The cities need to have a sound financial plan when looking to develop their district energy systems and other projects that often demand high capital expenditures in infrastructure. Having the right funding scheme is crucial to maintain a reasonable overall cost; it requires finding investors who are willing to make long-term investments and establish transparent working relations.

Each project is different, so there is no ready-set solution, but there are European programmes and investment funds specialized in finding solutions to these types of challenges. During this online meeting some successful cases of funding solutions for district energy development is presented, and also discussed with the experts that have helped put them in place. Representatives from Climate-KIC, the European Energy Efficiency Fund and from the City of Gothenburg shared their experiences and perspectives on this matter.

1. Low Carbon City Lab – Unlocking finance for cities

Victor Gancel, Low Carbon City Lab Programme Manager, Climate-KIC
Power point presentation by Victor Gancel  / Short cut to the video recording

The talk introduces the Climate-KIC (Knowledge and Innovation Community), which is the EU’s largest Public Private Partnership (PPP) addressing climate change. Climate-KIC drives innovation in climate change through creative partnerships, large and small, local and global, between the private, public and academic sectors.

Low Carbon City Lab (LoCaL) is a programme within the Climate-KIC,  which aims at unlocking climate financing for cities. It is a a matchmaking platform that connects cities and investors to overcome investing barriers, due to the fact that investments for attaining low-carbon cities often are very large. These investments need to be done as soon as possible, in order to reach the Paris agreement target.

The main activities within the LoCaL programme include influencing policy to align investment plans with environmental and social outcomes, convening investors and cities to direct more funds in sustainable infrastructure, and integrating environmental analysis of infrastructure projects into the investment and monitoring process.

Examples of LoCal projects:

  1. Matchmaker, which connect cities and investors to overcome investing barriers.
  2. Green Bonds for Cities, unlocking the green city bonds market for municipalities to facilitate climate change mitigation projects.

Finally, another Climate-KIC flagship project is presented, the Smart Sustainable Districts.

Question from the audience:

– In the Matchmaker programme, approximately how many proposals do you receive each year, and how many are funded? Selection criteria?

2. District energy systems financing

Paola Rusconi, Investment Manager, European Energy Efficiency Fund
Power point presentation by Paola Rusconi / Short cut to the video recording

The European Energy Efficiency Fund (eeef) is presented. Providing examples in every part of the chain, it is explained that if you are a public entity/private company/financial institution developing a project of renewable energy/energy efficiency/clean urban transport with these features: > 20% CO2-eq mitigation / funding 5-25 M€ / within a EU country, then eeef can provide you with funding and techical assistance.

The technical assistance facility is new, and is intended to increase the implementation rate of projects. It covers all activities necessary to prepare investments (feasibility studies, energy audits, legal support, etc.). No imbursement is required, provided the agreed conditions are met. Contrary to other providers, the eeef provides services for technical assistance, not funding.

Two case studies are briefly presented, where the eeef has different roles. The first is a biomass-fired CHP plant in Rennes, France, with eeef as equity investor.  The other is a natural gas-fired CCHP plant in Bologna, Italy, with eeef as lender.

Questions from the audience:

– Since the investments, have you been able to expand the networks?

– For the technical assistance facility, is it recommended to apply for this before you apply for funding for the project? Is there any cost? For the technical assistance?

– How many projetcs apply annually, and how many are selected?

3. Green Bonds

Magnus Borelius, Head of Group Treasury, City of Gothenburg
Power presentation by Magnus Borelius / Short cut to the video recording

As the first city in the world, Gothenburg has issued Green Bonds, since 2013. This enables investors to invest in green projects. The projects financed by the bonds belong to the following categories:

  • Sustainable transportation
  • Waste management
  • Water management
  • Sustainable housing
  • Smart grids
  • Environmental (biodiversity, air pollution)
  • Energy efficiency
  • Renewable energy
  • Biofuels

In the work with the Green Bonds, Gothenburg has collaborated with CICERO, which is a research institute at the University of Oslo. Cicero has provided a so-called second opinion about the city framework for Green Bonds. The bonds have been very popular with investors. They have received the highest ranking by Moody’s Investors Service, have been introduced on the London Stock Exchange (LSE), and have also been awarded the UN Climate Solutions Award in 2016.

Questions from the audience:

– How did the idea come up for a Green Bond?

– Other cities that have Green Bonds, do they have the same criteria?

– Can any city emit Green Bonds, or are there some requirements?

– Is eeef funding green financing? If so, in what way?

Date of webinar

June 2017

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Toolbox Business & Finance Webinar: Funding solutions for district energy development