Financial alternatives for Energy Efficiency Título Presentación...Create a programmatic approach....
Transcript of Financial alternatives for Energy Efficiency Título Presentación...Create a programmatic approach....
Título PresentaciónFecha: Friday, January 12, 2018
Financial alternatives for Energy Efficiency
Innovative financial alternatives
Profiles charts
Profile 1 ±
Profile 2. ±
Profile 3 ±
Profile 4 ±
Solvency of the Final recipients
Project viability
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Innovative financial alternatives
Profiles charts
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Solvency of the Final recipients
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Project viability
Non Residential Buildings
Rehabilitation
Residential Buildings Rehabilitation
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Three solutions for buildings retrofits covering all the potential targets
Financial InstrumentNord pas de Calais
• Aimed at companies orinvestment vehicles
• Targets: Energy efficiency, renewables, circular economy, sustainabletransport and inteligent networks
Green RevolvingFund
• Aimed at LargeConsumers: Universities, publicbodies and othernon-profitinstitutions
• Targets: Sustainableinvestments in theirfacilities, includingbuilding retrofits
Euro Pace
• Aimed at any real stateproperty, includingpublic bodies, industrial and services. Specialyadapted to residential
• Targets: Buildingretrofits
Profile 1 and 3Size ±
Profile 1 and 2Size +
Profile 1, 2, 3 and 4Size ±
Preferential profile 4 -
Ongoing instrument in Nord Pas de Calais
Ongoing instrument in USA
Ongoing instrument in USA, Canada, South Afrique and
Australia.Currently in Europe
BEI Inestment Platform. Integration of financial solutions
All the final solutions integrated in a unique platform, with the compromise of co-investment of EIB (Through
EFSI Fund), Nation, Region or group of Regions (Through European structural Funds) and private investors:
Wide-angle" effect, possibility to cover the different profiles of the very different final beneficiaries
(citizens, SMEs and public institutions).
Massive effect, Moore's law effect (expresses that approximately every two years the number of
transistors in a microprocessor doubles), exponential growth by:
Achieving the attraction of private capital for the various instruments, obtaining two issues
relevant to them: adequate risk / return ratio and an effective flow deal (project capture).
Achieving the attraction of the final beneficiary of the measures
Working from the demand side (buy side or demand side) is to work from the side of need, and
therefore approach it. To work the "buy side" you must involve business organizations, chambers of
commerce, sectoral associations and public institutions, granting comfort to the final beneficiaries and
commitment of execution and operative.
The three solutions integrated in one Platform, with the compromise of EIB to Invest.
Giving confidence and confort to the final beneciaries
Innovative financial alternatives
Nord Pas de Calais
• CAP Troisième Révolution Industrielle Nord-Pas de Calais, France
Profile 1 and 3Size ±
Ongoing instrument in Nord Pas de Calais
Combination of ESIF and EFSI support on the example of Région Les Hauts de
France
CAP 3ème Révolution Industrielle
CAP TRI has been developed on a State
aid compliant basis
The technical support grant
element is an aid which falls
within the de minimis limits.
Combination of ESIF and EFSI support on the example of Région Les Hauts de
France
CAP 3ème Révolution Industrielle
Main Characteristics:
Funding through Ordinary shares, Preference shares or Convertible bonds with the goal toGrowth Capital, positioning with minority interest
7 years horizon
Investment Tickets > 1 M € y < 5 M €. and up to 10 M € in co-investment with other existingfunds of manager.
Technical assistance of 2,5 M. € (Technical, environmental or economic studies)
Combination of ESIF and EFSI support on the example of Région Les Hauts de
France
CAP 3ème Révolution Industrielle
Main sectors of interest:
Renewables energies
Intelligent and alternative mobility (éco-transport, multimodal transport, logistics car-poolingplatform…)
Energy management (Connected buildings, passive buildings, energy storage, meters for
consumption control…)
Energy efficiency (Charging stations for electric vehicles, energy retrofitting of buildings, 3Dprinting…)
The circular economy (valorization of recycled materials and waste, eco-construction ...)
Sharing economy and the economy of functionality (self-service bike, rental car sharing...)
