FINANCING ENERGY EFFICIENCY IN MALTA AND ITALY
Event organised by the Executive Agency for Small and Medium-sized Enterprises (EASME) in the
frame of the Sustainable Energy Investment Forums contract funded by the Horizon 2020
programme of the European Union
22 November 2018
St Julians, Malta
Financing Energy Efficiency in Malta and Italy
Page 1
Table of contents
Background to the event ............................................................................................................ 2
Welcome speech ........................................................................................................................ 3
Plenary session 1: European and national policy context ........................................................... 4
European policy in support of energy efficiency investments .................................................. 4
Mobilising the financial sector on energy efficiency ................................................................ 5
Support available from the European Investment Bank .......................................................... 7
State of play of energy efficiency financing in Malta ............................................................... 8
1A. Making energy efficiency attractive for the financial sector ................................................ 10
Introduction to the Maltese context ....................................................................................... 10
The Energy Efficiency Financial Institutions Group (EEFIG) Underwriting Toolkit and the De-
Risking Energy Efficiency Platform (DEEP) .......................................................................... 11
Overview of renovation financing in Italy ............................................................................... 12
1B. Renovation of public buildings ........................................................................................... 14
Renovation of public buildings through energy performance contracting in Italy ................... 14
Finance for energy efficiency measures in Maltese public buildings ..................................... 15
How to develop a market for ESCOs in Malta ....................................................................... 16
2A. Home renovation................................................................................................................ 17
Overview of the energy performance of the housing stock in Malta ...................................... 17
A bank experience on home renovation loans ...................................................................... 18
One-stop-shop for home renovation: barriers and opportunities ........................................... 19
2B. Energy efficiency in industry and SMEs ............................................................................. 20
Financing energy efficiency opportunities in industry and SMEs .......................................... 20
How to encourage the uptake of energy audits recommendations from SMEs ..................... 21
How to support investment in energy efficiency in the business sector ................................. 21
Closing plenary session ........................................................................................................... 23
Short reports from parallel sessions by Moderators .............................................................. 23
Conclusions of the day by European Commission and Maltese Government ....................... 24
Financing Energy Efficiency in Malta and Italy
Page 2
As part of the "Smart Finance for Smart Buildings" initiative, the European Commission is
organising a series of “Sustainable Energy Investment Forums” to enhance the capacity of and
co-operation between public and private stakeholders to develop large-scale investment
programmes and financing schemes. The SEI Forums will consist of more than 30 events in up
to 15 Member States in 2016-2019; information on past and upcoming events can be found on
the SEI Forums webpage.
BACKGROUND TO THE EVENT
The Energy Union Framework Strategy puts energy efficiency as one of its five dimensions and
states it is to be treated as an energy source in its own right. The ambitious Paris Agreement
also underlines the importance of energy efficiency. Investments in energy efficiency have
proven to be one of the most cost-effective ways to support the transition to a low-carbon
economy. Not only does it help the EU in turning its climate ambition into action, it also brings a
number of significant benefits for European citizens and companies in terms of sustainable
growth, more jobs, security of supply, lower energy bills, environment and health.
To realise the full potential of energy efficiency, public funds will not suffice and private
financing will have to be unlocked at scale. In that context, energy policy should create more
favourable investment conditions, encourage demand for energy efficiency and help consumers
undertake energy efficiency investments more easily.
This event shared best practice from Malta and Italy as well as further countries on how energy
efficiency investments can be financed. This included the use of private funds and innovative
financing instruments, notably in the building and industry sectors.
All presentations and recordings from the event can be found at:
https://ec.europa.eu/info/events/sei-forum-events/financing-energy-efficiency-malta-and-italy-
2018-nov-22_en
Financing Energy Efficiency in Malta and Italy
Page 3
WELCOME SPEECH
Ian Borg, Minister of Transport, Infrastructure and Capital Projects, Malta
Under the Maltese presidency of the EU, energy efficiency was high on the agenda, including
negotiations for the revised Energy Efficiency Directive and Energy Performance of Buildings
Directive.
There is room for more synergy between the finance sector and the construction sector to
improve the energy performance of the building stock. In Malta, average building energy
consumption is half of the EU average. Heating levels are typically low and air conditioning is
only used for a few months. The main energy load is electrical plug load. This is not down to the
buildings themselves, but to geography. There is much improvement that could be made to the
building stock.
Previous improvement support schemes have been somewhat disjointed or piecemeal
initiatives designed to tempt the general public to improve the energy performance of buildings.
There have been subsidies provided for glazing improvement and renewable energy
generation. These subsidies were intermittent, and projects were mainly supported by these
public funds. There was awareness that they would not be enough without additional private
support.
Banks are starting to offer advantageous rates for green loans. Banks are investing part of their
capital in energy efficiency. Energy efficiency is not yet a feature by design though. The
improvements needed go beyond just renewables and low energy lighting. Designs need to
build in high performance materials and make use of natural light. The lifetime cost of operating
buildings should be considered.
