In the UK, awareness of climate change and its relation to energy supply is at an all-time high. The current technological and legislative context offers significant financial incentives for the expansion of renewable energy systems. This has created an attractive environment for shared investment in and ownership of renewable energy technologies.

In April 2013 ManagEnergy reported on a new revolving loan fund for community renewable energy projects launched by Cornwall Council (UK). The loan fund, worth EUR 1.2 million, is aimed at community groups to help build renewable energy installations in their local area. At the heart of this model is the principle that the benefits of energy should be localised, and that strong links between communities and energy should be forged to increase awareness and encourage community benefit through the way that agreements are structured. As such, only projects that could evidence strong community benefit were accepted. The Council’s Green Cornwall Programme has made a loan facility available to The Low Carbon Society (TLCS), who is working in partnership with Kabin and Community Energy Plus. This is the first loan facility of its kind for a local authority.

Two projects have applied for the revolving loan fund, former ManagEnergy runner up Community Power Cornwall (CPC) and Helford Energy Society (HES). The first application comprises of three projects while the second is a stand-alone project. Cornwall Council intends to launch another round of funding soon.

The first applicant Community Power Cornwall (CPC) is a co-operative that enables local communities to own and benefit from renewable technologies. All revenue generated will be reinvested locally. The common ownership model created by CPC contributes to a diverse, sustainable and secure energy supply infrastructure, under community control and for community benefit. A portfolio of three projects has been proposed by CPC for the fund application:

Project 1:

• 2 x 80KW wind turbine in Cornwall
• Expected annual output 2011-2012 360,000KWh
• Expected annual carbon saving 2011-2012 188t

Project 2:

• 1 x 10KW wind turbine in Cornwall
• Expected annual output 30,000KWh
• Expected annual carbon saving 15.6t

Project 3:

• 1 x 100KW wind turbine in Cornwall
• Expected annual output 275,000KWh
• Expected annual carbon saving 144t

In 2012 Community Power Cornwall was shortlisted for the ManagEnergy Local Energy Action Award from the European Union. The co-operative was one of only three innovative finalists out of a record 64 submissions from 23 countries.

Helford Energy Society (HES), the second applicant, is a community energy co-operative that was established to benefit people around the Helford river area.

This project will be the first installation for this society. It will secure an income to develop further sites for renewable energy directed by local people. HES is working with Fal Energy Partnership (FEP), Kabin and R-ECO.

Over five years ago HES were granted planning permission for a 10kW wind turbine in the Helford area. The turbine is to be held in common ownership. This year an application was granted to extend the planning permission for a further 3 years, however it stipulated that the height of the turbine must be reduced. HES is will now install at a 3.5kW wind turbine.

These cooperative projects offer inspiration to other communities that share similar characteristics to Cornwall such as rural location, not connected to a gas grid, have poorly insulated buildings and wish to reduce carbon emissions while securing their energy supply through investment in the local economy. Cornwall Council, through launching this initiative, was determined to reinforce the principle of local benefit and only applications from fully constituted Cornish based community groups were eligible. Through embedding this principle, it is hoped that communities will continue to see the benefit of renewable energy and that a less dependent relationship with energy can be fostered.

Related articles:

• Find out more about this Revolving loan fund for community renewable energy projects
• Renewable energy cooperatives
• Community Power Cornwall
• Community Power Cornwall (Community Energy Plus, United Kingdom)

A recently published European Commission Report found that investments in energy efficiency are increasing. However, the report noted that there is limited information on the effectiveness of the different financial support measures, both at EU and national level. Few member states have provided details on the effectiveness of national support measures, making it difficult to obtain a good overview of the impact of financial mechanisms in Europe. A report commissioned by the French Environment and Energy Academy (ADEME) reinforced this message stating that that annual national spending by EU countries on energy efficiency measures varies from €4 to €40 per person, per capita.

According to Paul Hodson, head of Head of Unit C3 (Energy Efficiency) within DG ENER, sufficient investment in energy efficiency is lacking. EUR 100 billion a year of investment is needed to meet the EU’s energy efficiency target of 20% improvement by 2020 but “we’re seeing only about half at the moment”.

