From Project idea to implementation Understanding the banking sector point of view

Transcription

1 From Project idea to implementation Understanding the banking sector point of view Covenant of Mayors training Brussels, 28 November 2016 Advancing Sustainable Energy for Europe

2 Agenda 1 Financing of energy efficiency measures 2 eeef portfolio - overview 2

3 Objective and sponsors of the eeef Background and objective Commitment of the EU member states to achieve the 20/20/20 goals: 20% increase in EE, 20% reduction of CO2 emissions, and 20% RE in EU's energy mix by 2020 Substantial potential for EE and small scale RE in the European public sector Set up a funding source to enhance EE and foster RE dedicated financing within the European Union, primarily through the provision of dedicated financing to: municipal, local and regional authorities public and private entities acting on behalf of those authorities such as utilities, public transportation providers, social housing associations, ESCOs etc. Focus areas: EE, RE and clean urban transport Sponsors European Commission (Initiator) European Investment Bank (Founding investor) Cassa Depositi e Prestiti (Founding investor) Deutsche Bank (Investor and investment advisor) 3

4 Role of Deutsche Bank into eeef Investment Manager Deutsche Bank, in its role as Investment Manager for EEEF, is the first point of contact for private and public clients Identifies, evaluates and structures the investments for the Fund, the final investment decision is taken by the Management Board Manages the existing project portfolio and interacts with all fund s service providers Sources new investors for the Fund Is the key point of contact for all investors, service providers, sponsors and project companies 4

5 Cities to deal with challenges when considering energy efficiency projects Project development Tender requirements Obligations / guarantees Financing Insufficient data about energy consumption and street lighting maps Upfront development costs/limited capacity and staff resources Long-term commitment by the municipality Know how of tender procedures taking national and EU tender requirements into account Design knowledge and technical know how required Procurement process linked to energy performance and financing solution Quality of the guarantee provided by the ESCO/EPC-O&M Obligations under the (existing) O&M structure Savings uncertainty and management vs perception of risk Limited capital available Impact on rating (if any) Regulatory constraints: financial situation of the municipality and legal requirements/ limitations with regard to increased debt level (see Eurostat in respect to EPC related payments) 5

6 eeef is designed to support Cities all along the energy efficiency investment circle City implementing investments and reporting achievements of targets International protocols for measurement and monitoring CO 2 and energy reporting Start EU CO 2 and energy targets Specific targets for European cities Political support to launch the projects CO 2 targets achieved Energy efficiency investment circle Project development phase Lack of capacities for self funding due to austerity policies/limited budgets Commercial banks do not support project development eeef allowed access to the Technical Assistance (TA) attached to the Fund eeef requires selected ESCOs to provide guarantees for energy savings to the City, which are aligned with the tender requirements Project implementation Financing instrument Access to financing eeef addresses and overcomes the high risks many funders perceive within energy efficiency projects eeef s objective is to fund projects reaching energy efficiency targets aligned with City s strategic plan Depends on results of the project development phase eeef flexibility in offering financing solutions 6

7 eeef investments scope of work Financial instrument Beneficiary Project feat. direct financing Public entity Individual Project Portfolio of projects EEEF indirect financing (PPP**) ESCO, utility, facility management company, social housing association etc. Individual Project Portfolio of projects indirect financing Financial Intermediary Public entities, ESCOs, utilities, facility mgm comp., social housing ass. Debt / equity* (/guarantees ) around 5m - 25m *EEEF doesn t invest equity into financial intermediaries Public link Primary Energy Savings or CO2e savings 20% **Generally speaking Indirect Financing entails a Public Private Partnership 7

8 Indirect Financing of EE measures ESCO Typical SPV structure overview Junior funds Capital injection Senior debt eeef Special Purpose Vehicle (SPV) Subcontracts Repayments Concession Contract Municipality EPC partner O&M partner/s Procurement process on overall performance and economic benefits to the municipality Advantages of offbalance sheet solutions Private sector expertise to design, implement and optimize operation Off-balance sheet financing requires no own upfront investments by the municipality Financial savings possible from the beginning which release funds for other purposes or investments of the municipality 8

9 Direct Financing of EE measures Direct financing structure overview Repayments eeef Loan agreement Municipality Construction and O&M contracts EPC partner O&M partner/s Simplified tender procedure Build-up of know-how for new technology on municipal level Advantages of direct financing The municipality handles all operational and financial matters Improved financial conditions compared to PPP solution (subject to credit standing of the public entity) Full saving benefit from start of implementation (subject to loan repayment) 9

