URBAN ENERGY AND CLIMATE CHANGE PROGRAMMES: THE ELENA FACILITY Juan Alario, Associate Director European Investment Bank (EIB) 14/12/2009 European Investment Bank / ELENA Facility

1. Urban Energy and Climate Change Programmes Substantial variations of energy consumption in cities: the largest consumer is usually buildings, followed by transport and to a lesser extend industry. Final energy demand in 2020 under “20/20/20 objectives” scenario -12% in relation to baseline. 67% of reduction corresponds to residential/tertiary (buildings), 18% industry and 15% transport. Main RES in urban areas: solar (PV/thermal), biomass, geothermal and waste-to-energy To achieve 20/20/20 objectives, need to launch large Energy Efficiency (EE) & Renewables (RES) programmes in urban areas Reduction of transaction costs by regrouping small projects Attract the attention of investors, access to competitive financing and subsidies 14/12/2009 European Investment Bank / ELENA Facility

2. The three pillars of a Urban Energy and Climate Change programme Creation of an entity to develop the programme: Organisation and technical capacity of the entity: Elena support Regroup projects in packages and develop a standard approach Access to competitive financing: Local authorities often limited possibilities to invest Involvement of the private sector, notably ESCOs EIB has develop specific instruments Access to subsidies: Efficient use of subsidies: focus on market barriers How best combine subsidies with loans 14/12/2009 European Investment Bank / ELENA Facility

3. Example of a Local Climate Change project European Commission ELENA funds Supporting entity - Leads the operation - Manages TA and assists municipalities Municipalities - Provide projects - Delegate some aspects to supporting entity - May receive or provide remuneration to private companies EIB ELENA Advise supporting entity - Follows ELENA EIB Lending Financing to Interm. Banks Combining subsidies&loans Private companies / Households - Implement projects - May receive or provide remuneration to municipalities Intermediary Banks Finance projects (incl. on-lending of EIB funds) 14/12/2009 European Investment Bank / ELENA Facility

4. European Local ENergy Assistance -- ELENA Technical Assistance Support local/ regional authorities: Feasibility studies Additional technical staff Technical studies Procurement/tendering Financial structuring INVESTMENT PROGRAMMES / PROJECT EE and RES investment in public and private buildings, including street and traffic lighting: refurbishment of buildings, PV, CHP, etc.; Urban transport, such as high energy efficiency buses, electrical cards, improve transport logistics; Local energy infrastructure to smart electricity grids, ICT to support EE&RES, charging points for electric cars, etc. 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility 5. Key conclusions Elena support the transition from policy commitment to actual investments Elena is an innovative instrument that links TA to investments It will support the development of urban programmes that can be replicated in other cities or regions It aims at a broader utilisation of innovative techniques, processes, products or practices 14/12/2009 European Investment Bank / ELENA Facility

Example of energy efficiency for municipal buildings Province as supporting structure Objective: assist small LA in its territory to lever energy efficiency potential in municipal buildings (e.g. schools) Preparatory activities: i.a. simplified energy audits carried out for ~ 300 schools in view of identifying most energy wasting sites Elena support requested: Set up of investment programme support unit Selecting of investment implementation procedure (e.g. EPC/PPP or direct investment or combination of both…), preparation of feasible lots Preparation of tender documents and contract negotiation with suppliers 14/12/2009 European Investment Bank / ELENA Facility

Example of energy efficiency and PV for municipal buildings District as supporting structure Objective: assist small LA in its territory to lever energy efficiency potential in municipal buildings (e.g. public lighting) and build PV plants on public building’s roofs Preparatory activities: i.a. simplified energy audits carried out for ~ 100 public lighting systems and available surface on roofs of public buildings in 100 LA Elena support requested: Set up of investment programme support unit Selecting of investment implementation procedure (e.g. EPC/PPP or direct investment, for PV direct investment or renting of roofs with special rent agreements …), regrouping in view of critical size Preparation of tender documents and contract negotiation with suppliers 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility ELENA-European Local Energy Assistance Improving energy efficiency in urban transport Mario Aymerich, Head of Division Urban transport and other urban infrastructures Projects Directorate 14/12/2009 European Investment Bank / ELENA Facility