A key barrier to increasing investment in energy efficiency projects is the lack of data and the lack of harmonised assessment methods for gathering data. As a result sufficient proof of how much energy savings projects or products can deliver is missing. Evaluating programmes would strengthen the case for increasing public budgets dedicated to energy efficiency as a responsible use of scarce public resources.

Some useful online portals for sharing data and analysing energy efficiency in buildings:

• Building Performance Institute of Europe’s data hub for the energy performance of buildings
• MURE database provides information on energy efficiency policies and measures that have been carried out in the EU.

Other Links:

Lack of data barrier to investors in energy efficiency

Energy efficiency & public-private partnerships: What you need to know

Guidance on Energy Efficiency in Public Buildings

Already Brussels is looking beyond 2020 for its climate and energy targets, with the European institutions in recent weeks endorsing 2030 goals and opening public consultation on the 2030 policy framework.

Leading questions include – what type, nature and level of climate and energy targets should be set for post-2020? How can coherence between different policy instruments be attained? How can the energy system best contribute to EU competitiveness?

Günther Oettinger, EU Commissioner for Energy said: “We need to define our climate and energy policy framework for 2030 as soon as possible to ensure proper investment that will give us sustainable growth, affordable competitive energy prices and greater energy security. The new framework must take into account the consequences of the economic crisis, but it must also be ambitious enough to meet the necessary long-term goal of cutting emissions 80-95% by 2050.”

Current EU policy is centered on the three headline targets (20-20-20) to be achieved by 2020:

• GHG emission reductions of 20%
• a 20% share for renewable energy sources
• 20% savings in energy consumption

Looking beyond 2020, the Energy Roadmap 2050 provides a basis for developing a long-term policy together with all stakeholders. First adopted by the European Commission in December 2011, the roadmap was developed in line with the objective of reducing GHG emissions by 80 to 95% by 2050 (compared to 1990 levels), as part of necessary efforts by developed countries as a group. How to achieve the EU’s decarbonisation agenda while at the same time ensuring security of energy supply and competitiveness is a challenging issue, to say the least.

As a staging post on the Energy Roadmap 2050, the Green Paper on the 2030 policy framework is open for public consultation until 2 July 2013. On the basis of the views expressed, the Commission intends to table the EU’s 2030 framework for climate and energy policies by the end of this year.

Connie Hedegaard, EU Commissioner for Climate Action, said: ”Europe’s dependence on foreign fossil fuels is growing every year. That means more expensive and unaffordable energy bills for Europeans. This is not very wise. It’s obviously not wise for the climate, but it’s also not wise for our economy and our competiveness. That is why we have decided that in Europe we want a low-carbon society for 2050. We have targets for 2020, but for most investors 2020 is around the corner. It’s time to define the targets for 2030. The sooner we do that, the more certainty we get to our companies and our investors. And the more ambitious these targets are, the better for the climate.”

Fighting words – but the devil’s in the details. Should the targets be at EU, national or sectoral level and be legally binding? Some argue that the existing targets – and policies to reach them – are not necessarily coherent or cost efficient, or that competitiveness, economic viability and maturity of technologies are not taken sufficiently into account. Also, concerns have been expressed that the EU’s commitment to tackling climate change is not fully reciprocated elsewhere, impacting on the bloc’s economic competitiveness.

ManagEnergy opines that there are at least two aspects of behavioral economics that could impact on setting – and reaching – real climate and energy goals. Optimistically, there may be a positive effect from hyperbolic discounting – meaning that people will be farsighted when planning if both costs and benefits occur in the future. What kind of world do you want in 2030? In 2050? However, in the absence of international binding targets for reducing greenhouse gas emissions – and the associated perception of free-loading – will the tendency towards pro-social behavior and fairness be diminished?

Have your say –

try coming up with answers to the questions listed here

For more, see

http://ec.europa.eu/energy/consultations/20130702_green_paper_2030_en.htm

Within the general target group of ‘public authority’,regional and local authorities were identified as having a higher priority, both with ca. 72 % or the answers, while national authorities were ticked by 56 % of participants.

In response to the question ‘Which sector should IEE III focus on?’ The public sector received 47% of the answers, then transport just over 46% and households 45%.

The inputs from this stakeholder consultation will be taken into consideration in shaping the IEE II successor programme – the ‘Market Uptake of Energy Innovation’ priority area of Horizon 2020′s Energy Challenge on Secure, clean and efficient energy.