Architects need to be brought into this debate, it is recognised that action on new build is
important, an usually easier than retrofitting. Older buildings are more challenging, yet they
cannot be ignored. Interventions on public schools and homes for the elderly have shown that
Near Zero Energy Buildings are possible. Low energy prices have disincentivised energy
Financing Energy Efficiency in Malta and Italy
Page 4
efficiency, in part, as payback periods have lengthened. This doesn’t mean there isn’t still an
opportunity.
A new authority for construction and buildings is being crated within the Ministry. This will bring
together activities that have been separated up to now. This new Agency will monitor and
regulate construction, and will look at performance of buildings through their lifetime, including
fire safety and lifelong living adaptations. The drive will be to develop structurally sound and fit
for purpose buildings.
There is a need to develop indigenous methods suitable for Malta’s context. This will help to
foster the transition to more energy efficient buildings.
The Ministry of Transport, Infrastructure and Capital Projects is committed to this Agency
helping the transition from the current position to a more sustainable future.
PLENARY SESSION 1: EUROPEAN AND NATIONAL POLICY CONTEXT
Chair: Professor Luciano Mule’ Stagno, Institute for Sustainable Energy,
University of Malta
European policy in support of energy efficiency investments
Paolo Tosoratti, Directorate-General for Energy, European Commission
There has been a 46% increase in weather related disasters in recent years. Economic losses
rose by 86%. Climate change is impacting. Banks across the EU area are heavily exposed to
climate risk, almost 50% of their portfolios. We need quick action to decarbonise. The
implications of the IPCC’s latest report mean achieving net zero by 2050. This should be linked
to the Paris Agreement and the UN 2030 agenda which includes the 17 Sustainable
Development Goals.
The EU started action early with the Clean Energy for All Europeans package, which brought
forward 8 legislative proposals. The package was clear that putting energy efficiency first is
crucial, in addition to strong action on renewable energy generation. Full implementation of
Financing Energy Efficiency in Malta and Italy
Page 5
Clean Energy for All Europeans would result in a 1% GDP increase and 900,000 additional
jobs.
Ecodesign and energy labelling is one of the frameworks. This legislation has helped to remove
the worst energy performing products and stimulate choice towards best performing products.
45 regulations covering 30 products are in place and the existing regulations have delivered
around half of the EU wide 2020 target for energy efficiency. This package of measures has
been a success story. The low hanging fruit has been picked, now the focus shifts to where the
remaining energy saving potential is – in the buildings and transport sectors.
In July 2018 a new Energy Performance of Buildings Directive was published. In Italy, three
quarters of buildings are inefficient, and many are over 50 years old. There are 18 million jobs
in the construction sector.
To help prepare for the future, a building smartness indicator is being prepared. Significant work
is also underway to push for e-mobility. Malta would be a perfect place to use Electric Vehicles
without “range anxiety”. There will be a pre-disposition in new build buildings and in deep
refurbishments for car charging points to be installed. This is in part in preparation for vehicle to
grid interaction, but also due to the drop in the cost of Electric Vehicles (EVs). Within 5-6 years
it is expected that the lifecycle cost of EVs will be similar to fossil fuel vehicles.
Europe’s building renovation rate is very low, around 1% depending on country, and in some
cases the renovation depth is also too shallow. It is necessary to combine all kinds of
refurbishment work with energy efficiency improvement. The revised Energy Efficiency Directive
targets an EU wide 32.5% efficiency improvement by 2030.
The EU’s action plan on financing sustainable growth highlights two key elements for the
financial sector. Firstly that environmental factors have to be incorporated into lending decision
making. Secondly that standards and definitions are required for “green” investment, hence a
taxonomy is being developed.
This activity is supported by the Smart Financing for Smart Buildings initiative, with activity set
out under three pillars:
I - More effective use of public funds – Focused on improving financing mechanisms, capacity
building and the development of platforms at national level to attract more private investment.
II - Aggregation and technical assistance – Focused on stimulating demand to reach critical size
and the use of Technical Assistance at national and regional level, including one stop shops.
III - De-risking investment – focused on changing risk perception of energy efficiency
investment. There are two key products here, firstly the DEEP database, launched in November
2016 alongside the legislative proposals and containing real world data on several thousand
renovation projects, which provides investors with useful data. Secondly, an underwriting toolkit
for investors to analyse costs and benefits of investing in energy efficiency.
Mobilising the financial sector on energy efficiency
Martin Schönberg, United Nations Environment Finance Initiative (UNEP FI)
Financing Energy Efficiency in Malta and Italy
Page 6
There is an investment gap on energy efficiency and a recognised need to treat it as
infrastructure. Financial institutions are recognising the need invest more are develop new
schemes and approaches.