ELENA- Improving energy efficiency in urban transport ELENA aims at helping public entities by means of offering technical advisory support, in order to facilitate the implementation of investment programmes. In the urban transport sector: Renewing of public transport buses with high energy efficiency and environmental performance, superior to the current standards imposed by EU regulations. Investments to facilitate the introduction of electric vehicles and their supporting infrastructure. Investment to introduce more energy efficient solutions to improve freight logistics in urban areas. 14/12/2009 European Investment Bank / ELENA Facility

ELENA- Improving energy efficiency in urban transport Examples Renewing of public transport buses The main focus of a public transport operator’s low-carbon bus programme is to rapidly introduce fuel efficient, cleaner and quieter hybrid buses and help cut CO2 by 11 % by 2015. The plan is to introduce 300 hybrid buses by 2011 and for all new buses entering the fleet to be of this type from 2012. Further research needs to be done to understand the whole life cycle costs, including operational risks associated to hybrid buses. 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility Tailored financial instruments A potential outcome from ELENA would be the definition of new financial instruments (namely using leasing financial principles) oriented to provide advantageous long-term financing to urban transport operators replacing or expanding their bus fleets with new vehicles outperforming existing environmental regulations. Pending/related issues: European label (adherence of the EC) Green and/or joint procurement Introduction of EuroV and IV standards R&D Incentives expected within the EU Particular treatment of O&M costs 14/12/2009 European Investment Bank / ELENA Facility

ELENA- Improving energy efficiency in urban transport Examples Introduction of electric vehicles Garbage collection and street cleaning The project consists of the acquisition of a fleet (around 1 900 vehicles in total) for urban sanitation services and other related investments across some 130 Spanish municipalities (more than 10% of them having signed the Covenant of Mayors). A part of the project will finance the development activities to put into service hybrid-electrical heavy duty vehicles, including the manufacturing of 21 prototypes. The project has already been financed by the Bank (loan is EUR 180m). 14/12/2009 European Investment Bank / ELENA Facility

ELENA- Improving energy efficiency in urban transport Examples Freight logistics in urban areas EU proposal aiming at reducing fuel consumption and GHG emissions from road transport vehicles (2009/33/EC). The directive introduces environmental aspects into public procurement of road transport vehicles, with the objectives of promoting and stimulating the market for clean and energy-efficient vehicles. When procuring vehicles, contracting authorities/entities or operators will use life cycle costs for CO2, pollutant emissions and energy consumption as award criteria. The application of these criteria will first be optional, then mandatory starting in 2012. Public procurement represents a key and visible market. The directive therefore is expected, over the long term, to boost the use of energy-efficient, clean vehicles and to reduce their costs through economies of scale. 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility European Local Energy Assistance (ELENA) – eligibility and selection criteria Ralf Goldmann, Projects Directorate, Energy Efficiency & Renewables Division 14/12/2009 European Investment Bank / ELENA Facility

Eligible promoters/Final Beneficiaries Project Development Services can be provided to a local or regional authority or other Public Body from a Participating Country, including those under the Covenant of Mayors Initiative, or a grouping of such bodies, The Investment Programme or part of it can be implemented through entities other than the Public Body, e.g. the holder or operator of a concession or an ESCO 14/12/2009 European Investment Bank / ELENA Facility

Eligible investment areas public and private buildings, including social housing and street and traffic lighting, integration of renewable energy sources (RES) into the built environment – investments into renovating, extending or new district heating/cooling networks including networks based on combined heat and power (CHP); decentralised CHP systems (building or neighbourhood level); 14/12/2009 European Investment Bank / ELENA Facility

Eligible investment areas urban transport to support increased energy efficiency and integration of renewable energy sources, such as: high energy efficiency buses, including hybrid buses, electrical or low-carbon propulsion systems; investments to facilitate the introduction of electric cars, investments to introduce new more energy efficient concepts to improve freight logistics in urban areas; 14/12/2009 European Investment Bank / ELENA Facility

Eligible investment areas local infrastructure including smart grids information and communication technology infrastructure for energy-efficiency energy efficient urban equipment inter-modal transport facilities refuelling infrastructure for alternative fuel vehicles. 14/12/2009 European Investment Bank / ELENA Facility