Read the full report here

What can be done to encourage ESCO take-up in an early stage market? ManagEnergy asks Stjohn O’Connor from the Department of Communications, Energy and Natural Resources in Ireland.

Stjohn O’Connor, Department of Communications, Energy and Natural Resources, Ireland

Ireland has an underdeveloped market for ESCOs generally. Within the public sector there has been relatively few ESCO contracts issued in recent years.

Market size?

This is a difficult question to answer, both from a national perspective as well as a public sector perspective. A study in 2005 estimated that the market value was somewhere in the region of €100 million. However, we believe that this figure is too low. More recent studies have shown that €1 billion could be spent in retrofit activity in the public sector alone. However, more detailed analysis will be undertaken in 2014 to establish the available economic opportunity for ESCOs.

National strategies and policies to encourage ESCO growth

Ireland has been sowing the seeds for ESCO market development for the last few years through an active campaign of conferences, workshops and guidance material.

2013 will see the introduction of a National Energy Performance Contracting Policy Framework, which will aim to standardise the approach to ESCO procurement. Most significantly this approach will seek to reduce the barriers to market entry and take-up from purchasing organisations. Aligned to the Framework is a new Energy Efficiency Fund that has been established to provide project finance to ESCO projects. The Department has also issued a call for Exemplar Projects, who will be provided with technical assistance in order to validate the Framework and reach investment-ready status.

What are the barriers to growth?

Knowledge, cost and expertise.

What targets are you hoping to reach in the next 1-3 years?

Ireland has yet to set any formal targets for the development of the ESCO market, but will be monitoring closely the number of ESCO contracts financed via the new Energy Efficiency Fund. Success will be if the Fund manages to disburse its monies via ESCO projects.

For more information:

ManagEnergy and the Energy Performance Contracting Campaign http://managenergy.net/news/articles/217

http://managenergy.net/news/articles/203

Covenant of Mayors www.eumayors.eu

Intelligent Energy Europe http://ec.europa.eu/energy/intelligent

What can be done to encourage ESCO take-up in an early stage market? ManagEnergy asks Miguel Feliz in the national energy agency ADENE, Portugal.

Miguel Feliz, ADENE

Here in Portugal, the ESCO market in [government owned] public buildings is practically nonexistent. Until recently, the procurement rules for public
authorities were not geared towards these kinds of contracts, which made it difficult. The economic conditions of the last few years don’t help either.

The private sector has a few successful cases, in buildings and industry, namely in the hotel & leisure sector and in partnership with industry
associations.

Market size

The private sector has probably around €50 M in actual contracts – mainly in industry.

The public sector has a lot of potential – at least €100M if the current programs can succeed and really lift off.

National strategies and policies to encourage ESCO growth

Back in 2010 the Portuguese Government decided that the ESCO structure was ideal to help the public sector to improve energy efficiency and to save on
energy budgets. This was part of the Eco.AP program.

The structure for a new public contracting scheme was created (Decreto Lei 29/2011), the architecture of the process was defined (RCM 67/2012) and finally
the contract draft to be follow by all public institutions was published very recently (Portaria 60/2013). All the legal tools are now in place, so the
process will now start in a more practical and forward way.

At the same time, the government sought ways to help with the financing of the ESCOs, with European Union funds, as well as through educating the
Portuguese banks to know more about energy performance contracting, with the aim of increasing the flow of funding for energy and ESCO related projects.

To foster market confidence, a new definition of ESCOs was created, underpinning an approval system with strict financial and technical benchmarking. This
pool guarantees that all the companies have the technical quality and financial structure to make a long term energy performance contract.

So, to sum up, in the public sector Portugal has provided a strong regulatory framework for ESCO development.

With this effort based in the public sector there is hope that the private sector can also benefit from the buzz around the ESCO concept.

Barriers to growth

As you know, like many other countries Portugal is facing difficult financial conditions and so here there are challenges in everything that involves money
and investment.

The first barrier is the lack of financing available from banks in Portugal, especially for new projects in the energy sector. In this financial
environment there are a surplus of projects with very good finance indicators and based in known technologies. It’s easy to understand that new contracting
schemes and engineering solutions not yet studied thoroughly by the banks have difficulties in finding the adequate finance.

