FINANCING ENERGYEFFICIENCY INGREECE AND CYPRUS

31 May 2018 Athens

Event organised by the Executive Agency for Small and Medium-sized Enterprises (EASME) in the frame of the Sustainable Energy Investment Forums contract, funded under the EU Horizon 2020 programme of the European Union

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As part of the "Smart Finance for Smart Buildings" initiative, the European Commission is organising a series of “Sustainable Energy Investment (SEI) Forums” to enhance the capacity of and co-operation between public and private stakeholders to develop large-scale investment programmes and financing schemes. The SEI Forums will consist of more than 30 events in up to 15 Member States in 2016-2019; information on past and upcoming events can be found on the SEI Forums webpage.

Most of the projects presented at this event were selected under the Horizon 2020 Energy Efficiency call for proposals managed by the European Commission's Executive Agency for Small and Medium-sized Enterprises (EASME). More information about those funding opportunities are regularly summarised and updated on the EASME webpage dedicated to energy efficiency finance.

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Table of contents

EXECUTIVE SUMMARY 5

BACKGROUND TO THE EVENT 6

OPENING SPEECHES 7

Welcoming speech 7

Energy Efficiency and national developmental strategy 7

Greece and Cyprus: core area for energy policy 7

PLENARY SESSION 1: EUROPEAN AND NATIONAL POLICY CONTEXTS 9

The Policy context of Energy Efficiency in Greece 9

Jessica funds: Joint European Support for Sustainable Investment in City Areas 9

Smart Finance for Smart Buildings 10

Financing of energy efficiency projects in Greece and Cyprus 10

Investments in Europe: ESCOs and Energy Performance Contracts 11

Mobilising the financial sector on energy efficiency 11

DISCUSSION 12

PLENARY SESSION 2: MAKING ENERGY EFFICIENCY ATTRACTIVE FOR THE FINANCIAL SECTOR 13

International stakeholder engagement experiences 13

Financial tools for optimal European resource valorisation 14

EBRD’s experience in energy efficiency financing 14

Piraeus Bank’s tools for energy efficiency funding 15

NBG’s tools for energy efficiency funding 15

Alpha Bank’s tools for energy efficiency funding 15

Eurobank’s tools for energy efficiency funding 16

DISCUSSION 16

PARALLEL SESSION 1: ENERGY EFFICIENCY FINANCING IN RESIDENTIAL BUILDINGS 18

The “Saving at Home” Programme in Greece 18

The “Saving and Upgrading of Households” Programme in Cyprus 19

Private Finance for Energy Efficiency (PF4EE) instrument 19

Integrating Energy Efficiency in Mortgages: The EeMAP and EeDaPP initiatives 20

DISCUSSION 20

PARALLEL SESSION 2: ENERGY EFFICIENCY FINANCING IN PUBLIC BUILDINGS 22

Financing tools for Energy Renovation of public buildings 22

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Development of Energy Efficiency Projects in 7 Municipalities in Attica 22

Innovative energy efficiency financing for public buildings and street lighting 23

Energy Performance Contracting in the Public Sector – Barriers and proposals 24

DISCUSSION 24

PARALLEL SESSION 3: ENERGY EFFICIENCY FINANCING IN SMES AND INDUSTRIES 25

The Sustainable Energy Asset Evaluation and Optimisation Framework (SEAF) 25

Financing tools for energy savings in SMEs 26

The role of Cooperative Banks in contributing to local economies’ development 26

Energy Performance Contracting Plus (EPC+) 27

DISCUSSION 27

CLOSING PLENARY SESSION 29

The new Eurostat guide on EPC statistical treatment in Member State Budgets 29

Short reports on parallel sessions by Moderators 29

Closing remarks 30

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The information and views set out in this document are those of the author(s) and do not necessarily reflect the official opinion of the European Union. Neither the European Union institutions and bodies, nor any person acting on their behalf, may be held responsible for the use which may be made of the information contained therein.