There is significant untapped energy saving potential. The annual energy productivity bonus
resulting from a comparison between actual 2016 GDP and the notional level of 2016 GDP had
energy intensity stayed the same is USD 2.2 trillion, with buildings representing the largest
untapped potential.
The EU’s work on a taxonomy for green investment is a driver for action and will help drive
investors to work towards a net zero carbon economy. This work is driving increasing attention
by financial institutions. According to the International Energy Agency, global annual energy
efficiency investment needs to increase by a factor of 8 to meet a 2 degrees temperature rise
pathway.
The volume of energy efficiency investment is significant and is approaching that for renewable
energy. The rate of improvement has accelerated and stands at 2% improvement every year
currently. This needs to rise to 3% per year.
There are four main challenges in energy efficiency:
I. Complexity: While renewable energy is mainly financed by project finance, for energy
efficiency the financing structures often go across asset classes.
II. Deal size: Small ticket size means that aggregation of projects is needed.
III. Embedded transactions: Energy efficiency investment is mostly integrated into other
transactions, such as real estate refinancing. There is a need for identification and
tagging of energy efficiency components in transactions.
IV. Coordination: Common frameworks need to be developed for project developers,
investors, financiers and project hosts.
Energy efficiency is a nascent market and should be initiated with concessionary finance, the
effect of which can then be leveraged, with the market then moving to a shared risk approach
and ultimately to shared standards. There will be higher engagement of private finance as the
Financing Energy Efficiency in Malta and Italy
Page 7
market grows. Standardisation of complex transactions will also be needed, and is a key
component of developing this market.
UNEP-FI have partnered with the European Commission on the Energy Efficiency Financial
Institutions Group. Their De-risking Energy Efficiency Platform (DEEP) and Underwriting Toolkit
(Value and Risk Appraisal Guide) are key outputs.
UNEP-FI have also led the development of the G20 Energy Efficiency Investment Toolkit. This
provides a collaborative architecture for policy-makers and financial institutions.
To realise the untapped energy efficiency potential, we need the private sector, insurers and
banks on board.
Support available from the European Investment Bank
Christoph Lassenberger, Fund and Structuring for Italy, Malta, Western Balkans,
European Investment Bank
In 2017, the European Investment Bank (EIB) financed €19.4 billion of climate action. €5 billion
of this went to energy efficiency. Of that energy efficiency lending, 70% goes into buildings and
an increasing share into industrial energy efficiency.
As others have noted, there are well identified barriers to financing energy efficiency. One of
these is the “split incentive” between tenants and landlords as to who pays for and who benefits
form energy efficiency improvements. There are now though innovative transactions taking
place in the Netherlands to try to overcome the split incentive barrier. Benefits of energy
efficiency to tenants are shared with the property owner in social housing. More generally, there
is a need to increase capacity within banks to finance energy efficiency.
EIB support not only lending, but also blending of funds and technical assistance advice.
On lending, EIB typically support classical investment loans of at least €20-25 million in size.
Blending work puts EU structural funds together with other sources of funding. For example in
Malta, EIB are working with the national government on an SME support initiative. The Smart
Finance for Smart Buildings support goes in the direction of blending too. The Private Finance
for Energy Efficiency PF4EE programme is also being implemented together with the European
Commission. This programme can provide a loan to an intermediary, together with a risk
sharing element, to encourage that intermediary into areas of financial support that they have
previously considered to be too risky. It includes an expert support fund, to boost technical
Financing Energy Efficiency in Malta and Italy
Page 8
expertise within the intermediary, to adapt their own internal setup or to make them more prone
to issue energy efficiency finance and to improve outreach to clients. The Smart Finance for
Smart Buildings instrument is a guarantee, where the European Investment Fund will provide a
guarantee, there may be another EFSI (Juncker plan) guarantee, plus a first loss layer.
On advising, the ELENA fund has been key. The idea behind this is to provide technical support
when it comes to defining investment projects. More than 60 contracts are in place, totalling
over €110 million of funding and supporting projects in over 20 countries. Associated
investments on the ground are estimated to be in excess of € 4billion.
State of play of energy efficiency financing in Malta
Daniela Grech, Planning & Priorities Coordination Division, Ministry of European
Affairs, Malta
Malta’s Partnership Agreement for the 2014-2020 period established three funding priorities for
EU funds, of which sustaining an environmentally-friendly and resource-efficient economy is
one. €54.5 million are earmarked for this area, a shift from 9% under the 2007-2013 period to
12% of overall funds now. Under the 2007-2013 Operational Programme, all funds were
committed and used.
So far, since 2014, under this programme area, €21 million has been committed, mostly on
renewable energy projects. These include a scheme on PV in the domestic sector, support for
efficient streetlighting and some public building retrofit. €15 million euro is going into setting up
a financial instrument. Malta is interested in the Smart Finance for Smart Buildings instrument,
and an ex-ante assessment has been undertaken, to gauge demand and look into the need to
adapt existing measures. Surveys have been undertaken within the domestic building and
commercial sectors.