10 Key decision factors for Cities when it comes to define the financial approach Financial room to manoeuvre Capacity to increase Indebtedness Technical skills Y Expertise to negotiate and manage renovations contracts and works N Indirect Financing Existing obligations Y In-house utility/company assigned for renovation N Indirect Financing Drivers to be addressed during the development phase of the project Y Direct Financing N Direct / Indirect Financing 10

11 Key focus of the financier At the Municipality level Creditworthiness Long-term committment and stability At the ESCO level Guarantee on quality delivered Expertise with public procurement Sufficient funds available Risks within projects out of scope At the project level Sub-scale issues of projects Projects bundled by a Public Entity: issue of governance Projects bundled by an ESCO: issue of performance and guarantees Well define the baseline: technical and financial issue Note: Actual coordination / monitoring at the national level would standardize and boost the market At the financial structure level The NOMBA syndrome Background: eeef s proposition Dedicated to the Public Sector Flexible one-stop-shop (debt, equity, potentially guarantees) Financial structures relying on project s revenues Implementing (PPP) financial solutions avoiding consolidation of debt Technical Assistance facility 11

12 Typical projects and main points Project examples Building upgrades Street lighting Biomass plants Photovoltaic Characteristics Energy audits completed, vast energy savings potential Sufficient know-how of ESCO in case of big projects Savings guarantee required Depending on counterparty risk additional parental/municipal guarantee required Only light bulbs, switch boards plus EE related measures can be financed, not the light pole itself Ownership of lighting points need to be in municipal hand Technology with good track-record only Contracts for input (e.g. feed-stock) / output (i.e. electricity/heat) in place Substitution of input possible Technology with good-track record (e.g. boilers, turbines etc.) O&M concept Land ownership in municipal hand Grid connection secured Feed-in tariff secured O&M concept Bankable module supplier Financial structures Senior debt Mezzanine / equity Funding via coinvestments in SPV or NewCo Forfaiting Leasing (mostly for clean urban transport projects) 12

13 Pre-screening Due diligence Decision Closing eeef s lean and fast investment process Potential beneficiary introduces the project via EEEF website (checklist + memo/teaser + draft financial structure) Investment Manager verifies eligibility and portfolio fit Beneficiary provides accurate description of the project, business plan, documents needed on a case by case basis Accurate analysis of financial, technical, legal, environmental profiles Discussion of the Investment Proposal with Investment Committee and Management Board Decision of the Management Board Preparation of contractual documents Financial close Disbursement Preparation of the Investment Proposal 13

14 eeef Technical Assistance Facility New model ensuring enhanced project implementation (1/2) Background and objective EEEF TAF aims to bridge the gap between sustainable energy plans and real investments by supporting all activities necessary to prepare investments Facilitating in particular implementation of projects by supporting with feasibility studies, energy audits and evaluating the economic viability of the investments as well as legal support Eligible sectors are energy efficiency, small-scale renewable energy and/or sustainable public urban transport Advantages EEEF provides TA support by way of consultant services: assigning selected experts with the required knowhow (tender run by EEEF) to the relevant investment programmes, thereby saving scarce resources and valuable time at the public authority level To help the TA beneficiaries even more EEEF is monitoring the timeline of the consultants on a monthly basis EEEF TA builds on the experience gained from its predecessor facility, the European Commission TA Facility with 16 TA projects in 8 countries This model is expected to ensure a faster and higher project implementation rate New features Efficient TA implementation timeframe of 2 yrs, including signing of contructs for project realisation TA support is linked to financing of the investment programme by EEEF, otherwise reimbursement of services previously allocated/covered by EEEF 14

15 eeef Technical Assistance Facility New model ensuring enhanced project implementation (2/2) Application process The application process is straight forward by submitting a TA proposal following the recommened EEEF application format provided at the website of the Fund Further criteria for the call for proposals can be found at: Timeline Submission of proposals Evaluation and selection Awarding to TA beneficiaries TA works phase EEEF Invest. Date for submission of the application is Friday 23 December 2016, 17:00 (CET) Fully-fledged electronic proposal to be sent to the following address: technical_assistance@ee ef.eu Mainly four criteria to be applied to the proposals: Investment Programme TA required for the Investment Programme Commitment to implement the Investment Programme Proposal clarity Winning applicants will be informed by the EEEF team in writing latest by Friday 13 January 2017 TA contracts with the selected TA beneficiaries to be signed by the end of January 2017 Completion of agreed TA scope of work within a two year timeframe, including selecting the company/companies to implement the Investment Programme Decion taken by the EEEF TA Committee 15

