, the materials are constantly refined and will result in a step-by-step guidance for local authorities and other stakeholders on how to design, implement and monitor their large-scale energy efficiency program.

In order to effectively monitor the progress of the CITYnvest project during the implementation phase, a data collection methodology and respective templates were developed during the first half of the project. During the second half three types of data will be collected:
- The organisational aspects of launching a ‘Project Delivery Unit’ (a dedicated team of staff members),
- The actual individual investment projects,
- The projects which are in the pipeline for future investment projects.

In order to share these first results, CITYnvest partners were present at a number of regional, national and EU-wide events to raise the awareness for innovative financing models on energy efficiency and promote the CITYnvest materials and tools to a large audience as well as in expert circles on these issues.
The activities of CITYnvest have led to improved cooperation in the pilot regions in general. This is thanks to the discussions and meetings in order to create a dedicated structure to implement the energy efficiency measures. For example, different municipalities in the Rhodope region in Bulgaria have started to work more closely together; a culture of collaboration which is also likely to spread to fields beyond energy, and to continue in the future. The same goes for the other pilot regions, where different institutions and public authorities have been brought together and worked towards a common goal, which should have positive impacts even after the end of the project.

Furthermore, CITYnvest enabled the consortium partners to raise their voice on EU policy matters that could support further the wider take-up of energy efficiency investments. Solutions are necessary for the regulatory framework, particularly the European System of Accounts. The CITYnvest partners are working with the European institutions to demonstrate the need for alternative procedures for enabling public energy efficiency investments such as in innovative Public Private Partnerships (PPPs).

In the next phase, CITYnvest will aim to make its stakeholders even more aware of the European energy efficiency financing landscape, which will be reshaped in the autumn of 2016 with the expected Energy Efficiency package and Smart Financing for Smart Buildings initiative.
Picture of the consortium during the second Steering Committee (October 2015)
CITYnvest Logo
Picture used for the homepage of CITYnvest