Map of Structured Financial Solutions for Citizen Financing Schemes for Energy Efficiency:

Under the Citizee project, Energinvest has developed a guidance document aiming at helping CitizEE Pilot Regions to select a suitable Public Financing Instrument (PFI) to be set-up to support the development of their Financing Scheme for Energy Efficient Buildings. (For further information please see also Map of Structured Financial Solutions for CFs4EE Financing Scheme to be found under https://www.citizee.eu/results/). 

Using this guidance document, the CitizEE Pilot Regions were invited to fill-in a respective template to evaluate and select on appropriate financing solutions. The structure and content of the template includes several key steps, which should be followed when evaluating and selecting the Structured Financial Solutions that could best meet the needs of the four Pilot Cases.

Key steps to take when evaluating and selecting eligible Structured Financial Solutions:

The following figure presents the four main steps, CitizEE Pilot Regions were asked to apply when evaluation and selecting eligible Structured Financial Solutions:

Following the four main steps, all CitizEE Pilot Regions were able to evaluate and select eligible Structured Financial Solutions. As the evaluation and selection of suitable Structured Financing Solutions highly depend on the local context, the type of buildings, targeted final recipients and the type of implementation model and the Citizen funding options, the chosen options differ between the four Pilot Regions.

The comprehensive outcomes of the evaluation and selection of suitable Structured Financing Solutions can be found in the related report.

The report is available for free download here.

Methodology used to develop the Structured Financial Solutions Map:

In order to develop the Structured Financial Solution Map, a first desk research was conducted by which the team collected, compiled and analyzed the documentation and reports available on Public Financing Instruments (PFIs). A benchmark of these PFIs was then carried out in order to identify the most effective and the most adapted to the situation of the CitizEE Pilot Regions.

In addition to that, the study considered the main outcomes of a former analysis on the set-up of Investment Platforms supported by the European Fund for Strategic Investments. In the frame of a last step, the study has analyzed how financing instruments could be structured within the specific architecture of an Investment Platform, including Citizen Funding, to develop a Structured Financing Map.

Study-result – eight different Structured Finance Solutions:

The main result of the study is a Map of Structured Financial Solutions for Citizen Financing Schemes for Energy Efficiency. It mainly presents a series of eight different Structured Finance Solutions that meet the potential needs of the Pilot Regions. These solutions include the leverage of citizen financing, which can be used by the Pilot Regions according to their market conditions, the main financial barriers and market failures. Moreover, these solutions reflect the policy objectives within these Pilot Regions.

Donwload the full report here

The methodology has been developed in a general template that allows project partners to assess, on a country-per-country basis the market characterization of existing and emerging Citizen Funding solutions and schemes for the energy sector (RES & EE3). This covers both funding through « crowdfunding platforms » as through « cooperative funding models ». The difference is covered in the definitions section. The objective of the Market Characterization analysis is to identify the key decisional elements that will serve the evaluation of the CFs4EE Financing Scheme to be developed and the Public Financing Instrument that will support the scheme. The template (see section 2.3) is based on a number of topics that need to be described and a number of questions that need to be answered.

Download the report here

It is to be noted that the EFSI initiative will soon reach the end of its timeframe and will be replaced by the new InvestEU framework as a successor of EFSI. Apart from the Lithuanian pilot region that has already succeeded to obtain approval for an EFSI-backed Investment Platform and will be signed within the current timeframe, according to discussions with the European Investment Bank, the remaining timeframe will most probably not allow other CitizEE pilot regions to obtain an ESFI approval for their projects. Remaining pilot projects will therefore fall under the InvestEU framework, which, although based on the success of the EFSI initiative, includes a number of significant developments that will need to be analyzed in more detail as soon as the regulation establishing InvestEU will enter into force. The Master Plan should therefore be reviewed regularly (at least at each stage of development), in order to align it with the most recent information. Following consultations with European Investment Bank (EIB) and European Investment Advisory Hub (EIAH), it is assumed that in the next Multi-Annual Framework (2021-2027):

• EU-backed guarantee will remain the cornerstone of InvestEU program;
• Financial Instruments and Investment Platforms will remain strategic tools within InvestEU program to support public and private investment in Europe;
• European Investment Bank Group (EIB) will remain the main operator for InvestEU program;
• The cooperation between EIB Group and National Promotional Banks and Institutions (NPBIs) in the implementation of InvestEU will be strengthened as well as the complementarity between InvestEU and ESIF in the implementation of Financial Instruments.

Download the document here

The main objective of CitizEE is to support European public authorities to scale up funding for energy efficiency in the building sector through attracting citizen private investments.