Combination of ESIF and EFSI support on the example of Région Les Hauts de
France
CAP 3ème Révolution Industrielle
SPVEnergy Asset
The Fund
Technology Partner
Energy Efficiency Service/ Energy Supply
Client
EPC, O&M Contracts
Equity Stake in selected cases
$
$
$$
Innovative financial alternatives
Green Revolving Fund
• A Fund that re-invest its return in new projects in the same final recipients facilities, in a continuous process of improvement towards
sustainability• Similar Structuring and implementation than Cap Tris Sas from Nord Pas
the Calais
Profile 1 and 2Size +
Ongoing instrument in USA
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Energy Efficiency Green Revolving Fund
Identifyenergy waste
Finance EficiencyProject with Green
Revolving Fund
Repayservices from
energysavings and
the GRF reinvest the
return
Continuous Improvement
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Revolving effect in financial instrumentsFigure from “Ex-ante assessment methodology for financial instruments in the 2014-2020 programming period”
Innovative financial alternatives
Continous process of reinvest and
permanent improvement
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Potential financial instrument: European
Structural Investment Funds
Fund of Funds
GRF
Final recipient.Only one
Managing Authtority
€
€
€
Return only in
specific cases
Return On
Investment
Return only at the
end of the life
fund
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Potential financial Instrument: implementation
Public and Private
Partnership involving
Technical, financial and
managing issues
Fund of Funds
GRF
European
Structural
Funds
Managed by
Public body
Managed by a
outstanding private
General Partner
Equity Fund of Funds
EFSI (Mezzanine Loan)+ Private
investors
€
€
Targeted
Final
Recipient
Project1
Project2
Project3
Projectn
------
€€€
€
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Potential financial instrument: financial
structuring and implementation
no reimbursement
expected to Fund of
Funds or managing
Authority
GRF: Financial
Instrument
SPV 1
(Financial ESCO) SPV n
(Financial ESCO)
…
.
Equity &
Mezzanine
Debt (with
no return).
European
Funds
SPV n
Equity Fund of Funds.
Investors
GRF. Financial Instrument Scheme
Bank Debt
Optional, depending
on market
conditions and pipe
line of projects
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Potential financial instrument: ex ante
assessment
Targets of final recipient: large energy consumers, public or private
Universities
Public Bodies
Hospitals
Public schools
office buildings
Other public facilities
Other Non Profit Institutions
Large energy consumers or business associations of large energy consumers (e.g.
associations of cement, chemicals, steel, breweries, Private hospitals, etc)
Minimum size of the fund: 5 M €
Project IRR target ranged between 6%-8%
Pay Backs < 10 years
Contract supported: EPC, Operative Leasing, PPA (Off Balance Sheet Finance). OFF BALANCE
SHEET
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Potential financial instrument: ex ante
assessment
Ex ante assessment feasibility is needed
No state aids involved, is market conform
No preferential remuneration is needed to attract private investors
No asymmetric profit-sharing
No asymmetric loss-sharing
No preferential fee payment to the managers to the extent they are
also co-investors
Good alignment of interest with private managers, achieved with a
significant investment share and remuneration linked to success
Financial instruments may be combined with grants, interest rate
subsidies and guarantee fee subsidies (art. 37 of Common Provisions
Regulation).
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Example GRF for University
GRF:Investment Committee
integrates technical, financial, legal experts, etc from the University
University(or Group of Universities)
SMEs sector (ESCO, Technologists, etc)
Development and installation of the project.
ESCO or engineers design, install and are responsible of the maintenance during the
contract period
Advanced energy service contract. EPC
GRF provides 100% of the cost of the project.
University’ payments are based on savings. Part of the savings can be directed to the research in sustainable fields.
Services Performance Contract.GRF executes a Turn Key contract (or BOOT
contract, or PPA) to cover all project installation and maintenance services
SMEs sector (ESCO, Technologists, etc)SMEs sector (ESCO,
Technologists, etc)SMEs sector (ESCO, Technologists, etc)
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Example GRF for UniversitySEED Fund = 100 ($)
Equity20
Mezzanine Debt0
European Funds(Revolving)
50
Bank Debt
30
Project DataAnnual Net Saving ($) 15 $Contract period 10 YearsMaturity Equity Return 10 YearsExpected Equity Return 12%Interest on Debt 3%IRR Project 8,14%
European Structural Funds Involved: 50
Leverage Ratio (additional private and public resources) >= 50/50(depending on the bank debt).