This is the financial rationale behind the contracts – but the lack of available money to invest is the real problem.

The second barrier is the lack of expertise in the public services, either to launch contracts or to supervise them.

As the second barrier can be overcome with more training and education, the first one cannot easily be overcome.

What targets are you hoping to reach in the next 1-3 years?

There is a Government plan for launching ESCO contracts worth €10M in 2013, €20M in 2014 and €30M in 2015, all of them in the Eco.AP program environment.
Let’s see how it goes and how the market reacts to this new contract scheme and how the economic situation will evolve in the next few years.

Despite – or perhaps because of – the acute economic recession in Ireland, the Irish government has earmarked €35m million in seed capital for a new energy efficiency fund to help reduce the cash-strapped nation’s energy consumption by 20%.

On 28 February 2013, Irish Energy Minister, Pat Rabbitte formally announced a €70m Energy Efficiency Fund (EEF) that he says will “dramatically improve energy efficiency savings in public and commercial buildings right across the country.” Minister Rabitte added, ‘“We see a significant win in terms of jobs and energy savings by placing an increased focus on energy saving in the public and commercial sectors. We want to trigger large investments through this fund.”

Projections are that the EEF will deliver up to 675 jobs, direct and indirect, for every €10 million expenditure.

The €70m Energy Efficiency Fund is created using matching private sector investment to a minimum Fund value of €70m (with €35m from the Government). There is a “good degree of interest from the market” according to a government source, including from ESCOs and investment fund managers. It is intended to commence lending in 2013.

The Energy Efficiency Fund will be available to both the public and private sectors, and will be available to fund projects outside the Energy Performance Contracting (EPC) model. However it is expected that EPC structures will form a significant component of the fund’s activities.

An ESCO or host can potentially borrow up to 100% of the funding required to invest in the project. The percentage of project funding will vary depending on the credit risk and circumstances of the ESCO and the host organisation. The loan payback period can range from 3 to 15-20 years.

Dr. Motherway, CEO of the SEAI remarked “Energy efficiency is all about stopping sending money abroad to import energy, and spending it instead on technology and labour in the local economy. It creates jobs, keeps business competitive, and brings social and environmental benefits. The new energy efficiency fund is a great opportunity.”

The Fund is a cornerstone of Ireland’s second National Energy Efficiency Action Plan. The National Energy Efficiency Action Plan (NEEAP) outlines how Ireland will deliver the national 2020 energy saving target. A key focus of the second Action Plan is for the public sector to act as an exemplar in how it uses and procures energy.

Commenting on NEEAP, Minister Rabbitte said “The potential impact of energy efficiency on the Irish economy cannot be overstated. The NEEAP represents a huge opportunity to reduce energy bills for consumers, businesses and the public sector. When we deliver the 20% energy saving target in 2020 we will have taken a €2.4 billion energy burden out of the economy – the benefit of which will be felt throughout the length and breadth of the country. However, energy suppliers must play their part in this and some more than others need to intensify their efforts to offer a much wider range of affordable energy services to their customers.”

Further detail on the National Energy Performance Contracting Framework and how to apply as an exemplar project is available on www.seai.ie/WorkplaceSupports

Read about the EU-wide Energy Performance Contracting Campaign

See what the EIB has to say about energy efficiency and public-private partnerships

Across Europe, the renewables sector increased market share in 2011, with ‘bold local initiatives’cited as a leading factor in the sector’s growth.

According to a new report released by EurObserv’ER , the renewables sector now has a 13.4% market share, employs 1.19 million people and accounts for a turnover of EUR 137 billion. The European Union is already well on its way towards achieving the 20% share of renewable energy in final energy consumption set in the 2009 Directive, with the increase in European Union renewable energy investments uninterrupted since 2004.

Success stories from the regions include Uckermark and Barnim, two administrative districts between the Berlin metropolitan area and the Polish border. Both districts deal with disproportionately high levels of unemployment (Barnim: 17.1%, Uckermark: 24.7%) and are facing serious demographic challenges as the number of inhabitants in 2020 is expected to drop heavily due to economic migration. In Uckermark, ambitious regional targets have resulted in the district becoming a 100% RES region and a surplus producer, identifying 100% renewable heat supply as their next goal.