CitizEE will address this objective by integrating tailored and widely adopted crowdfunding and cooperative financing schemes with adequate available or to be developed Public Financing Instruments (PFIs). As a result, CitizEE will enable to set up large-scale community energy efficiency programs while strengthening know-how of regional/national key stakeholders.

CitizEE innovation strategy project is conceived to support public authorities in a twofold purpose:

• Setting up Citizen Investment Platforms with respect to specific regulatory and market conditions of each pilot region/country bringing together all market players: citizens, associations and economic actors in their territory. These platforms will act as an advisory body with a strong focus on maximizing the interaction with Investment Platforms under the European Fund for Strategic Investments (EFSI) and complying with the rules for operating such Investment Platforms according to the “EFSI Regulation”, 2015/1017.
• Integrating crowdfunding and cooperative financing mechanisms within their public funding policy, programs and processes dedicated to energy efficiency by assessing CFs4EE Financing Schemes (Citizen models pooled with PFI) viability for upscaling energy efficiency investment programs.

To this end, among other activities, a detailed analysis of the different aspects and challenges surrounding crowdfunding and cooperative funding models will be ongoing throughout the project. This will be supported with benchmark study of existing and addressable Public Financing Instruments in order to implement optimal financing schemes for energy efficiency in the funding of global projects and/or large-scale programs. This will be completed with the development of policy recommendations for improving the framework and market conditions for target countries and at European level.

In addition, four demonstrators have been selected to show the replication possibilities of the project financing schemes proposed. The cases have been selected considering the following: (i) geographical representation across the European Union (Portugal, Belgium, Croatia and Lithuania). (ii) their commitment to invest in energy efficiency savings in buildings and established strategies to implement them in different market segments (adequate financing remains however a real barrier). (iii) various level of maturity in the development of the citizen financing market.

Furthermore, a strong exploitation strategy including capacity building activities will be carried out. The goal will be to deliver specific training to regional/national stakeholders and to promote the outcomes and replication potential of the schemes developed. Already a large number of individuals are expected to be trained within the project duration. In addition, CitizEE will gather regional/national stakeholders in working groups. Overall, the group discussions will target the integration of standardised citizen financing by kick-starting the Citizen Investment Platforms. Key role of these platforms will be to support the deployment of large-scale energy efficiency.

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The Smart Finance for Smart Buildings Initiative

The Commission has launched the Smart Finance for Smart Buildings(SFSB) initiative, as part of the ‘Clean Energy for All Europeans‘ package. Building on the Investment Plan for Europe, it includes practical solutions to mobilise private financing for energy efficiency and renewables in buildings in three main areas:

More effective use of public funds

At the EU level, the European Structural and Investment Funds (ESIF) will allocate €18 billion to energy efficiency in the period 2014-2020. Boosting investment in sustainable energy projects is also one of the strategic priorities of the European Fund for Strategic Investments(EFSI). In addition, the EU has developed a number of other support schemes and funding programmes aiming to help businesses, regions, and countries successfully implement energy efficiency projects.

Read the full article: ec.europa.eu/energy/en/topics/energy-efficiency/financing-energy-efficiency

Investment Platforms can help to finance smaller projects and bundle funds from different sources to enable diversified investments with a geographic or thematic focus. They help to better share risk, make it easier to attract private investors and eventually unlock financing for individual projects. An Investment Platform can combine EU funds, national support and financing from private investors. The Platform itself can then provide loans, guarantees and/or equity financing to the underlying projects, depending on their specific needs.

The European Fund for Strategic Investments (EFSI), the financial pillar of the Investment Plan for Europe (IPE or Juncker Plan) can provide financial support to such Investment Platforms. The set-up of EFSI Investment Platforms can be flexible. Both public and private actors can establish such platforms (they typically also provide part of the financing), with the legal form and the financing structure to be determined depending on the projects’ needs and the main investors’ interests (managed account, co-investment agreement, Special Purpose Vehicle, etc.). Financing for economic, environmental, and social purposes can then be provided through Investment Platforms supported by EFSI to help achieve the aims of the IPE.

The Advisory Hub can give specific advice to help develop and structure Investment Platforms. Advanced proposals for Investment Platforms can also apply directly to the EIB Group for EFSIfinancing.

Why are Investment Platforms supported by EFSI useful?

Investment Platforms can attract and crowd-in relatively large budgets, making it easier for public and private investors to fill market gaps and finance groups of smaller and riskier projects.

Risks can then be shared by investing in portfolios of projects that are financed from different sources. This can also include creating new forms of cooperation between key financial organisations like National Promotional Banks / Institutions (NPBIs), commercial banks, investment funds and the EIB Group.

Finally, the Investment Platforms’ flexibility allows them to adapt to a range of markets, partners and policy objectives.

Read the full article: eiah.eib.org/about/services-investment-platforms.htm