16 eeef investments by country NETHERLANDS 8.5m senior debt to City of Venlo (EE: public lighting) FRANCE 5.1m junior funds to project vehicle to supply heat to City of Orléans (EE: CHP/biomass) 7.3m junior funds to project vehicle to supply heat to City of Rennes (EE: CHP/biomass) 30m senior funding to Bolloré (Clean Urban Transport: electric cars) 5m senior construction facility to project vehicle of Région Rhône-Alpes (EE: schools retrofit) SPAIN 2.5m forfaiting loan to Universidad Politécnica de Madrid via Enertika (EE: building retrofit) GERMANY 0.9m forfaiting loan to Jewish Museum Berlin via Johnson Controls ESCO (EE: building retrofit) 0.6m forfaiting loan to University of Applied Sciences Munich via Johnson Controls ESCO (EE: building retrofit + CHP) ITALY 32m project and VAT bond facility to project entity upgrading University Hospital S.Orsola Malpighi in Bologna (EE: reduction on energy in entire fluid production and distribution system) ROMANIA 25m subdebt to Banca Transilvania (Financial Intermediary investment: EE, RE, Clean Urban Transport) 16

17 Technical Assistance of the European Commission allocated by eeef to boost EE projects UNITED KINGDOM 1.7m to Ore Valley Housing Association (EE: CHP plant/decentralised district heating) IRELAND 336k to Limerick and Clare Education and Training Board (EE: building upgrade and RE: PV, micro wind) 184k to Roscommon Council (EE: biomass district heating) DENMARK 1.9m to the Municipality of Ringkobing-Skjern (RE: biogas plant) NETHERLANDS 425k to City of Venlo (EE: public lighting) 463k to Municipality of Zaanstad (EE: open/smart energy network) SPAIN 452k to City of Santander 754k to City of Córdoba 871k to Cabildo of La Palma 623k to City of Terrassa 456k to City of Marbella 782k to City of Elche (EE: public lighting, building retrofit and RE as well as Clean Urban Transport) PORTUGAL 540k to CIMAC (Comunidade Intermunicipal do Alentejo Central) (EE: public lighting, building retrofit and RE as well as Clean Urban Transport) BELGIUM 1.5m to University of Liège (EE: building retrofit) 2m to GRE Liège (EE: building retrofit) FRANCE 1.1m to project vehicle Région Rhône-Alpes SPL (EE: building retrofit) Please note: The European Commission Technical Assistance (EC TA) Facility application phase ended 31 March The EC TA facility agreement includes a right to match for the financing by eeef 17

18 Agenda 1 Financing of energy efficiency measures 2 eeef portfolio - overview 18

19 Energy efficient renovation of public buildings - Région Rhône-Alpes, France (1/2) Project description Location Partner: Région Rhône-Alpes, OSER Measures: Public buildings retrofit Rhône-Alpes region is committed to the Territorial Climate and Energy Plan Objective: Reduction of GHG emissions by 40% until 2020 Start of public buildings retrofit in some of the public senior high schools Région Rhône-Alpes, France Current status: Successful tender for the renovation of 8 schools in the Rhône-Alpes region with total investment volume of 20m Ongoing tender for a library and a city hall with additional investment volume of more than 5m Project structure Rent upon project completion Senior debt Projects owned by Région Rhône-Alpes and municipalities SPL-OSER Région Rhône-Alpes Service & financing contract Selection Surveillance etc. Equity Guarantee on debt portion in case of project abortion Execution of works and services Service Providers Investment characteristics Key data: Construction facility/ senior debt: 5m Duration of financing: 5 years Highlights: Providing construction financing to attract additional commercial lenders for the Project after end of construction phase Bridge financing enables total investments of more than 25m First contruction bridge loan structure provided by eeef Project benefitted from a European Commission Technical Assistant Facility by the eeef 19

20 Energy efficiency upgrade of the University Hospital S. Orsola Malpighi - Bologna, Italy Overview Location Partners: Progetto ISOM S.p.A (project SPV) University Hospital S. Orsola Malpighi (grantor of concession) Bologna, Italy Measures: energy efficiency CCHP Upgrade of entire fluids production and distribution system of the hospital Including a tri-generation plant for the combined production of cooling, heat and power (CCHP) Results: Reduction of CO2 emissions of 14,136 t p.a., approx. 31% compared to baseline Project Structure Manutencoop Facility Management Siram Sinloc Project bond + VAT bond SPV Progetto ISOM S.p.A. Equity funding Concession agreement UHSOM (Grantor of concession) Regional funding of healthcare Region Emilia Romania EPC and O&M EPC & O&M consortium Investment Features Key data: Total project volume: 41m (equity provided by Manutencoop Facility Management, Siram, Sinloc and Iter Cooperativa Ravennate) EEEF funded volume: 32m via a project bond structure Duration of financing: 20 years Highlights: Largest energy efficiency upgrade in Italy under a Public Private Partnership (PPP) framework Complex energy efficiency upgrade of the hospital - won the 'CESEF Energy Efficiency Award 2015' in the Financial category 20