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EXECUTIVE SUMMARY This event gathered 183 participants working on energy efficiency financing, with backgrounds in the financial sector, national governments, project development, the renovation supply chain and local and regional institutions. Taking place over one day, the event was structured as indicated below:

Opening speeches Plenary Session 1: European and national policy contexts Plenary Session 2: Making energy efficiency attractive for the financial sector Parallel Session 1: Energy efficiency financing in residential buildings Parallel Session 2: Energy efficiency financing in public buildings Parallel Session 3: Energy efficiency in the industry and SME sectors Closing plenary session

The conference hosted speakers from across Europe. Through the presentations and the following discussion, the following key points emerged:

• Progress in the deployment of energy efficiency in the region is evident. New forms of financial tools are starting to emerge, e.g. green mortgages, yet there is much greater scope for their deployment. Public funds should be more efficiently used to draw in private investment, although appropriate risk and reward sharing mechanisms need to be applied, a first approach being implemented in the “Saving at Home II” call for applications.

• The building sector is vital for energy efficiency, but demanding in terms of risk-taking

and project management, as the typical size of a project is disproportionate to the business risk for its take-up by a private institution. Multilateral facilitation can be provided by bodies such as cooperative banks, which due to their proximity to customers and mode of operation are more flexible in offering non-financial services (consulting). This holds true for the housing, as well as the commercial and public building sector.

• Generally, all stakeholders represented at the meeting called for enhanced

cooperation, including the banking sector, to debottleneck, overcome obstacles and jointly develop strategies and solutions. This should also be seen in relation to the need to develop a more supportive national framework.

• It is needed to bring all stakeholders together and foster an integrated approach,

involving knowledge transfer and capacity building, creating stable project pipelines that will result in greater leverage of both public and private funds.

The plenary sessions on the legislative framework and the invertibility improvement potential, along with the three parallel sessions, gave interesting insights and ideas on how to tackle the particular barriers and unlock opportunities within the various sectors.

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BACKGROUND TO THE EVENT The Energy Union Framework Strategy puts energy efficiency as one of its five dimensions and states it is to be treated as an energy source in its own right. The ambitious Paris climate agreement also underlines the importance of energy efficiency. Investments in energy efficiency have proven to be one of the most cost-effective ways to support the transition to a low-carbon economy. Not only does it help the EU in turning its climate ambition into climate action, it also brings a number of significant benefits for European citizens and companies in terms of environment, health, security of supply, lower energy bills, more jobs and sustainable growth.

To realise the full potential of energy efficiency, public funds will not suffice, and private financing will have to be unlocked at scale. In that context, energy policy should create more favorable investment conditions, encourage demand for energy efficiency and help consumers undertake energy efficiency investments more easily.

This event aims to share best practices from Greece and Cyprus, as well as other countries, on how energy efficiency investments can be financed. These include the use of private funds and innovative financing instruments, notably in the building and industry sectors. Speakers focused on practical experience in developing and structuring investment programmes.

Copies of all presentations from the event can be found at:

https://ec.europa.eu/info/events/sei-forum-events/financing-energy-efficiency-greece-and-cyprus-2018-may-31_en

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OPENING SPEECHES Welcoming speech Michalis Verriopoulos, General Secretary of Energy, Ministry of Environment and Energy, Greece

The Greek Government is aiming at measures to encourage investments, combat energy poverty and mitigate the impact of the energy transition on citizens. The main strategy of the Ministry is to develop an energy culture, stressing that "the most important fuel is the one saved". Funds are already available from the “Saving at Home II” programme (where the initial target of € 400 million has been supplemented with additional resources of € 1 billion to meet demand), as well as for corresponding programmes for SMEs and public buildings. The National Renovation of Buildings project targets 20,000 homes per year from 2020 onwards, a target regarded as quite ambitious. The integrated energy market, combined with the coordinated planning of energy and climate measures, along with an increase in the share of RES, will bring security of supply, while competitiveness in the energy market will reduce the final consumer tariffs.

