Only one year old and ICP Europe is already at the centre of the European energy efficiency financing community. At last week’s Investor Days, ICP Europe was name-checked by speakers from the European Commission, United Nations Environment Programme, US Department of Energy, and fund managers. The money was in the room, with ICP Europe Director Panama Bartholomy hosting three panels of financiers and fund managers. Confidence is the buzzword as ICP Europe makes money flow.
Last week’s Investor Days in Brussels was co-hosted by ICP Europe, and attended by the cognoscenti in the movement towards mass-scale energy efficiency financing. To make the money flow, ICP Europe director Panama Bartholomy hosted the first European ‘Interconnect’ - a pitching session for investors (Deutsche Bank, Green Investment Bank, Joule Assets, European Investment Bank, SUSI Partners, Triodos Bank, Amber Infrastructure) looking for projects - and project developers looking to connect with funders. Fund managers are already lining up to join ICP Europe’s soon-to-be-launched Investor Network.
For the policy perspective, Paul Hodson, the most senior European Commission official on energy efficiency opened the proceedings in typically personable style, referring to the ‘many friends’ in the room. Hodson’s unit takes the job of upscaling energy efficiency investments seriously, and Hodson was generous in sharing the insights of their work.
‘Let the public sector learn from their investments’, said Hodson, referring to the group of public sector-led projects that have used successfully EU grant funding to leverage private investment into retrofit programmes. The ratio of public (grant - known as project development assistance or PDA) funding to further investment in energy efficiency projects ranges from 1:15 up to 1:50 and has proven to be an effective use of public funds, especially for cash-strapped public authorities.
Publicly owned or occupied buildings represent about 12% of the EU building stock[1], and with more than 6 000 signatories to the dynamic Covenant of Mayors initiative and a host of legislative drivers, the pressure is on for the public sector to take an exemplar role – and attract private capital to make up for the shortfall in public investment which has declined more than 20 percent across Europe since 2008.
Some of the policy push comes from the Energy Efficiency Directive, which is under review this year. ‘We’re looking for ideas’ said Hodson, and it’s no secret that the European Commission’s Directorate-General for Energy will be expecting input from contracts in which the ICP Europe team is involved. Hodson cited the importance of ICP Europe in tackling the barriers to mass scale investment into energy efficiency.
‘Let the public sector learn from their investments’, said Hodson, referring to the group of public sector-led projects that have used successfully EU grant funding to leverage private investment into retrofit programmes. The ratio of public (grant - known as project development assistance or PDA) funding to further investment in energy efficiency projects ranges from 1:15 up to 1:50 and has proven to be an effective use of public funds, especially for cash-strapped public authorities.
Publicly owned or occupied buildings represent about 12% of the EU building stock[1], and with more than 6 000 signatories to the dynamic Covenant of Mayors initiative and a host of legislative drivers, the pressure is on for the public sector to take an exemplar role – and attract private capital to make up for the shortfall in public investment which has declined more than 20 percent across Europe since 2008.
Some of the policy push comes from the Energy Efficiency Directive, which is under review this year. ‘We’re looking for ideas’ said Hodson, and it’s no secret that the European Commission’s Directorate-General for Energy will be expecting input from contracts in which the ICP Europe team is involved. Hodson cited the importance of ICP Europe in tackling the barriers to mass scale investment into energy efficiency.
Overall the approach from the Commission towards accelerating energy efficiency investment is three-fold – de-risking, aggregation and promoting a market-based culture.
These ideas are closely aligned with the goals of the Investor Confidence Project. ICP Europe launched in Brussels just one year ago, and its central role in Investor Days shows that it is already at the forefront of the European movement on energy efficiency financing – a diverse group which includes policymakers, activists, bankers and project developers.
These ideas are closely aligned with the goals of the Investor Confidence Project. ICP Europe launched in Brussels just one year ago, and its central role in Investor Days shows that it is already at the forefront of the European movement on energy efficiency financing – a diverse group which includes policymakers, activists, bankers and project developers.
Banker-turned-financial-climate-activist Peter Sweatman chaired the discussion panel consisting of Roman Doubrava (DG Energy, European Commission), Annie Degen (UNEP Finance Initiative, a global partnership between the United Nations Environment Programme and the financial sector), Stefan Besser (German Federal Ministry for Economic Affairs and Energy - BMWI, Germany).
Over the past three years, Sweatman’s invaluable work as rapporteur of the Energy Efficiency Financial Institutions Group (EEFIG) has laid the groundwork for a common language and consensus on what needs to happen next to enable mass scale financing of energy efficiency retrofit. The consensus is clear: the lack of a standardized process for developing and underwriting projects is the biggest barrier to confidence. ICP Europe comes at ‘le bon moment’ – momentum is building – but exactly how mass-scale financing for energy efficiency retrofit will be delivered is not clear. Some hints came from Sweatman’s panel.
