Objective:
The topic aims to increase the amount of private finance allocated to energy efficiency and small-scale renewable energy sources by establishing innovative financing schemes for investments in sustainable energy.
Significant investments in energy efficiency and small-scale renewables need to be mobilised to achieve the ambition set by the European Green Deal[1] and the objective to reduce EU dependence on fossil fuel imports set out in the REPowerEU Plan[2]. In order to meet the required level of investments, it is necessary to progressively maximise the mobilisation of private capital, using public funds as a catalyst, and to put in place an enabling regulatory framework. This has been at the heart of the works of the Energy Efficiency Financial Institutions Group (EEFIG)[3] and will remain a central objective of the recently established European Energy Efficiency Financing Coalition[4]. In addition, the revised Energy Efficiency Directive and Energy Performance of Buildings Directive aim to increase the cost-effectiveness of public funding and the mobilisation of private investments in energy efficiency measures, including by promoting innovative financing mechanisms. National Energy and Climate Plans provide a solid framework for Member States to evaluate and report on investment needs and gaps to achieve their 2030 national energy and climate targets, including regarding the mobilisation of private investments. The Smart Cities Marketplace offers an investor matchmaking platform for investments in clean energy, ICT solutions and sustainable mobility.
While significant public sector expenditure is allocated to leverage private finance for energy efficiency and small-scale renewables (e.g. through the InvestEU facility), most private investors still view this type of investments as risky, complex and/or insufficiently profitable. This is due to the limited availability of investment opportunities which comply with the requirements of financial institutions in terms of size, scale, standardisation and transaction costs. There is a need to set up and roll-out private financing schemes which can be expanded and/or replicated at scale, and contribute to the national strategies to achieve the 2030 energy efficiency targets and the building renovation policy objectives. These schemes have to be adapted to the specificities of energy efficiency investment profiles, as well as those of small-scale renewables, in buildings, SMEs, district heating and other relevant sectors.
The financing schemes can be initiated by private sector stakeholders or local and regional authorities, as well as other types of actors.
Scope:
Proposals should clearly focus on tailored, market-oriented solutions to crowd in private finance at scale for sustainable energy investments, understood as investments in energy efficiency and/or small-scale renewable energy sources and storage.
Proposals should set-up innovative financing schemes leveraging private finance for sustainable energy investments, with a dedicated and clear focus on energy efficiency, in at least 1 eligible country with a clear ambition and effort towards expansion in additional eligible countries. The financing scheme should be operational by the end of the project, whereas the related investments may be implemented after project completion.
The financing schemes can involve, for example, but are not limited to:
- Equity, debt, mezzanine financing, potentially combined with non-reimbursable grants (“blending”).
- Local or regional investment funds, including blended financing. Guarantees, risk-sharing, insurances or other de-risking instruments.
- Energy services such as energy performance contracting, efficiency as a service, and variants thereof, if used to finance the investments.
- On-bill, on-tax and building-based financing, where the debt is attached to the energy meter or the building rather than the household or company.
- Schemes complementing, with a dedicated financing component, already existing local and regional technical assistance facilities, in particular integrated home renovation services.
- Schemes targeting the secondary market, including refinancing mechanisms, specialised securitisation vehicles and green bond schemes.
- Local investment structures, including citizen financing (e.g. crowdfunding) for energy efficiency.
- Market-based instruments relevant for sustainable energy (e.g. carbon finance instruments, energy efficiency obligations, etc.).
- Brokering, aggregation or clearing houses, which facilitate matching of demand and supply of sustainable energy finance.
Proposals should take into account all the following elements:
- Establish an innovative, operational financing scheme for energy efficiency and/or integrated renewables in at least 1 eligible country. Proposals can build on and/or upscale innovative financing schemes successfully tested previously[5].
- Address the provision of finance as well as the structuring of demand, in particular at regional and national level.
- Define the target region(s) and sector(s) and justify how the proposed scheme is innovative and complements available funding schemes.
- Clearly demonstrate the business case and financial viability of the proposed scheme (including e.g. market analysis, investment sizes targeted, transaction and management costs, expected energy/cost savings and other returns, etc.).
- Plan replication and/or rollout of the scheme envisaged beyond the region(s) targeted for the establishment, including the analysis of legal and market conditions for replication.
Proposals should demonstrate support of the targeted stakeholder groups and present in a detailed manner how they will be involved throughout the project.
For actions addressing innovative financing schemes focused specifically on heat pumps, please refer to topic LIFE-2024-CET-HEATPUMPS.
Proposals must be submitted by at least 3 applicants (beneficiaries; not affiliated entities) from 3 different eligible countries.
The Commission considers that proposals requesting a contribution from the EU of up to EUR 1.75 million would allow the specific objectives to be addressed appropriately. Nonetheless, this does not preclude submission and selection of proposals requesting other amounts.
Expected Impact:
Proposals should present the concrete results which will be delivered by the activities, and demonstrate how these results will contribute to the topic-specific impacts. This demonstration should include a detailed analysis of the starting point and a set of well-substantiated assumptions, and establish clear causality links between the results and the expected impacts.
Proposals should demonstrate how they will contribute to deliver adequately tailored innovative financing schemes that are operational and ready to finance investments, and the impact that this will have on investments in energy efficiency and small-scale renewables.
Proposals should quantify their results and impacts using the indicators provided for the topic, when they are relevant for the proposed activities. They should also propose indicators which are specific to the proposed activities. Proposals are not expected to address all the listed impacts and indicators. The results and impacts should be quantified for the end of the project and for 5 years after the end of the project.
The indicators for this topic include:
- Number of investors and project developers using the financing scheme.
- Number of investment projects processed/covered by the financing scheme.
- Volume of investments processed/covered by the financing scheme.
- Number of households and/or businesses benefitting from the financing scheme.
- Investments in sustainable energy (energy efficiency and renewables) triggered by the project (cumulative, in million Euro).
- Investments in building energy renovation triggered by the project (cumulative, in million Euro).
- Average % of energy savings targeted by investment projects.
Proposals should also quantify their impacts related to the following common indicators for the LIFE Clean Energy Transition subprogramme:
- Primary energy savings triggered by the project in GWh/year.
- Final energy savings triggered by the project in GWh/year.
- Renewable energy generation triggered by the project (in GWh/year).
- Reduction of greenhouse gases emissions (in tCO2-eq/year).
- Investments in sustainable energy (energy efficiency and renewable energy) triggered by the project (cumulative, in million Euro).
[1]COM(2019) 640 final
[2]COM(2022) 108 final
[3]The Energy Efficiency Financial Institutions Group (EEFIG) (https://ec.europa.eu/eefig/index_en) analyses drivers and barriers for energy efficiency investments in buildings and industry, including adequate financing instruments.
[4]https://energy.ec.europa.eu/topics/funding-and-financing/european-energy-efficiency-financing-coalition_en
[5]
