The achievement of EU energy and climate goals by 2030 requires additional investment expenditures of approx. 167 billion EUR per year in the time frame 2021 till 2030 whereby 80% of the investment gap is related to residential and tertiary buildings. At the same time, many studies have been published that confirm the existence of huge amounts of economically attractive, yet untapped potential for energy efficiency (EE) projects. In this context, the access to attractive financing remains an important barrier for the expansion of EE investments.
Furthermore, there exist many financial institutions (FI) that have formulated strategic focus areas around sustainable financing and thus would also like to finance more EE projects, but – in contrast to investments in the renewable energy sector – they have difficulties to find the right channels to stimulate market growth. It seems that the peculiarities of EE investments do not fit well to the requirements of financial institutions. The increase of loan finance to EE investments is limited because it means that either the client or the EES provider (ESCO) have the investments in their balance sheets. Since EE projects compete with other investment options, clients frequently will have reservations in limiting the financial leeway, whereas EES providers will soon be confronted with a situation, where they will reach their own credit limits and will have to reject EE projects. Therefore, if remarkable market growth is intended, the major question is how the balance sheets could be cleaned up in order to gain financial leeway to expand business. Based on the experiences gained from selected EU markets the establishment of a solid refinancing cycle through the sale of receivables is a promising way to support the supply of financing for EE market growth.
Against the background as presented above, the ultimate goal of REFINE is reflected by two overarching objectives, which were pursued during the implementation of the REFINE project.
- Enhancing the refinanceability of EES projects
- Amplifying the actual use of refinancing schemes in EES business practice
The project identified key conclusions with both European-wide and country-specific implications. It was observed that while refinancing is successful in certain contexts, it remains a niche approach in the European EES market due to well-established financial services and existing financing options that suit prevailing market conditions. Market size, saturation, and the availability of alternative funding sources also influence the limited adoption of refinancing.
However, the significance of refinancing is expected to grow in the future, driven by challenges such as decarbonization goals and the need for deep renovation projects. Public guarantee schemes emerged as game changers, mitigating risks for financial institutions and promoting the adoption of innovative project types. Facilitation services were highlighted as vital for supporting refinancing efforts until they become mainstream in the EES market, and good practices provided in trainings were shown to enhance energy efficiency investment outcomes.