The main findings of the ex-ante study show that GDP is growing faster than the EU average
although, at €22,700, is still lower than EU average. It is however expected to continue to grow
in the coming years and has already increased by about 52% in the 2009/2016 period. The
number of enterprises has increased by 25% between 2011 and 2016, however the size of the
enterprises remains very small, with 97% still being made up of micro-enterprises.
Malta has one of the lowest levels of energy consumption per capita across the EU. The
household and service sectors account for about 80% of energy consumption. The population
Financing Energy Efficiency in Malta and Italy
Page 9
typically live in cold houses during winter and cooling in summer is limited to particular rooms.
There is market failure in the energy sector. The PV sector was only really kickstarted after
public sector support was made available. Energy Efficiency is not perceived as a priority, but if
it is promoted, there is a lot of potential in this area.
A potential investment demand in energy efficiency of €117 million has been estimated for the
coming years (2018 – 2023). The corporate sector is expected to be the main contributor to this
demand, through the development of energy efficiency initiatives to both to improve buildings
and machinery. The residential sector is also expected to contribute with energy saving
initiatives in residential buildings. Demand is also anticipated from the public sector, to
implement energy efficiency initiatives on buildings (energy audits are ongoing) and for public
infrastructure (e.g. street lighting systems).
The high level of collateral required by recipient SMEs has been identified as a barrier to
financing energy efficiency improvements. Financial instruments can work alongside existing
support schemes and should be used to reduce the grant dependency of energy efficiency and
renewable energy initiatives.
€15 million will have been made available before the end of 2018. Discussions are ongoing on
state aid concerns and how to implement a financial instrument. Funding agreements can then
be signed and then expressions of interest for intermediary banks will be issued.
Financing Energy Efficiency in Malta and Italy
Page 10
1A. MAKING ENERGY EFFICIENCY ATTRACTIVE FOR THE FINANCIAL SECTOR
Chair: Oronzo Daloiso, EASME, European Commission
Introduction to the Maltese context
Jonathan Scerri, Ministry of Transport, Infrastructure and Capital Projects, Malta
Energy Efficiency is an often overlooked aspect in Maltese energy policy. The topic struggles to
become a priority on the agenda of the prominent actors in the field. From an industry
perspective it’s very hard to make people invest in energy efficiency, as they prioritise
productivity. The payback period for energy efficiency investments is considered to be too long
and the view is that investing into productivity will always pay back more quickly. From an
energy production perspective, Malta’s situation has improved. Pricing has been the main driver
to improve energy efficiency.
From an infrastructure (and buildings) perspective, energy efficiency has not been so much of a
concern. Malta has the lowest target in the EU, due to the context and the climate. The priority
is on renewable energy generation.
Another barrier, which is not specific to Malta, but is more evident, is the size of the projects,
which are too small to be financially attractive. The investment required for projects to be
implemented are too high in comparison to the benefits. An ambitious aggregation strategy is
needed in order to scale up investment in energy efficiency.
There is lots of room for improvement, but each sector should be addressed with its
particularity.
Financing Energy Efficiency in Malta and Italy
Page 11
The Energy Efficiency Financial Institutions Group (EEFIG)
Underwriting Toolkit and the De-Risking Energy Efficiency
Platform (DEEP)
Mark Scicluna Bartoli, Bank of Valletta, Malta
The Energy Efficiency Financial Institutions Group (EEFIG) was established in 2013 by the
European Commission Directorate-General for Energy (DG Energy) and United Nations
Environment Programee Finance Initiative (UNEP FI). It created an open dialogue and work
platform for public and private financial institutions, industry representatives and sector experts
to identify the barriers to the long-term financing for energy efficiency and to propose policy and
market solutions to them. It has engaged 120 active participants from 100 organisations.
In February 2015, EEFIG presented its report "Energy Efficiency – the first fuel for the EU
Economy: How to drive new finance for energy efficiency investments" which provided a
significant advance in the understanding and knowledge about the issues of energy efficiency
financing. Its recommendations for both the buildings and industry sectors are still being
addressed by EEFIG, the European Commission, the G20 and many others. The report made a
number of recommendations on areas including underwriting for debt and equity investments,
risk assessment and related capital requirements for long-term energy efficiency investments,
addressing barriers to expanding the green mortgage market and examining the use of
factoring funds for Energy Performance Contracts.
EEFIG’s second phase was largely based on two main deliverables. Firstly in November 2016,
EEFIG's De-risking Energy Efficiency Platform (DEEP) was launched with over 7,800 projects
in an open-source, pan-EU database to improve the sharing and transparent analysis of
existing energy efficiency projects in Buildings and Industry. Secondly, in June 2017, the EEFIG
Underwriting Toolkit was launched. The toolkit is aimed specifically at financial institutions that
are looking at ways to design better financial products for energy efficiency investment projects.