In contrast Silesia is a densely populated region in the south of Poland, traditionally associated with the coal industry and power production. Decisive policy push factors include the work of pioneering municipalities such as Bielsko-Biala which joined the Energy Cities in 1997 and the Covenant of Mayors in 2009; not only providing local subsidies but also organizing educational programs for all strata of society.

Cleverly, Silesia used its infrastructural base to increase RES share. Human capital (highly qualified staff in the metallurgy sector) was used to develop the largest RES manufacturing base in Poland. The region experienced a solar thermal collector boom with 45 000m2 in 2011 and 1.9 Mm2 planned to 2020. Silesia shows how traditional, heavy industry and ‘black’energy producers can be treated as partners. Investors in Silesia value incentives based on the regional endogenous potential: the existing infrastructural base as well as its highly qualified human capital.

On the national level, Romania is emerging as a vital player in the European wind scene with a particularly spectacular build-up of capacity. The country, which only had one single 18-MW wind farm in 2009, had 982 MW of installed capacity in 2011. Wind energy development was made possible by the Romanian government’s decision to double the number of green certificates for producing wind power until 2017. Market analysts Ernst and Young rank Romania amongst the 10 most attractive wind energy markets in the world.

In Italy, photovoltaic capacity installed during 2011 finally came to 9303 MWp – four times more than in 2010. Nationally, solar power production increased more than five-fold in a single year.

According to Remi Chatbrillat, Director, Sustainable Production and Energies at ADEME, by 2030, renewable energies could account for 34% of France’s final energy consumption.

The renewable sectors increased their relative share to 13.4% in 2011 compared to 12.5% in 2010 – a significant gain in the context of falling energy consumption combined with the drop in wood fuel consumption resulting from an exceptionally mild winter.

For the full report, click here

First launched in 2008, RE:FIT is the Mayor of London’s award-winning scheme to provide a commercial model for public bodies wishing to achieve substantial financial cost savings, improve the energy performance of their buildings and reduce their CO₂ footprint. Honoured by ManagEnergy in the 2011 Local Energy Action Award, the scheme has now been rolled out nationwide to public
sector organisations across the UK.

The scheme uses an Energy Service Company (ESCo) to implement energy efficiency measures – in this case, retrofitting public buildings and enabling organisations to cut running costs, energy consumption and carbon emissions. The ESCo guarantees the level of energy savings, thus offering a secure financial saving over the period of the agreement.

In November 2012 the Department for Energy and Climate Change (DECC) announced it would fund a nationwide rollout of RE:FIT, enlarging the scope of Boris Johnson’s programme to improve energy efficiency in the public sector. The RE:FIT Framework streamlines the procurement process for
energy services by providing pre-negotiated, EU-regulation-compliant contracts that can be used with a group of 13 pre-qualified ESCos.

The programme was revised earlier this month to incorporate the lessons learned from the work carried out so far. The changes include making the scheme more flexible and simpler, as well as extending the range of funding options available. These range from allowing fully financed projects which do not require upfront investment from the authority, to potential benefits from a tax and accounting treatment of any investment, such as off balance sheet investment. Simpler tendering processes through a pre-agreed model will also make smaller projects (costing less that £1m) much more viable.

Does your sustainable energy project deserve a higher profile? Enter theEU Sustainable Energy Week awards – find out why here.

ManagEnergy talks with Stuart Broom at the EIB’s European PPP Expertise Centre (EPEC) about energy performance contracting and what local authorities need to do to get energy efficiency projects ready for the next funding period.

Could you tell us about EPEC’s work, especially how it relates to investments in energy efficiency and renewable energy?

EPEC was established in September 2008 as a unique cooperative initiative of the EIB, the European Commission and EU Candidate Countries and Member States. We have an international team of 18 professionals working on a range of PPP issues alongside Member States.

As regards energy efficiency it’s an area where we feel there is a clear public sector need for private sector knowledge and expertise to deliver projects. As part of that there are clear similarities between PPPs and long-term energy efficiency contracts e.g. Energy Performance Contracts (EPCs).

Along with ManagEnergy and Covenant of Mayors, EPEC is supporting the EU-wide campaign for energy performance contracting. Can you tell us more about EPEC’s specific activities in this campaign?

