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

+

+

-

-


Profiles charts

+

Solvency of the Final recipients

+

Project viability

Non Residential Buildings

Rehabilitation

Residential Buildings Rehabilitation

-

-

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


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.


France


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)


France


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...)


France


SPVEnergy Asset

The Fund

Technology Partner

Energy Efficiency Service/ Energy Supply

Client

EPC, O&M Contracts

Equity Stake in selected cases

$

$

$$


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

Innovative financial alternatives 12


Energy Efficiency Green Revolving Fund

Identifyenergy waste

Finance EficiencyProject with Green

Revolving Fund

Repayservices from

energysavings and

the GRF reinvest the

return

Continuous Improvement


Revolving effect in financial instrumentsFigure from “Ex-ante assessment methodology for financial instruments in the 2014-2020 programming period”


Continous process of reinvest and

permanent improvement

16

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


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

------

€€€

€


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


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


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).


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)


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)



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


Equity20

Mezzanine

0

EuropeanFunds

(Revolving)50

Bank Debt

30


Equity20

Mezzanine

0

EuropeanFunds

(Revolving)50

Bank Debt

30


Equity20

Mezzanine

0

EuropeanFunds

(Revolving)50

Bank Debt

30



AccumulatedInvestments in

14 years1.230

ESIF = 250Leverage

(Others) = 250Revolving = 730

1th Capital Call thatamounts

100 ESIF = 50


100 ESIF = 50


100ESIF = 50


100 ESIF =50


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!


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


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


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


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


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

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Financial alternatives for Energy Efficiency Título Presentación...Create a programmatic approach....

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