Eligible investment areas Industrial facilities shall be excluded, as well as reductions of greenhouse gas emissions due to industry delocalisation. 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility Selection Criteria eligibility of an applicant from a Participating Country; eligibility of Investment Programme; potential bankability of the Investment Programme; applicant's financial and technical capacity to implement and complete the Investment Programme; expected contribution to the objectives of the "20-20-20" Initiative in terms of reducing greenhouse gas emissions, increasing the share of renewables in energy consumption and improving energy efficiency; expected Leverage Factor; EU added value, in terms of compliance with EU policies, including: the EU sustainable energy policies and priorities, targets and legislation; the state of the art of sustainable energy technologies and taking into account previous actions in the context of the EU energy policy objectives and relevant action by the applicant; 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility Selection Criteria the EU Cohesion Policy; the needs of local communities and possible impacts on the local/regional development, including a positive impact on SMEs; the contribution to dissemination of good practices or technologies at an early market penetration phase, within the EU; verification that financial assistance under this Facility shall not be used for Investment Programmes that can be better supported by other similar EU funds and facilities, including Cohesion and Structural Funds. If funding can be obtained from other facilities, the applicant must justify why the use of this Facility is more appropriate; absence of other EU support granted to the same applicant for Project Development services in relation to the same Investment Programme. 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility Eligible activities feasibility and market studies business plans energy audits preparation of tendering procedures and contractual arrangements and other assistance necessary to develop Investment Programmes, excluding subsidies to investment (hardware) costs. Additional staff hired by the final beneficiary 14/12/2009 European Investment Bank / ELENA Facility

Selection of Service providers The Project Development Services providers shall be selected by the EIB or by the Final Beneficiary EIB shall ensure that: procurement procedures comply with the principles of transparency, Proportionality sound financial management equal treatment and non-discrimination lack of conflicts of interests and respect of internationally accepted standards. 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility European Local ENergy Assistance -- ELENA How to apply for ELENA support Reinhard Six, Projects Directorate, Energy Efficiency & Renewables Division 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility European Local ENergy Assistance -- ELENA How to contact European Investment Bank (EIB)? By fax, letter or e-mail (best way through e-mail to elena@eib.org ) English or French is required Informations available on ELENA web site (www.eib.org/elena): ELENA brochure Frequently Asked Questions Application form By clicking on both links are available to the respective sites of the Bank and Fund 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility European Local ENergy Assistance -- ELENA Two stage application procedure: Pre-Application Application 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility European Local ENergy Assistance -- ELENA Pre-Application Formless Required information's Brief description of planned investment programme + implementation approach Expected investment cost + development schedule Amount, scope and main needs for technical assistance Reaction from EIB: ~ two weeks If positive : start to fill in application form 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility European Local ENergy Assistance -- ELENA Application Content of application form: Applicant’s identification Applicant’s situation Presentation of the Investment Programme Description of work programme for Project Development Service / Technical Assistance Overview table: Milestones presentation for measuring leverage factor Estimated cost and funding Declaration of the applicant 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility European Local ENergy Assistance -- ELENA Application procedure: Reception of application by EIB Possible request (s) by EIB for additional information’s Proposal assessment by EIB Approval request to European Commission If approved by EC: start of contract negotiation with applicant Signature of funding agreement by EIB and beneficiary Start of project development service / technical assistance 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility European Local ENergy Assistance -- ELENA Funding agreement design Duration: 3 years maximum General and special conditions Annexes: Description work programme for Project Development Service and planned Investment Programme including milestones for measuring leverage factor Estimated budget Reporting requirements Intended grant disbursement schedule: 40% at start 30% after validation of interim report 30% after validation of final report 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility European Local ENergy Assistance -- ELENA Reporting Progress reports: every six months Interim report (date agreed upon with beneficiary (in general at mid term = month 18)) Covering period from start Documenting achievement of leverage factor Final report (latest one month after project end) Covering complete project period Prior approval for external services/subcontracts above 200 000 € and in certain cases also for contracts below this threshold 14/12/2009 European Investment Bank / ELENA Facility

European Investment Bank / ELENA Facility For more information… http://www.eib.org/elena elena@eib.org Thank you for your attention 14/12/2009 European Investment Bank / ELENA Facility