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Energy Social Housing Innovative Financing Tender

Periodic Reporting for period 2 - EnerSHIFT (Energy Social Housing Innovative Financing Tender)

Reporting period: 2017-08-01 to 2020-01-31

EnerSHIFT is a H2020 project that promotes energy renovation of Social Housing buildings in Liguria Region by applying innovative financing models within Public-Private Partnership.
The project is coordinated by the Liguria Regional Authority. The partners involved, which represent the whole Social Housing local chain, are the Regional Energy Agency -IRE, the four regional Social Housing operators –ARTE, and the Tenants’ Unions.
It is the first Italian experience using Energy Performance Contracts (EPC) in the SH, achieving reductions in energy consumption and related bills without drawing on the economic resources of the building owners or the tenants. It is also the first EU project involving Tenants’ Unions as official partners.
The project aims to prepare an energy retrofit investment plan addressing over 70 Social Housing Buildings
through the awarding of EPC tenders for investments addressed to qualified ESCos (Energy Service Companies).
EnerSHIFT oveall objectives:
• Implementing sustainable EE initiatives involving private capitals and offering advanced energy services to Public Administrations, thus challenging the general shortage of public resources for SH buildings energy retrofit which affects many EU Countries;
• Implementing the “triple win approach”, which foresees an equitable sharing of benefits among tenants, building owners and ESCos;
• Promoting replicable technical and financial schemes to foster the implementation of energy retrofit initiatives at mass scale level;
• Rising awareness and engaging of citizens suffering from energy poverty;
• Fostering cooperation between ESCos and banks through innovative financing schemes lowering the financial risk of EPC operations and through synergies among public funds;
The Consortium realized a global inventory of SH buildings which includes energy performances consumptions and cost indicators of over 100 buildings; these data formed the energy baseline on which tender documents have been set.
Meanwhile SHOs identified a range of energy retrofit interventions potentially suitable for EPC, and elaborated them in order to design a multi-setting investments and savings plan; the aim was to secure a tender’s overall sustainability and provide for an equitable sharing of benefits among tenants, building owners and ESCos (Triple win-approach).

Regarding the legal aspects the Regional Council on December 2016 approved by with broad consensus an amendment to the regional Law managing the Social Housing sector (n. 10/2004) aimed to overcome the tenants formal approval of EPC contents.
At the same time the Project Development Unit (PDU) analyzed the national regulatory framework in order to identify the most suitable legal scheme for the tender: EPC model with third party financing finds no specific discipline under the Italian Public Procurement Code, therefore it was necessary to assimilate it within other models of PPP (Public Private Partnership).
In addition, due to the differences between the financial audit systems, was impossible to use ERDF funds (5 million €) within the framework of EPC , so the Consortium had to split two different tendering procedures.
The PDU found for a Public Service Concession reserved to certified ESCOs, with innovative elements as revolving mechanism for incentives sharing, GPP criteria and bankability clauses.
The call left the participants free regarding the choice on energy technologies and the minimum investment threshold, but it fixed a minimum energy saving target of 45% on former consumptions. It concerned the Energy Efficiency Services on 67 Social Housing public buildings, the Energy Management of their 43 centralized thermal power plants and the supply of fuel (methane, gas, biomass, etc.).
The tender was launched through formal channels and promoted through meetings with with ESCos and financial Institutions, and was split in lots to encourage the participation of SMEs; it raised a wide interest among the national market operators.
The bigger lot (province of Genoa) had a concession amount of c.a. 16.7 million € and received bids from three temporary grouping of Companies. The other lots (provinces of La Spezia and Savona-Imperia) had a concession amount of c.a. 3.3 million € and c.a. 0.7 million € respectively, and received no bids probably because they were too complex and unsustainable for SMEs.
These considerations, shared with the ESCos trade associations, led to a new call for tender (single lot with changes about the financial plan). Despite the interest shown by several SMEs, only a top market player participated and won the tender.
Both winner proposals provided for an extensive use of renewable biomass, a solution not foreseen by the project partners though interesting for the local wood supply chain.
The Awarding Commissions ended their work on October 2018 and September 2019 respectively.
The signatures of EPC contracts took place in January 2020: the procedure was very long due to the financial, administrative and legal controls provided for the Public Procurement Code, and a renegotiation of the first lot financial plan (a building was no more available).
Meanwhile SHOs worked to the implementation of 7 Public Procurements for Works regarding the energy retrofit of 9 SH buildings, financed with a mix of SHOs’ budget, ERDF and national funds; the tenders were awarded by January 2019 and most of works are already finished.
Overall the project generates investments in energy efficiency for around 12 million € and guarantees 10.6 GWh / year of energy savings (equivalent to 54% of previous consumption), around 1,900 tons / year of CO2 savings and 3.4 GWh / year of renewable energy production.
In addition the Consortium implemented an extensive information campaign targeting the civil society, and provided training and materials for potential public replicators.
The Tenders’ Unions, coordinated by SUNIA, organized several meetings with the tenants of Social Housing buildings in order to know their expectations on the retrofits and to inform them about the results of the EPC / ERDF tenders. They also organized a visit in a public housing complex recently renovated, and published a best practices Vademecum about energy-saving home behaviors.
Regione Liguria and IRE implemented information and dissemination activities to guarantee a national/international visibility and a wide potential for replication.
Moreover the Consortium started many proactive synergies with other European projects, and carried out a communication campaign through media and promotional events.
The innovative EPC model has been considered as a reference for other regional, national and European initiatives.
EnerSHIFT promoted an amendment to the Regional Law managing the Social Housing sector (n. 10/2004) which removed the legislative barriers to the implementation of EPC contracts on the SH buildings. In Italy only two regions so far promulgated similar initiatives.
EnerSHIFT is the first national initiative applying EPC to the SH public sector. It received in 2018 the Public Administration Sustainable Award.
EnerSHIFT has been recognized as a good practice at a European level and it is published in the Guide on good practice in energy efficiency (DG Energy DG and EASME, 2018). The project also received the European Energy Service Award 2019 as Best Energy Services Promoter.