Energy Efficiency and national developmental strategy Panagiotis Korkolis, General Secretary of NSRF Public Investments, Ministry of Economy and Development, Greece

The priority of energy efficiency for the Ministry was highlighted, along with its importance for the country's development strategy. Energy efficiency strengthens the entire value chain of productive activity and stimulates economic growth. As regards the sources of funding, initially € 1.5 billion was committed from the current NSFR, while € 1 billion have been secured for “Saving at Home II”.

The EU proposal for the new NSRF includes an additional 8% of new energy subsidies and a program to support SMEs from the Infrastructure Fund is in progress. The Infrastructure Fund is co-funded by € 200 million from the NSRF and € 200 million from the EIB and will be able to finance public and private projects as well as PPPs. Institutional initiatives need to be taken jointly with the Ministry of Energy to add financial resources for financing energy efficiency projects in public buildings.

Greece and Cyprus: core area for energy policy Tudor Constantinescu, Senior Advisor to the Director General, DG ENERGY, European Commission

The five pillars of the European energy policy (“Clean energy for all” package), the primary importance of savings and security of supply, balancing networks with the integration of new technologies (smart grids, smart buildings, ICT) and the role of competitiveness were mentioned. Particular attention was given to the European objective of almost zero energy consumption of buildings by 2050, as the EU building sector is responsible for

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36% of CO2 emissions, and the importance of energy storage.

With regard to the expansion of the share of RES, emphasis should be placed not only on the financing of electricity, but also heating and cooling projects. Also, a new market design is needed to benefit both consumers and RES producers more actively. It is vital to reduce risk through targeted financial and legislative assistance, which will also help tackle energy poverty (a relevant European observatory is in place) and the budget deficit. Europe-wide emission reduction targets require an additional € 177 billion in annual spending to be realised in 2020-2030. There is no golden rule to achieve these targets, each Member State should shape its own legislative framework. However, useful conclusions can be drawn through interactive dialogue and cooperation between countries and regions.

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PLENARY SESSION 1: EUROPEAN AND NATIONAL POLICY CONTEXTS

Moderator: Stavros Stamatoukos, EASME, European Commission

The Policy context of Energy Efficiency in Greece Vassiliki Sita, Ministry of Environment and Energy, Greece

An overview of the institutional framework for energy efficiency and statutory targets by 2030 was provided. European legislation was incorporated into national law by Laws N. 4342/2015-EED and N. 4122/2013-EPBD. In addition to the savings target for final consumption, there is now a commitment to save 1.5% from new savings projects per year by 2030. There is also an obligation to convert all public buildings to nearly zero-energy buildings by 1/1/2019. There is a deviation from Article 7 of the EED of Greece of about 35%, which brings an additional cost of 2-3 billion € for the country.

Energy audits, based on standardized technical methodology, is a key step towards the long-term strategy of renovating the building stock and identifying sustainable solutions. Another key objective of the Ministry is the direct linking of funding to research and innovation in the field of energy saving.

Link to presentation

Jessica funds: Joint European Support for Sustainable Investment in City Areas Alexandra Doga, Ministry of Economy and Development, Greece

The development of PPPs on the global market was briefly presented. The European PPP market has grown in recent years to a scale of € 53 billion. In Greece, PPPs are regulated by Law 3389, while the country has been awarded the most innovative PPP financing. There are 12 contracts with a total budget of 633 million €, of which three are waste management projects, the only waste management projects currently taking place in Greece. Another example of a PPP is the application of telematics and e-tickets to the Athens Motorways, which has increased revenues of € 4.5 million for the two months of March - April 2018 compared to the corresponding period for 2017.

Another area where PPPs are often used is street lighting, which accounts for 20% of the energy consumed in cities. It is reminded here that cities are responsible for consuming 2/3 of the energy produced across Europe. PPPs are jointly funded by Jessica and the EIB.