It is essential to reach out to the financial community to be active in addressing our low-carbon
energy transition. This is particularly important for energy efficiency, where financial institutions
Financing Energy Efficiency in Malta and Italy
Page 12
have traditionally had less exposure and capacity to analyse the creditworthiness of energy
efficiency measures. The energy efficiency challenge also requires significant investment. Thus,
it is essential that the financial community be fully committed and fully ready. EEFIG is only
one, but an important, way of getting the financial institutions fully involved.
A follow up initiative "EEFIG 3.0" will be rolled out in 2019. There is a need for sectoral
stakeholders to continue discussing issues with the financial community, the Commission and
UNEP-FI. There cannot be a reliance on legislation alone. It is fundamental that non-legislative
initiatives such as EEFIG bring stakeholders together.
Overview of renovation financing in Italy
Angelo Peppetti, Direzione Strategie e Mercati Finanziari, Italian Banking
Association (ABI)
In Europe, lending to the private sector is growing again, this growth is especially fast in the
case of Italy, which is above the EU average rate since the beginning of 2016.
However, in Italy, the ratio of mortgages to GDP remains below the EU average (21.9 vs 45.7).
Additionally, only 5% of these loans are taken for renovation, as against 74% of them being
taken for purchasing in 2018. Based on these figures, ABI has come up with several aspects
that should be prioritized in order to increase the use of residential mortgages for renovation:
fiscal drivers (reducing expenses), cultural drivers (raise awareness), improving the real estate
«quality» (and «market value» for future investments), positive macroecomic impacts (access
to credit), savings from lower utility bills (more money available).
With these considerations in mind, the Energy Efficient Mortgages Initiative, under which
umbrella the EeMAP and EeDaPP initiatives runs in parallel, is based on the realisation that: (i)
banks, in financing the purchase of homes, can play a game-changing role in supporting the
EU’s energy savings targets, by bringing energy efficiency into the conversation between banks
and consumers and (ii) it is essential to gather and access large-scale data relating to energy
efficient mortgage assets (loan-by-loan) for the purpose of risk analysis through an
accompanying data protocol and portal.
The idea is to incentivise and channel private capital into energy efficiency investments by way
of preferential conditions linked to the mortgage financing mechanism, which is entirely
independent from, but complementary to, public funds, tax incentives and utility rebates. The
Financing Energy Efficiency in Malta and Italy
Page 13
data protocol and portal will enable large scale recording of data relating to energy efficient
mortgage assets, allowing for continuous tracking of their performance.
The ultimate success of the initiative rests on two assumptions, which have already been
recognised across a series of market and academic studies, and which will be further
substantiated via the EeMAP and EeDaPP Initiatives. The first assumption is that improving the
energy efficiency of a property has a positive impact on property value, reducing a bank’s asset
risk. The second assumption is that energy efficiency borrowers have a lower probability-of-
default as a result of more disposable income in the household due to lower energy bills,
reducing a bank’s credit risk.
Financing Energy Efficiency in Malta and Italy
Page 14
1B. RENOVATION OF PUBLIC BUILDINGS
Chair: Andrew Deacon, Climate Alliance
Renovation of public buildings through energy performance
contracting in Italy
Dario di Santo, FIRE
The Energy Performance Contracting (EPC) market in Italy is well developed and is moving
towards Nearly Zero Energy Buildings. Italy has implemented a standard for the certification of
Energy Service Companies (ESCos).
One of the main issues is the lack of resources and know-how on how to use EPC (for the
public sector). Incentive schemes in Italy are designed to use EPC, with either an ESCo or the
end-user providing financing. Measurement and verification of savings and performance is an
important topic and has been one of the main barriers to progress. FIRE decided to promote the
IPMVP protocol and have translated this into Italian. This measurement and verification protocol
is now being specified in EPC tenders.
Energy agencies have developed skilled facilitation teams and under the Horizon 2020 funded
GuarantEE scheme, project promoters are being identified.
There are 940 ESCos in Italy, most are small organisations created to benefit from white
certificate (Energy Efficiency Obligaiton) schemes and many don’t have the capability to deal
with large public tenders.
In the public sector, the types of interventions are typically large and holistic, including
cogeneration, trigeneration, renewable energy and lighting. A survey conducted in 2016
showed that around 60% of public authorities were using performance contracts, but only 10%
were using EPC. The feeling was that more reliable monitoring and verification is needed to
increase the appeal of these contracts. Contract size is usually below €500k and often below
€200k. 5-15% energy savings from baseline are typical.
From examples from the Marte region, Padova and Bologna, the complexity of the offer, the
need for reliable monitoring and verification and the ability to demonstrate results had emerged
as key learnings.