Our website www.eib.org/epec/ee has been recently set up to host some of our core materials, case studies and key links. For example, we have prepared a number of factsheets on key energy efficiency issues, such as on the new Cohesion Policy and streetlighting as well as what you might call our flagship document Guidance on Energy Efficiency in Public Buildings.

On a more interactive basis we are arranging and attending relevant events in Member States to share knowledge about EPC contracts and try to establish a forum among the key players, especially at the national level, for discussing some of the key obstacles to delivering more EPCs.

What do you think has been learned from the Structural Fund allocation of EUR9 billion to sustainable energy projects in 2007-2013?

Looking at the principles around the proposed new Cohesion Policy, the Commission is clearly keen to move away from what is perceived as a grant-only culture. There seems to be evidence that this has created some perverse incentives such as commercially viable projects, which would benefit the public sector, being rejected for funding or delayed. This is often because Regulations were not helpful to private sector participation or authorities waited for grants that were often slow to arrive, if they arrive at all. The next funding period will see a bigger focus on the use of financial instruments, leveraging grant and focusing grant where it is most needed e.g. to stimulate innovation.

How can we apply the lessons learned in 2014 -2020?

Clearly energy efficiency is much higher up the policy agenda than it was at the beginning of the current funding period. In addition the fiscal crisis has brought both challenges and opportunities for energy efficiency projects. In making the case for these projects money is clearly tight across Europe but energy efficiency projects do at least offer the opportunity of monetary payback on the investment over the medium/long-term as well as evidence that they stimulate the economy in the short term in terms of jobs. It’s therefore important that the Member State strategies for the current funding period give sufficient weight to EPCs and other energy efficiency projects and that the rules at European and national level are flexible enough to react to what is clearly a fast-moving policy environment.

What advice do you have for local authorities and municipalities in developing sustainable energy projects?

There’s now a good body of project experience out there so there’s no sense in not utilising that in preparing their own projects. There are many organisations now operating in the energy efficiency space that have made available a number of excellent case studies, guidance etc. so there’s no sense in starting from the beginning. Also given the way energy efficiency is rising up the agenda at European level there will be a lot of help out there, both financial and technical, going forward into the next funding period.

EPEC helps strengthen the capacity of its public sector members to enter into Public Private Partnership (PPP) transactions. Can you describe how this work is carried out?

We work in a number of different ways.

Our website www.eib.org/epec contains a lot of guidance on a range of PPP issues and Member States can access more information on our Members website through their PPP Unit.

We share information, experience and expertise through Working Groups on specific PPP issues such as financing, statistical treatment and EU grant/loan blending.

We also work one-to-one with Member States, on request, on specific issues which help to build their institutional capacity to deliver PPPs e.g. skills, legal issues, commercial advice. We also have a helpdesk facility for a rapid response to more straightforward queries.

What kind of expertise do public sector managers need to enter into successful PPP partnerships?

In a way the key expertise is management itself and an ability to utilise what is already out there. Managers need to be, as a minimum, aware of the challenges and peculiarities of PPP projects and therefore well prepared for what might come up. More importantly, though, they will need to be able to build a team around them capable of delivering the project. There are a range of skills required to deliver an effective PPP project e.g. legal, commercial, policy, therefore bringing all that together into a coherent package, addressing the issues that emerge, and delivering the project to time is a crucial skill.

Please can you identify some exemplar projects in this area, with regard to energy efficiency and renewable energy?

Projects we are of course closer to are those funded through the Bank’s own instruments like EEEF,ELENA and JESSICA. Therefore the most obvious examples are the Jewish Museum in Berlin (winner of the European Energy Service Initiative’s Award) which has a ‘forfeiting’ style financial structure which allows the ESCO to be effectively recapitalised, and the schools project in Milan for which ELENA gave technical assistance to help prepare the project.

Thanks to Stuart Broom and the team at EPEC, see you on the EPC campaign trail!

For more information:

ManagEnergy and the Energy Performance Contracting Campaign http://managenergy.net/news/articles/217

http://managenergy.net/news/articles/203

Covenant of Mayors www.eumayors.eu

Intelligent Energy Europe http://ec.europa.eu/energy/intelligent