21 Energy efficient renovation of public buildings - Région Rhône-Alpes, France Overview Location Partner: Région Rhône-Alpes, OSER Measures: Public buildings retrofit Rhône-Alpes region is committed to the Territorial Climate and Energy Plan Objective: Reduction of GHG emissions by 40% until 2020 Start of public buildings retrofit in some of the 271 public senior high schools Région Rhône-Alpes, France Current status: Successful tender for the renovation of 8 schools in the Rhône-Alpes region with total investment volume of 20m Ongoing tender for a library and a city hall with additional investment volume of more than 5m Project Structure Rent upon project completion Senior debt Projects owned by Région Rhône-Alpes SPL-OSER Région Rhône-Alpes Service & financing contract Selection Surveillance etc. Equity Guarantee on debt portion in case of project abortion Execution of works and services Service Providers Investment feat. Key data: Construction facility/ senior debt: 5m Duration of financing: 5 years Highlights: Providing construction financing to attract additional commercial lenders for the Project after end of construction phase Bridge financing enables total investments of more than 25m First contruction bridge loan structure provided by eeef Project benefitted from a European Commission Technical Assistant Facility by the eeef 21

22 Combined Heat and Power Plant (biomass) City of Orléans, France Overview Location Partners: City of Orléans, Dalkia France, eeef Measures: Biomass plant/ energy efficiency Dalkia won a public tender realized under a French Regulation Commission Tender ( CRE3 ) for electricity /heat generation fired by biomass Biomass-fired combined heat and power plant with a capacity of 7.5 MW in electricity and 17 MW thermal energy Orléans, France Results: Reduction of CO2 emissions of 20,500t p.a., approx. 89.1% compared to baseline Energy production 50,826 kwh p.a. Project Structure Investment feat. Key data: eee is a 84.4% shareholder of Orléans Biomasse Energie s.a.s City of Orléans Land rights agreement Orléans Biomasse Energie s.a.s Contract for electricity sale Construction contract EDF Total project volume: 36m Total junior funds volume: 5.1m Duration of financing: 18 years Highlights: Public concession for Heat supply to district heating network Dalkia Biomasse Orléans s.a.s Operation and maintenance, Incl. biomass supply Decentralized energy supply for City of Orléans using existing district network Supply of biomass within 100 km Long term PPA agreement with EDF 22

23 Building retrofit of the University of Applied Sciences - Munich, Germany Overview Location Partners: University of Applied Sciences Munich (UoM), Johnson Controls, eeef Measures: Building upgrade/ energy efficiency Installations of combined heat and power plant Installation of energy efficient lighting Optimization of heating Optimization of building management Munich, Germany Results: Reduction of CO2 emissions 88t p.a. approx. 11.6% compared to baseline Guaranteed energy savings 118,860 p.a. (41.7%) Project Structure (Purchaser) 2 Forfaiting agreement: purchase of 70% of receivables / energy savings ESCO (Seller) 1 3 Implementation of EE measures acc. to energy performance contract (EPC) Savings guarantee Pays receivables/ energy savings UoM (Employer) Investment feat. Key data: Financing volume: approx. 0.6m Duration of financing: 10 years Highlights: Second project with the innovative forfaiting structure EE measure including a CHP plant (decentralized energy production) Role model for further energy efficiency investments in schools, universities etc. 23

24 Building retrofit of the University of Applied Sciences - Munich, Germany Overview Location Partner: Universidad Politécnica de Madrid (UPM) Measures: Energy efficiency Building retrofit Energy efficiency measures in 32 buildings of the University Substitution of the 63 oil based with the gas based boilers Installation of 6,800 thermal valves in the heating system and solar panels Installation of a global energy management service Madrid, Spain Results: Targeted primary energy savings of 27% and CO2 savings of 45% compared to baseline Project Structure Investment feat. Key data: (Purchaser) 2 Purchase of receivables 3 Pledge of equipment 4 Monthly payment of the relevant share based on issued invoices Forfaiting structure to purchase receivables obligations related to installation works: 2.5m Duration of financing: 9 years Repayment: monthly ESCO (Seller) 1 Implementation of EE measures acc. to Energy Management Contract UPM (Employer) Highlights: Transaction completed in three months after signing of the Energy Management Contract by the UPM and Enertika, demonstrating the ability of the private and public sectors to align efforts to implement projects in the energy efficiency sector 24