Financing Energy Efficiency in Malta and Italy
Page 15
Finance for energy efficiency measures in Maltese public
buildings
Diane Cassar, Malta Intelligent Energy Management Agency (MIEMA)
Research undertaken as part of the Interreg-Med New Finance project has shown that there are
more than 9,000 public buildings across Malta and Gozo. Historical building issues are key
when thinking about renovation in Malta. The project has established an enabling platform for
exchange between public authorities and financial institutions.
Maltese public buildings typically use lots of limestone and insulation is not popular. There is
scope to improve the energy performance of the building stock and the majority of buildings
could benefit from financing for energy renovation. Projects are usually funded through the
public budget and this may not be enough alone in the coming years.
Results from 26 interviews from public authorities across the EU had investigated main barriers
to greater action in this sector. The main issued raised was the lack of standard procedures,
especially for smaller buildings. Other issues included the lack of regulation for EPC and the
lack of capacity.
ESCos don’t really exist currently in Malta and it will be important to lay the ground for what will
come in future.
A new project, STEPPING, is building on the previous work. Pilot studies on 3 schools in Malta
are being conducted, 1 in Gozo and the local councils association building in Malta. An
investment plan will be developed to allow them to undertake an EPC. Building envelope only
projects are proving difficult and renewable energy generation is being built in to make the
business case work.
Financing Energy Efficiency in Malta and Italy
Page 16
How to develop a market for ESCOs in Malta
Norman Zammit, President of the Chamber of Engineers
Malta’s energy mix is comprised of gas LNG and an interconnector, plus black start machinery
(diesel fired turbines). By 2050, Europe is aiming for net zero emissions, considerable rapid
progress will need to be made. 2018 saw a 4% increase in energy demand.
On public building renovation, an ESCO won’t typically finance the energy efficiency measures
themselves. Barriers to action include product offers being ahead of the curve for investors and
other decision makers. Banks expect standardisation and volume might be lacking. Energy
efficiency solutions have to be structured to resemble standard lending. Banks will not
necessarily adapt just for this sector, so offers have to be adapted accodingly.
For Malta, the the ESCo definition may have to be re-dimensioned. The definition could include
utility companies, building equipment manufacturers. It would be easier to start an ESCo as a
subsidiary of a larger organisation and then work to grow the market. Renewable energy policy
also needs to diversify from PV, with offshore wind and solar and marine turbines being
considered. As demand is still going up, there are additional demands on energy generation.
There are opportunities for further research on building demand side control. There are some
large construction projects coming, these will provide an opportunity to look into ESCo activity.
The key issue is ownership and financing of risk.
Financing Energy Efficiency in Malta and Italy
Page 17
2A. HOME RENOVATION
Chair: Roberta Vella, Ministry of Transport, Infrastructure and Capital Projects,
Malta
Overview of the energy performance of the housing stock in
Malta
Vincent Buhagiar, Faculty for the Built Environment, University of Malta
A study was carried out on a typical housing block to determine whether energy efficiency
measures could be replicated in similar governmental housing blocks to reduce the energy bills
of the tenants while improving their thermal comfort. Typical Maltese buildings tend to suffer
from extreme heat during the summer while maintaining adequate temperatures during the
winter months.
A case study in Ta’ Giorni area was carried out to determine the building performance during a
period of one year. The building was thought to be cool during the summer months due to being
relatively close to the sea. During the duration of the study, the attitude of the tenants towards
thermal comfort was also noted. While in recent years, air-conditioning systems have become
more affordable, running costs are still an issue. From the results, it could be noted that heat
transfer to the outdoors is significant, together with heat being lost from the window frames.
These factors led to the bedrooms, located on the north side, to be very cold resulting in poor
thermal comfort.
A considerable time lag in heat transfer could be noted, due to the thermal mass of the building
envelope. Insulation increased the effect of thermal inertia in the building, reducing the heat
entering the building. The building was retrofitted with a number of measures to determine
which of these factors are beneficial to the current and future apartment buildings. The original
window apertures were replaced with double glazing frames. Insulation boards were attached
directly to the internal walls with adhesive. Retrofitting of the roof was also part of the project,
to eliminate excessive heat in the top floor. Ventilation was integrated as part of the project to
maintain healthy humidity levels. It was imperative that the data collection was maintained after
the retrofit was completed to determine the effectiveness on the overall thermal comfort.
Financing Energy Efficiency in Malta and Italy
Page 18
A bank experience on home renovation loans
Edward Grech, Consumer Finance, Bank of Valletta
While an Energy Performance Certificate (EPC) is necessary to sell a property, it is felt that it
does not have a weighting on the price of the building. Few developers are marketing energy
efficient measures in their buildings, as they may be perceived to increase the cost of the
property, reducing its potential to be sold. Having a property with a high EPC rating should have
added value on the price and such properties should not be treated equally alongside other
properties which do not have these features. Otherwise, the EPC will continue to be an added
expense.
