Set up financial structures dedicated to the energy transition
From Energy Cities Wiki
Investment needs for thermal retrofitting of buildings, producing local renewable energy and developing CHP and heat networks are considerable. These investments are cost-effective but their economic impact spans over a long period of time. In financial terms, this means that their return on investment is moderate and the banking system prefers short-term, risky products with a high return. Sustainable development has not yet found its business model. Only a few public, co-operative and ethical banks are interested. Transaction costs can also be disproportionate in the case of small projects.
Some large companies offer comprehensive packages (audit, feasibility studies, installation, financing) but these are often expensive with little impact for SME and local craftsmen.
This is why local authorities are inventing new solutions, some of which are closely connected to the conventional banking system.
Set up financial structures dedicated to the energy transition. These may take several forms: a guarantee fund using local savings for reassuring banks and supporting project managers; a local sustainable energy fund for financing widely ranging public and private projects; a specialised public or semi-public company providing both technical and financial solutions; an ESCO (Energy Service Company) for energy performance contracting.
• Clearly identifying local public and private financial needs as well as existing solutions, including those that are under-used.
• Highlighting examples of necessary investments for which no satisfying solution has been found.
• Gathering information on instruments that are -or are in the process of being- tried and tested using, for example thanks to the support of European programmes.
• Setting up a panel of the public and private stakeholders concerned.
A pioneer in local financing funds
In 1998, the Municipality of Hannover, together with five municipalities from the urban area and the municipal company (Stadtwerke) set up the “Proklima” financing fund. With its initial 5 million euros, the fund was made up of the member cities’ fees and the Stadtwerke’s profits. The fund finances incentive programmes and grants for the general public and is used for co-financing individual pilot projects: CO2 emission reductions, stimulating building energy use standards and introducing innovative energy technologies.
Between 1998 and 2012, over 45 million euros were allocated to finance numerous projects, including the biogas plant in the Kronsberg eco-district as well as the thermal solar and PV grant programme in new and existing buildings.
REScoop: the European Co-operative Network
REScoop is the European federation of groups and co-operatives of citizens for renewable energy. It unites co-operatives from Belgium, The Netherlands, Spain, Luxemburg and France. This federation represents over 45,000 co-operative members in Belgium and 100 million euros invested in renewable energy production. Some 750 new citizens join the co-operative movement every month!
REScoop aims to combine and bring the various renewable energy sources of a region together in an appropriate energy mix, to promote sustainable territorial energy planning and to defend public interest through the creation of concessions and tender bids open to partnerships between businesses, citizens and municipalities.
“Green Deal” initiative, United-Kingdom
A “Green Deal” to boost energy efficiency
In 2011, the British government provided households and businesses with a legal framework enabling them to have energy efficiency work carried out without having to pay up-front costs. This is the “green deal”! A cost/benefit ratio is calculated for each series of energy saving measures defined and proposed. Once the application is accepted, the work is carried out by authorised companies which are paid through a charge that is added to the renovated property’s electricity bill, taking into account that the charge should not exceed the projected associated savings. If the beneficiary moves or sells the property, the legislation stipulates that the “Green Deal” is attached to the property rather than the occupant, be it an individual or a company.