25 Green lending cooperation with Banca Transilvania- Cluj-Napoca, Romania Overview Location Partners: Banca Transilvania S.A. ( BT ) Measures: EEEF and BT, one of the leading banks in Romania signed a letter of intent regarding green lending to support energy efficiency and renewable energy investments Provision of financing to public and private building owners, homeowner associations and municipalities, public sector entities and private sector companies acting on behalf of the public sector Cluj-Napoca, Romania Results: Average CO2 emission reduction of at least 20% for projects financed via BT Project Structure (Lender) Investment feat. Key data: Financing volume: approx. 25m Duration of financing: 10 years (Borrower) Loan Agreement Sub-loans for EE and RE projects (Subborrowers) Highlights: First cooperation of the EEEF with a financial institution and also EEEF s first project in Eastern Europe Strong local partner with credentials in financing several energy efficiency projects Role model for further Financial Institutions investments 25

26 Street lighting upgrade of the City of Venlo - Venlo, Netherlands Overview Location Partners: City of Venlo (Borrower) Measures: Energy efficiency Street lighting The City of Venlo upgrades of the existing street lighting network of the city with energy efficient LED lamps The existing O&M contract for the street lighting network with a private service company stays in place and includes the upgraded lighting points Venlo, Netherlands Results: Achievement of primary energy savings of around 62% p.a. compared to baseline Project Structure Investment feat. Key data: Total project volume: 8.5m Loan Agreement eeef funded volume: 8.5m via a senior debt loan covered by the City of Venlo Duration of financing: 15 years Highlights: (Lender) Obligation to invest into energy efficiency projects (Borrower) First direct lending to a municipality by eeef. The street lighting upgrade is part of an overall green development plan of the city Reference project for European public authorities demonstrating efficient financing solutions for energy efficiency and renewable energy projects via eeef 26

27 Car-sharing programme for electric cars- Cities of Paris, Lyon and Bordeaux, France Overview Location Partner: Bolloré S.A. Measures: Public urban transportation Bolloré SA won the concession for the first large scale electric vehicle renting scheme in the greater Paris region (Ile-de-France) expansion of Bolloré s core infrastructure (e.g. cars, charging stations, rental kiosks) Paris, Lyon and Bordeaux, France Results: Reduction of CO2 emissions of min. 50% compared to baseline Project Structure Investment feat. Paris Bordeaux Lyon Key data: Bond issue (private placement): 30m Obligation to expand core infrastructure Bond purchase Duration of financing: 5 years Repayment: Bullet structure 100% 12 year concession for the Paris/ Île-de-France region; Lyon and Bordeaux to come Highlights: First eeef transaction for clean urban transport in Europe 51 municipalities in the Paris/ Île-de-France region participating, accessible to more than 4 out of 7 million inhabitants 27

28 Contatti European Energy Efficiency Fund (eeef) Lada Strelnikova +49 (69) Matthias Benz +49 (69) Iñigo Prior +49 (69) Paola Rusconi +49 (69)

29 Copyright European Energy Efficiency Fund, SICAV-SIF, 31 Z.A. Bourmicht, L-8070 Bertrange, Luxembourg. All rights reserved. This presentation (the Document ) has been prepared by European Energy Efficiency Fund, SICAV-SIF ( European Energy Efficiency Fund ) exclusively for the benefit and internal use of the potential client ( Client ) in order to indicate, on a preliminary basis, the feasibility of a possible transaction or transactions. The Document may only be used for these purposes. The Client is not permitted to duplicate the information provided in this Document and to communicate the received information of this Document to any third party without the prior written consent of European Energy Efficiency Fund. The Document is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by European Energy Efficiency Fund. The Document is neither intended to serve as legal or tax advice nor should it replace it. The information in the Document reflects prevailing conditions and European Energy Efficiency Fund's views as of this date, all of which are subject to change. Neither the European Energy Efficiency Fund nor their directors, officers, agents or employees, customers or professional advisers make any representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness or reasonableness of the Document. The aforementioned persons will be under no duty to provide access to any additional information or to update or correct (if required) any Information. Accordingly, neither the European Energy Efficiency Fund nor the aforementioned persons will be liable for the accuracy, reliability, completeness or reasonableness of the Document. Advancing Sustainable Energy for Europe