Currently, banks cannot distinguish whether the equipment to be bought is energy efficient or
not without taking into consideration the running costs. If the equipment to be bought requires a
higher initial capital cost with minimal running costs, the loan can be repaid over a shorter
period of time based on the same initial capital. If banks were to have technical expertise with
regards to energy efficiency loans, the banks would be more willing to offer higher loans
depending on the return on investment. Currently, personal loans are offered for equipment,
upgrading the personal property with insulation and more. To entice the interest of the public,
these have lower interest rates than motor vehicle loans.
An increase in the uptake of energy efficiency measures could be facilitated by providing direct
financing to equipment retailers without the need for the buyer to apply for a bank loan. To be
implemented, the cost savings in the loan mechanism are to be included as part of the
repayment and thus the customer could be offered a higher loan.
Financing Energy Efficiency in Malta and Italy
Page 19
One-stop-shop for home renovation: barriers and opportunities
Marco Devetta, Sogesca
The one-stop-shop was introduced and led by the municipality of Padova. Across Italy, until
recently, a significant portion of the energy bill could be attributed to heating. Nowadays,
cooling is becoming more significant due to the temperatures being recorded through the
summer months.
A number of Energy Service Companies (ESCOs) are being set up to bridge the gap between
the building tenants and the energy provider. The first task to be carried out is data collection
throughout the condominium, to determine the measures to be undertaken during the energy
refurbishment. It is essential to emphasize the term energy refurbishment, as the municipality
will only provide the necessary funds to carry out energy audits if the building will be refurbished
to reduce the energy costs. Following analysis of the data collected during the investigation
period, the works are carried out by the ESCO, without any involvement from the tenants. The
return on investment would be based on the savings from the new technology installed in the
condominium. After the works are completed, the tenants would still pay roughly 95% of the
energy bill amount prior to the upgrade. The difference between the 95% bill and the new
reduced bill would be the repayment to the ESCO. ESCOs are chosen by public tender. To
start the works, a private-private contract will be signed between the ESCO and the
condominium.
These projects have an added value for citizens, as they benefit from free energy audits,
increased knowledge related to energy efficiency, fixed heating costs, reduced CO2 emissions,
improved thermal comfort and increased value of the property. The improved thermal comfort in
the building also leads to better health of the occupants.
Financing Energy Efficiency in Malta and Italy
Page 20
2B. ENERGY EFFICIENCY IN INDUSTRY AND SMES
Chair: Charles Buttigieg, Malta Water and Energy Agency
Financing energy efficiency opportunities in industry and SMEs
Rene Saliba, Malta Development Bank
Malta Development Bank (MDB) are acting as a catalyst for sustainable development and
inclusive and sustainable growth. The Bank performs a promotional role and has a remit to
support the private sector, particularly SMEs, including through credit enhancement. In more
detailed phases of work, the Bank can provide Venture Capital and advisory services.
There is a €180 billion annual investment gap across the EU to meet clean energy targets and
for Malta, more energy efficiency and renewable energy projects are needed. The MDB makes
use of multiple funding sources, and will on-lend, through intermediary banks, to SMEs and
individuals and infrastructure projects.
It is possible to combine funds at financial instrument level. These could combine EU structural
funds with Development Bank co-financing and could provide a guarantee fund to underwrite
commercial banks. A €10 million guarantee fund can leverage to €50 million of investment.
Structural Funds can be used to reduce the cost of interest payments and to make loans softer.
MDB can blend at project level too, blending EFSI and structural funds as other EU Member
States have done.
Financing Energy Efficiency in Malta and Italy
Page 21
How to encourage the uptake of energy audits
recommendations from SMEs
Karl Herrera, Malta Enterprise
Malta Enterprise has made available financial support schemes to help make business more
profitable and to make them more efficient. Take up is not as high as expected. Private
companies will typically go for a new production line before investing in energy efficiency. Malta
Enterprise are working to make energy efficiency more known and to increase consideration of
these investments.
Investment aid is available specifically for highly efficient co-generation and can support plant
upgrades as well as new plant. Financial support can also be provided for schemes in
manufacturing systems, lighting, heating and cooling in the hotel sector. An application for this
funding line would require a link to an energy audit.
How to support investment in energy efficiency in the business
sector
Geoffrey Saliba, Malta Business Bureau
Financing Energy Efficiency in Malta and Italy
Page 22
EU energy saving targets are an important driver for action. While the 2020 targets are
achievable technically, they may not be economically feasible. New energy efficiency measures
will be needed, so additional financial support is very welcome.
There are four key barriers; the economic environment, the legislative environment, capacity
and financing.
On the economic side, it is important to catch businesses at exactly the right time when they are
thinking about renovating. Decision making cycles on this can be over a 10-15 year time period.
Operations and buildings may be separated strategically, but not operationally. Energy
Efficiency audits are in their infancy in Malta. It would be good to raise the bar on audits across
Malta. There are around 70 energy auditors in Malta, with an excellent technical understanding
of energy efficiency, return on investment etc, but when it comes to why end users should act,
then they struggle. Presenting the business case for energy efficiency is a key skill. Not all
companies might be willing to pay for an energy auditor.