Accumulated Investment in 10 years 221,75 €
Accumulated resources for Institutional and R&D proposals = 15(10% of Total Savings)
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Example GRF for University
An alternative is phasing the seed funding process in 5 years, investing in 5 different projects (one eachyear) with capital calls with the same financial structuring:
Year 1 Year 2 Year 3 Year 4 Year 5
1st Capital Call 100
Equity20
Mezzanine
0
EuropeanFunds
(Revolving)50
Bank Debt
30
2th Capital Call 100
Equity20
Mezzanine
0
EuropeanFunds
(Revolving)50
Bank Debt
30
3th Capital Call 100
Equity20
Mezzanine
0
EuropeanFunds
(Revolving)50
Bank Debt
30
4th Capital Call 100
Equity20
Mezzanine
0
EuropeanFunds
(Revolving)50
Bank Debt
30
5th Capital Call 100
Equity20
Mezzanine
0
EuropeanFunds
(Revolving)50
Bank Debt
30
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Example GRF for University
AccumulatedInvestments in
14 years1.230
ESIF = 250Leverage
(Others) = 250Revolving = 730
1th Capital Call thatamounts
100 ESIF = 50
2th Capital Call thatamounts
100 ESIF = 50
3th Capital Call thatamounts
100ESIF = 50
4th Capital Call thatamounts
100 ESIF =50
5th Capital Call thatamounts
100ESIF = 50
0,00
200,00
400,00
600,00
800,00
1000,00
1200,00
1400,00
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Accumulated investments
¡Without considering potential releverage!
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Energy Efficiency Green Revolving Fund. (GRF)
There are several key advantages that revolving funds hold over traditional non-revolvingexpenditures. Revolving funds:
Demonstrate the business case for sustainability. GRF tracks the savings into future projectscreating a measurable return on investment (ROI)
Engage and educate the community. GRF can bring diverse stakeholders together to makedecisions about investments and build a sustainability strategy
Convey reputational benefits. It is a unified, purposeful investment vehicle that generates morepositive press than conventional top-down investments.
Catalyze a culture shift. A GRF provides constant focus on the idea that you want continuousimprovement until you get to a carbon footprint of zero.
Create a programmatic approach. A GRF creates a formalized program of sustainability investmentsrather than a series of one-off projects
Leverage savings into opportunity. Way for organizations to capitalize on the savings of theprojects in order to promote sustainability in general.
Track performance. You cannot manage what you do not measure
Seize new fundraising opportunities
Innovative financial alternatives
EuroPace
• A mechanisme to pay the energy services through property taxes (On TaxFinancing)
All ProfilePreferential 4-
Ongoing instrument in USA, Canada, South Afrique and
Australia.Currently in Europe
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EuroPace
Previous
Launched in California in 2008.
In the US:
$4.7 billions in funded projects
More than 42,000 new local jobs and the creation of hundreds new companies.
It was successfully implemented in Canada, Australia, and more recently in South Africa
Currently, an approved H2020 project to carry out EuroPace in Europe
Technical assistance
One municipalities developing EuroPace
4 additional Pilots in big municipalities
Replicable throughout Europe
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EuroPace
Innovative Financing
100% up-front financing
Long-term financing, up to 20 years
Can be combined with utility, local, regional, and state incentive programs
Financing is attached to the property – can be transferred to a new owner upon sale
Financing is repaid with regular property taxes
Investors enjoy a senior lien position and security of repayment
Is not “more taxes”, is accepted voluntarily by the final recipient as a easy way to rehabilitate
New taxes are not integrated in the public budget, the municipality acts as a collection manager for aprivate fund
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EuroPace
People-Centric Deployment
Simple and clear value proposition that speaks directly to people’s needs
Local energy services contractors working as sales force
Digital platform allows for quick and easy approvals
Technical and customer assistance is provided throughout the process
Comprehensive consumer protection policies
Local programs determine:
Measures and equipment
Approved companies
Standardization and certification
City planning regulations in neighborhoods
Policies related to carrot and stick game
etc
Título PresentaciónFecha: Friday, January 12, 2018
Thanks for your attention