Page 14 - European Energy Innovation - spring 2020 publication

14 Spring 2020 European Energy Innovation

ENERGY EFICIENCY FINANCING

Energy efficiency financing in
the public sector – challenges
and solutions

By Lada Strelnikova and Jennifer Finke Investment Manager European Energy Efficiency Fund
managed by Deutsche Bank AG
with high savings are commercially scarce internal financial and project
Significant investment viable and bankable, public management resources. An important
is needed to meet the authorities are presented with first step is to aggregate smaller
European Commission’s numerous hurdles in designing, projects to achieve a critical project
target of 32.5% energy
savings by 2030 and its ambitious implementing and, in particular, volume that warrants a dedicated

commitment to tackling climate financing such projects. Local financing structure. Public authorities

change as set out in the European authorities may lack the technical must then consider their financial

Green Deal. Given that cities expertise to plan, negotiate and capacity, technical skills and existing

represent almost two thirds of global manage the projects. Further, energy operational set-up in weighing up the

energy demand, the public sector, efficiency related investment tends financing structure.

particularly at the municipal level, has to involve a large number of small

an important role not just in shaping and bespoke projects, for which a It should not be underestimated

policy but also actively implementing typical project finance approach is that this is also a political decision.

projects to improve the energy not economical. Public debt limits The public authority should decide

intensity of public infrastructure. constrain a public authority’s capacity amongst various direct and indirect

Retrofitting buildings, optimising to support energy efficiency projects. financing approaches, each of

transportation efficiency, reforming which offers certain advantages and

electricity grids and upgrading public To address these challenges, public drawbacks that reflect the trade-off

lighting all represent tangible and sector energy efficiency projects between the transfer of project-

actionable opportunities for public require a flexible and tailored related risks and the proportion of

authorities to reduce greenhouse financing structure with project energy savings retained.

gas emissions and achieve savings in level support. Bespoke project

energy costs. financing allows the public authority Direct financing involves a loan

to implement projects faster as agreement with the public authority

Although energy efficiency projects they are not then competing for itself, who then commits to use

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