On financing, greater variation in terms of financial product offers is needed and length of
payback is an important consideration. 7 years might be considered long for Malta. Malta has a
diversified industry/SME sector, including for example injection moulding, currency printing,
steel polishing and marble cutting, so any financial instrument should try to accommodate
multiple sectors’ needs.
There is a need to look at the EU targets. If Malta focuses only on the “lucrative” shorter
payback measures, then it won’t hit EU targets. To reach the targets Malta’s energy and
buildings community will have to venture well outside of their comfort zone.
Internal capacity within business varies greatly. The second round of Energy Efficiency
Directive audits are due at the end of 2019. These will gather a lot of useful data. 2019 would
therefore also be an ideal year to launch a financial support instrument. Larger businesses will
have to decide at the end of the year which improvement measures to adopt, and financial
support might help them to decide how to proceed.
Financing Energy Efficiency in Malta and Italy
Page 23
CLOSING PLENARY SESSION
Chair: Professor Luciano Mule’ Stagno, Institute for Sustainab le Energy,
University of Malta
Short reports from parallel sessions by Moderators
1A. Making Energy Efficiency Attractive for the Financial Sector
Chair: Oronzo Daloiso, EASME, European Commission
Energy Efficiency has so far not been a priority for banks because savings don’t always
pay back the loans, but the potential is there.
Blending of different funds can be complex and State Aid implications are not always
readily understood and can be a barrier
Financial incentives to create demand could be linked with those for renewable energy
generation
Awareness raising and capacity building in the financial sector has an important role to
play
1B. Renovation of Public Buildings
Chair: Andrew Deacon, Climate Alliance
There is an important distinction to draw between public buildings and public authority
buildings in terms of ownership and occupation
There is a need to build knowledge and capacity among building owners, occupiers and
managers in order to drive demand for energy efficiency improvements
While overall renovation has a high profile, all public funds should include energy
renovation as a key area to be addressed
There is a lack of standardized procedures, this is a key barrier to action for Malta
Renewable energy generation can be integrated into energy renovation projects on
public buildings in order to improve the business case for action
Building performance benchmarking has an important role to play, and could be a first
step towards target setting for renovation performance improvements
Financing Energy Efficiency in Malta and Italy
Page 24
2A. Home Renovation
Chair: Roberta Vella, Ministry of Transport, Infrastructure and Capital Projects,
Malta
There is potential to improve energy consumption in social housing by educating tenants
in alternative methods to achieve thermal comfort. A multitude of measures can be
integrated (such as double glazing, roof insulation and ventilation to keep humidity levels
in check).
In Malta, the EPC rating is not given any weight in the price of property. Banks cannot
distinguish between one measure and the next in terms of energy saving in renovations.
Thus if there was technical input, banks would be more willing to provide higher loans
with respect to energy efficiency measures
The ESCO concept is interesting and a useful example from Italy (PadovaFIT) was
shared.
2B. Energy Efficiency in Industry and SMEs
Chair: Charles Buttigieg, Malta Water and Energy Agency
While energy may not be the topmost issue for industry and SMEs, support schemes
exist and there are further opportunities for energy efficiency improvements in the sector
in Malta
The timing of introduction of schemes is important as businesses may have a limited
time to decide to take forward energy improvements
Schemes to build knowledge and awareness are also important, these can be linked to
energy management systems.
SMEs should also get support for the development of energy improvement
applications/schemes.
Conclusions of the day by European Commission and Maltese
Government
Paolo Tosoratti, Directorate-General for Energy, European Commission
Climate and energy is bringing a paradigm shift in the way we work and the way that
we think about buildings. This is the case at many levels and work is needed at all
levels and to continue to exchange experiences and views. There is a need to continue
awareness raising with all stakeholders. Conditions to leverage investments will then
follow. We have to think differently and promote different values. Thermal comfort from
a well-insulated apartment is one positive value to promote.
Jonathan Scerri, Ministry of Transport, Infrastructure and Capital Projects, Malta
There is not enough demand for energy efficiency and it seems that currently that
renewable energy is more attractive. Energy efficiency comes lower down the agenda.
There are though a number of things that could be done to raise its importance. These
include greater awareness raising, making better use of demonstration buildings that
are available and making lifetime and lifecycle costs more apparent. Energy efficiency
brings improved quality of life. People often speak about cost, but there are some
unquantifiable benefits that result from energy efficiency. Building improvements also
Financing Energy Efficiency in Malta and Italy
Page 25
translate into health benefits. We do know how to make our buildings more energy
efficient, but we need to raise interest among the public to reach our targets. The
technology is there, the funding seems available, but the Ministry want to close the
circle by increasing demand.
Top Related