ManagEnergy

In light of the current economic situation, one way the public sector can invest in building energy efficiency is by using European Structural and Cohesion Funds, financial tools set up to implement the regional policies of the European Union (also known as Cohesion Policy).

Structural Funds are made up of the European Regional Development Fund (ERDF) and the European Social Fund (ESF). Cohesion Funds are used to fund projects in the environment, transport, infrastructure and renewable energy sectors. More than a third of the European Union budget is used for Cohesion Policy.

The current regional policy framework, running from 2007 ‐ 2013 was allocated €350 billion. The Structural and Cohesion Funds offer a good opportunity to bridge the gap between potential and actual energy efficiency investments, as part of the funds is directly dedicated to sustainable energy. The share for energy efficiency and renewable energy represents about €9 billion, of which €4.3 billion is available for New Member States.

How do Structural and Cohesion Funds work?

At EU level, Structural Funds are centrally managed by the European Commission (DG Regio). The European Commission drafts regulations, called Community Strategic Guidelines, outlining the aims and objectives for the funding period. Member states propose a National Strategic Reference Framework (NSRF) which outlines the priorities, strategic framework and available budget for the Operational Programmes (OP). EU cohesion policy complements national funding so member states also commit some the National budget to the Operational Programmes. 


To develop a successful project using SCF:

•Learn from good practices
•Find your nearest Energy Agency to get advice
•Study EC INFOREGIO portal
•Meet your SF Managing Authority and find out about the funding priorities for your sustainable energy project and what SF money available
•Visit the DG Regional Policy website
•Find out about non-grant EC instruments: loans, equity, venture capital (JESSICA, JEREMIE, JASPERS, JASMINE)

Managing Authorities , appointed by member states, are responsible for managing the Operational Programmes, informing potential beneficiaries, selecting projects and generally monitoring implementation of the Structural Funds at regional or national level. This interactive map details existing Managing Authorities in all member states. In the current programming period, the budget for the Structural Funds is divided among 355 Operational Programmes.

Applications for funding are welcomed from private, public and third sectors who propose projects that deliver on Cohesion policy objectives. Once an applicant identifies a project opportunity, they need to check the eligibility of the project under the existing Operational Programme and contact the Managing Authority (MA) or an Energy Agency to verify that there is still money left in the Operational Programme to finance the project. Usually funding is allocated through a call for proposals, although some MAs have open calls with no specific deadline. The Manual for financing RES and EE projects with Structural and Cohesion Funds provides beneficiaries with clear and simple steps to develop and obtain funding for energy efficiency and renewable energy projects.

The contribution of Structural Funds depends on the type of project, on the focus of the Operational Programmes and on the beneficiary. The funds partially finance projects and it is the responsibility of the applicant to get the remaining co-financing, through bank loans, local or regional funds or by private means. In general, EU co-financing rates go from 50% in the more developed regions to 80% in the less developed ones. It can be as low as 20% in Western Europe.

Front Runners

 

Grants for energy efficiency in housing – France

Under the 2007-2013, programming period each French region allocated up to 4% of their Operational Programme to energy efficiency investments and greater use of renewable energy in existing housing. Projects had to target the most energy inefficient buildings and implement the most effective energy-saving actions. Two types of housing were eligible: social housing and run-down co-ownership with social occupation.

For existing buildings, eligible actions had to achieve a gain of at least 80kWh/m2 and reach an energy consumption of less than 150kWh/m 2. The French government used ERDF funding in a grant scheme as an additional financial resource to reach its objectives of retrofitting 800,000 energy inefficient social dwellings.

Effective educational infrastructure – Bulgaria

The city of Dobrich in north-eastern Bulgaria refurbished seven municipal buildings, five schools and two kindergartens. Energy saving measures included energy audits, replacement windows, installation of insulation, roof repairs and reconstruction of public areas. The project was completed through the Regional Development 2007-2013 Operational Programme, with 84% of the total investment costs financed through Structural Cohesion funds. Furthermore, cooperation with energy services companies (ESCOs) has been established to leverage on private partner investments for future projects. This project was cited as one of Good Practice examples in the SF Energy Invest project.

Through the implementation of such successful projects Dobrich municipality demonstrates that we are highly motivated and strive to be a sustainable model of the evolving European community with low energy consumption, reduced CO2 emissions and better protection of the natural environment.” Detelina Nikolova, Mayor of Dobrich Municipality

The JESSICA holding fund for domestic retrofits – Lithuania

The JESSICA holding fund can be adopted as an innovative way of using Structural Funds, by moving from grant incentivised mechanisms to revolving funds. A revolving fund allows for the loan amount to be withdrawn, repaid, and redrawn again such that funds remain available for investment in further projects. This type of financing tool facilitates a continuous source of funds and ensures the sustainability of projects.

In June 2009 the Ministry of Finance of the Republic of Lithuania, the Ministry of Environment of the Republic of Lithuania and EIB established the JESSICA Holding Fund for the modernisation of apartments. The EIB-managed JESSICA Holding Fund is aimed at energy efficiency projects for multi-apartment housing via the Lithuanian banking sector. Loans are offered to home-owners in multi-apartment buildings with tenant associations acting as representatives, managing the energy efficiency implementation process. €227 million was invested in the Holding Fund is, which consists of ERDF funds (€127 million) and national funding (€100 million). Results from the Vaišvilos g. 9, Plungė project show that over 50 apartments were refubished, with a pre-refurbishment energy rating of band E, which increased to band B after works were completed, achieving energy savings of over 55%.

The prospect of energy savings, improved energy efficiency and increasing the share of renewable energy projects financed by Structural Cohesion Funds is very attractive. Even with the increasing scarcity of public resources, Europe can meet 2020 targets by employing innovative financing mechanisms such as revolving loans, soft loans, guarantees and tax incentives.

This article is the first in a series of ManagEnergy articles on using Structural Cohesion funds to finance energy efficiency in buildings.

 

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