First up, Roman Doubrava cited the potential of utilities to lead as aggregators. In Europe, the Energy Efficiency Directive (Article 7) requires energy companies to achieve yearly energy savings of 1.5% of annual sales to final consumers, opening up the possibility of stronger utilities’ engagement in the retrofit market, possibly under Pay-As-You-Save or on-bill financing. ICP has potentially a huge role to play here, given that just last week the New Jersey Board of Utilities (BPU) announced the launch of a new pilot program incorporating the IREE protocols, making New Jersey the first state to bring ICP’s market-based approach to energy efficiency into an existing state incentive program.
Degen emphasized the need to drive demand in the marketplace, and flagged up the significance of Buildings Day in the COP - next stop COP22 in Morocco. She said that UNEP FI are pushing for ‘some kind of a ratings agency’ (more potential for ICP here, perhaps), and also mentioned ongoing work at UNEP FI on a standardised energy services contract for utilities.
Degen emphasized the need to drive demand in the marketplace, and flagged up the significance of Buildings Day in the COP - next stop COP22 in Morocco. She said that UNEP FI are pushing for ‘some kind of a ratings agency’ (more potential for ICP here, perhaps), and also mentioned ongoing work at UNEP FI on a standardised energy services contract for utilities.
Dr Tim Unruh (Department of Energy, Director of the Federal Energy Management Program) shared lessons learned from the US National Deep Energy Retrofit project, again with a shout out for ICP.
And from there on out it was ICP’s show, as ICP Europe project director Panama Bartholomy hosted three successive panels, which included Lada Strelnikova (Deutsche Bank), Manuel Dueñas (European Investment Bank), and Sebastian Carneiro (CFA, SUSI Partners) among others. Led by Bartholomy, participants greeted the money with whoops and hollers. The bankers seemed surprised but shyly pleased with this reception.
And from there on out it was ICP’s show, as ICP Europe project director Panama Bartholomy hosted three successive panels, which included Lada Strelnikova (Deutsche Bank), Manuel Dueñas (European Investment Bank), and Sebastian Carneiro (CFA, SUSI Partners) among others. Led by Bartholomy, participants greeted the money with whoops and hollers. The bankers seemed surprised but shyly pleased with this reception.
Apart from the public money (EIB, Deutsche Bank’s primary involvement is through the European Energy Efficiency Fund), increasing private sector interest is noted. Swiss investment advisor SUSI Partners’ Carneiro has arranged more than EUR 500 million in project loans bringing investors together with project developers - especially investors looking for investments with long-term stable returns. SUSI Partners is specialised in the financing of sustainable energy infrastructure, and ‘aims to be the leading provider’ of market-based financing of the energy transition.
Carneiro pointed up the staggering difference between the public sector energy performance contracting market in the US (EUR 6 billion) and Europe (EUR 175 million), and mentioned that categorizing buildings as infrastructure may be a key step (a point that was also echoed by Degen and Amber Green’s Alex Gilbert who manages the London Energy Efficiency Fund). The nascent municipal bond movement in Europe could also play a big role here.
This week, ICP Europe release a full set of building Performance Protocols – which are already being used in the UK, Germany and Portugal.
Bartholomy says, ‘It’s time for energy efficiency to realise its potential. With these Protocols the European market now have the tools they need to communicate the safety of standardised projects and manage owner and investor risk. The resulting investment in projects will build the business case we need to allow the institutional investors into the game and only then can we start to see the path towards meeting Europe’s energy goals.’
Making money flow – strategies to increase energy investments in the European building sector, February 22-23, Brussels, was organised by BPIE, IEA-EBC Annex 61: Development of Business Models and Technical Concepts for Deep Energy Retrofits, KEA, and ICP Europe, in partnership with The Covenant of Mayors, the Climate Alliance and the CITYnvest Project.
Carneiro pointed up the staggering difference between the public sector energy performance contracting market in the US (EUR 6 billion) and Europe (EUR 175 million), and mentioned that categorizing buildings as infrastructure may be a key step (a point that was also echoed by Degen and Amber Green’s Alex Gilbert who manages the London Energy Efficiency Fund). The nascent municipal bond movement in Europe could also play a big role here.
This week, ICP Europe release a full set of building Performance Protocols – which are already being used in the UK, Germany and Portugal.
Bartholomy says, ‘It’s time for energy efficiency to realise its potential. With these Protocols the European market now have the tools they need to communicate the safety of standardised projects and manage owner and investor risk. The resulting investment in projects will build the business case we need to allow the institutional investors into the game and only then can we start to see the path towards meeting Europe’s energy goals.’
Making money flow – strategies to increase energy investments in the European building sector, February 22-23, Brussels, was organised by BPIE, IEA-EBC Annex 61: Development of Business Models and Technical Concepts for Deep Energy Retrofits, KEA, and ICP Europe, in partnership with The Covenant of Mayors, the Climate Alliance and the CITYnvest Project.
[1] Ecofys, Ecorys & Bio Intelligence Service. (2010). Study to Support the Impact Assessment for the EU Energy Saving Action Plan.
RSS Feed
