Smart Finance for Smart Building SFSB Programme update · 1. The SFSB Pilot Phase is being tested...
Transcript of Smart Finance for Smart Building SFSB Programme update · 1. The SFSB Pilot Phase is being tested...
Smart Finance for Smart BuildingSFSB Programme update
Brussels, December 4th, 2018
2
The implementation of the EU's ambitious Paris climate change commitments is now the priority and
depends to a large extent on the successful transition to a clean energy system as two thirds of greenhouse
gas emissions result from energy production and use (*)
The Clean Energy window would cover financial instruments covering SMEs and individuals market gaps in
Energy Efficiency, Renewable Energy and Clean Technologies, the main proposed products are:
1. Capped/Uncapped guarantees to support lending by Financial Intermediaries and
2. Credit Enhancement guarantees to support Institutional Investors lending in clean energy portfolios
SFSB
Clean Energy window
(*) Clean Energy for all Europeans Nov 2016 Communication to the European parliament
3
Main objectives:
Promote investments in Energy Efficiency and Renewable Energy projects to be made by
households, individuals and SMEs in Europe by:
(1) Supporting Irish Financial Institutions that invest in Energy Efficiency in buildings under
both: consumer financing and mortgage;
(2) Providing financial instruments for both household and SMEs in order for them to
invest/finance their Energy Efficiency projects;
(3) Stimulate Energy Efficiency demand in MS: by providing a technical assistance managed by
the EIB Group under the ELENA Program.
Smart Finance for Smart Building Energy Efficiency/Renewable Energy
4
Smart Finance for Smart Building Energy Efficiency/Renewable Energy
Objective of SFSB Guarantee Facility:
to expand EE lending activities by
financial institutions
to intensify EE investments in
buildings:
• primarily residential buildings, HoA,
and
• secondarily (indicatively up to 30%
of projects' value of the whole
scheme): SMEs.
Scalability is crucial to reach volumes
Components of SFSB:
guarantee facility (e.g. National
Funds+EFSI+ other: EIB, EIF);
Technical Assistance;
The SFSB programme is a joint initiative of the EIB Group and the EC to incentivise
investments in Energy Efficiency for Buildings in the EU with three main pillars
SFSB
(i) Credit protection for
banks via capped and
uncapped guarantees
from EIF funded by EIB
and Nas
(i) Green Bonds
(ii) Turn Key Technical
Assistance support
provided by ELENA and
EIB Group at three
levels: NAs, Banks and
final beneficiaries
(iii) Turn key
Monitoring and follow
up services provided
by EIB Group
Eligibility
Disbursements of the
guarantee
Portfolio management
Recoveries
• Etc
EIB Group SFSB programme
1. The SFSB Pilot Phase is being tested in 5 main EU markets: Malta, France, Spain, Netherlands and
Portugal, in addition preliminary discussion are starting in Poland and Ireland. A summary of the
structures being tested are presented below:
2. The market feedback from banks and Managing Authorities is positive. The first guarantee products are
expected to be signed end of 2018 – first quarter 2019
SFSB Pilot phase current
implementation experience
SFSB Guarantee Technical Assistance
ELENA:
Reinforced in 2017 with € 97 million to support SFSB
guarantee facility;
Main objective: to help eligible entities to prepare and
implement initiatives for EE renovations of existing
buildings;
Minimum leverage factor: 10 (for buildings);
Residentials: typically 80% or more of the total PDA
costs, i.e.: awareness raising, pre-assessment checks,
energy audits, EPCs, support access to financing from
loans and grants, project monitoring.
Financial intermediaries and public authorities: eligible
costs, i.e.: develop IT tools to standardise EE
investments, capacity building, monitoring and
reporting tools, assistance in pipeline screening,
identification of projects, awareness raising.
ELENA can cover up to 90% of the eligible TA costs.
EIB managed TA support could be co-funded from different sources,
incl. i.e. the European Investment Advisory Hub ("EIAH") and the
European Local Energy Assistance ("ELENA") facility.
SFSB Guarantee
a) Effective use of public money:
• financial intermediaries undertake to increase their portfolio of
EE loans
• high leverage level: trigger additional financing from private
sources (from 4 upwards).
• Co-financing rate of up to 100% in case of combination of ESFI
and EFSI, i.e. no national match funding is required.
b) Cutting red tape:
• no need for a new or revised ex ante assessments by the
national authorities;
• if ESIF contributes to existing instrument (e.g. EFSI): no need to
select new fund managers and with the application for payments
in accordance with the agreed schedule;
c) access to technical assistance from ELENA;
10
SFSB Guarantee
d) Enabling and supporting banks' transition to sustainable finance providers:
• Financial Intermediaries can benefit from EIB triple-A rating by having access
to attractive financing conditions;
• Credit risk protection to Financial Intermediaries (up to 80%)
• Sustainable financing providers' label: growing importance for institutional
investors e.g. pension funds and insurance companies;
e) unlocking private financing on the long term:
• Know-how to financial institutions;
• Establishing a fully functional financial market ready to trigger sufficient private
capital to reach EU and national energy/climate objectives;
g) Non-financial sector impact:
• local jobs, growth, reduced costs, security of supply and decrease of pollution.
11
SFSB Uncapped Guarantee
1st stage market awareness
Guarantee Fee
Guarantee Fee
2. Green bond Programme applicable
to all Clean Energies (EE, RE and CET)
The growing investments in European EE, RE and CET loans granted to SMEs and individuals by potential
Participating Financial Institutions (FIs) is putting pressure on the credit fundamentals with ensuing
concerns on the financial sustainability of such a success going forward
In parallel, the Green Bond Programme aims at attracting sustainable sources of financing for the clean
energies sectors answering to a strong growing demand from institutional investors for green assets.
The structure will allow Participating financial intermediaries to transfer their current Clean Energy loans
portfolios to third-party investors with the subsequent requirement to invest the transfer proceeds into
new loans eligible under the programme
A SPV would buy the (signed and to be disbursed/disbursed) loans portfolios of Participating FIs (ie true
sale of underlying loans) with a minimum of EUR 50m. For that purpose, the SPV would raise finance in the
capital markets by issuing senior notes attracting Private Sector investors to these investments (targeting
Green Bonds label)
Investors in the Senior Green notes will benefit from an EIF first demand guarantee. Participating FIs would
retain a vertical share in the portfolio either on their B/S or through subscription of the notes
SFSB Uncapped Guarantee
2nd stage Green Bonds
Green Bond
Platform Publicly rated bond
issues
Investment Grade
targeted
Guarantee up to 25%
True sale Loans
Portfolios
Institutional
investors/others
Originator
Public o
Financial
Institutions
Puchase of Senior notes
Region1
SMEs 2
SMEs 3
SMEs 4
Re-investmentof funds in new loans
Potentially EFSI support(if needed)
Remunerated FLP to the EC
EIF Credit EnhancementGurarantee security to protect Bond holders
FLP
Credit Enhancement
Guarantee by EIF up
to 25%