We don’t lack money, but we lack good projects to lend money to” – answered a banker during an interview on financing urban excess heat recovery investments. Indeed, this is the key aspect to be considered in a bankability assessment: a “good project” is one that has an extremely low risk of not generating enough cash flows to repay the received loan, but the risk is not always measurable in objective terms!

A detailed analysis on the topic of bankability of urban excess heat recovery investments was carried out by RINA in the frame of the H2020 Reuseheat project. The focus of the analysis, like that of the whole project, was on excess heat available at an urban scale, including sources such as underground railways, sewage systems, datacenters, hospitals, but also large refrigeration plants of supermarkets and large tertiary buildings. The exploitation of these sources is closely linked with the concept of low-temperature district heating, which is expected to bring a significant contribution to the decarbonization of the EU heating and cooling sector.

The main barriers to bankability of urban excess heat recovery investments were identified to be:

  • absence of similar projects in the banks’ portfolios, able to demonstrate that such projects are technically feasible and able to generate cash flows;
  • lack of experience of the project developers in similar projects (especially if the project is proposed by the excess heat owner) and lack of technical knowledge both among bank officers and most of their technical consultants;
  • long payback periods and operational risks regarding supply, operation, maintenance, pricing, insurance, quality assurance, monitoring, billing and renegotiation;
  • risk of underperformance due to lower availability of urban excess heat source or lower devices efficiency compared to the expectations;
  • unclear legal framework and authorization procedures, with possible related delays and consequent impact on project implementation timeline;
  • competition with different and more consolidated technologies like cogeneration or renewables to meet banks’ sustainability targets.


Based on the identified barriers, three main needs were identified, to be possibly addressed through policy actions at EU and national level:

  1. Support to the implementation of pilot projects – aimed at demonstrating their technical feasibility and economic profitability. When supported with public funds, this allows collecting real monitored data on all project phases, thus creating knowledge for all stakeholders and making easier the replication of these projects. Moreover, many of these investments are profitable even without public incentives, thus they could be realized by utilities with own funds or corporate finance, with similar benefits in terms of creation of knowledge and of a track record for banks.
  2. Improvement of the legal framework – inserting urban excess heat sources and low-temperature district heating among priority areas in the EU and national strategies, and subsequently regional and municipal action plans, would result in an increased knowledge about these opportunities and in easier, faster and more standardized permitting processes, thus reducing the risk of delays in project implementation.
  3. Promotion of financial support and guarantees for investments – at local level, the involvement of the public sector (municipalities) is a plus that increases bankability of urban excess heat recovery projects, both due to the socio-political engagement of the local community and to the increase of the share of equity, which reduces the part of investment covered by debt. At national and EU level, a further opportunity could be the creation of a credit facility to support urban excess heat recovery investments, with a public guarantee to cover technology- and source-related risks (for more details visit: https://www.euroheat.org/wp-content/uploads/2019/09/Credit-Facility_Giorgio-Bonvicini.pdf).


The full bankability of urban excess heat recovery investments report is available here: https://www.reuseheat.eu/wp-content/uploads/2019/06/D2.2.-Bankability.pdf.

For further information, discussion and to share your views on this topic, please feel free to contact Giorgio Bonvicini, Senior Energy Engineer at RINA: giorgio.bonvicini@rina.org and follow the Celsius LinkedIn group: https://www.linkedin.com/company/celsius-initiative.

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Toolbox Policy & Planning Barriers and solutions Bankability of urban excess heat recovery investments