Link to presentation

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Smart Finance for Smart Buildings Dimitris Athanasiou, DG ENERGY, European Commission

The main goals of the “Clean Energy for All” package is putting energy efficiency first, but also delivering a fair deal for consumers, as so far 9% of household spending is available for electricity bills. It is also important to redesign the electricity market in order to be more compatible with RES, but also to make the RES more compatible with the market. Governmental cohesion should take advantage of the development of new technological infrastructures (e.g. e-mobility, smart readiness indicator) to ensure that gaps in the targets for energy efficiency are avoided.

It is vitally important to renovate the building stock, where funding plays a leading role. The average European pace of renovation is currently between 0.4% and 1.7%. By the end of June, the revised European EPBD Directive will be published and Member States will have 20 months to incorporate it into National Legislation. Based on the current targets, by 2030 an increase in European GDP by 1% and the creation of 900,000 new jobs are expected.

The objectives of smart financing are: more efficient management of public funds with the smaller administrative burdens for competent authorities, technical assistance and project aggregation, and the reduction of financial risk. SEI Forums serve precisely the purpose of convergence and networking, in order to stimulate large-scale investments.

Link to presentation

Financing of energy efficiency projects in Greece and Cyprus Vasileios Konidas, DG REGIO G3 (Greece & Cyprus), European Commission

During the previous management period (NSRF 2007-2013), investments totaling € 600 million were made in Greece and Cyprus. 46,000 residences were benefited, and 5,800 man-year equivalent new jobs were created. For the 2014-2020 NSRF management period, Greece has allocated to energy efficiency projects: € 5bn from EPANEK and € 5.5bn from YMEPERAA, while € 1.3bn is available for sustainable urban mobility projects. In Cyprus for the same period (2014-2020) € 20 million are allocated for energy efficiency projects in public buildings and € 8.7 million for SMEs.

An extremely important project, also funded by NSRF, is the interconnection of the Cyclades, whose first phase (Tinos Mykonos, Syros Paros) has already been completed, while the second phase (Naxos) and the third phase (second cable to Syros) are still under construction.

“Saving at Home II” will give new impetus to energy efficiency for households, since they have no access to other funding options, such as the Infrastructure Fund. An area that needs support from the state to develop further is that of Energy Services Companies (ESCOs).

Link to presentation

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Investments in Europe: ESCOs and Energy Performance Contracts Laurent Bender, European Investment Bank (ΕΙΒ)

EIB (European Investment Bank) is the largest multilateral lender and borrower in the world and aims to act as a catalyst for leveraging private capital and combining private and public funding. The Energy Performance Contracts concept (EPCs), as well as the role of the EIB in combining EIB finance with EU budget and other public sources, were presented briefly. The budget-neutral approach of EPCs was analyzed, which enables owners to implement cost-saving projects without capital budgets. Projected annual savings are guaranteed to meet finance payments.

In recent years, various policy developments have been put in place, addressing some important barriers. Despite these developments, the Greek and Cypriot ESCO market remains stagnant, with very few projects implemented (none in Cyprus and 2 in Greece). An ESCO registry has now been created containing data for 47 ESCOs in Greece and 19 ESCOs in Cyprus. In Greece, in order to boost the market, pilot projects are planned and the involvement of JESSICA is foreseen. Further, a number of key elements, deemed as key drivers for a kick-start of the ESCO market, are now in place in the Cypriot framework. More awareness and information sharing measures are necessary to attract the interest and increase the trust among potential partners.

The main differences between EPCs and PPPs were then clarified: EPCs refer to medium-term investments, are aimed at renovation and savings, while PPPs are about long-term investments, aiming at erection of new constructions and new investments.

Finally, the Practitioners Guide for EPC statistical treatment was presented as well as the possibility of financing project development assistance through the ELENA Programme for aggregation of small-scale projects in pipelines, and moreover the Pf4EE initiative for technical assistance to the private financing of energy efficiency projects.

Link to presentation

Mobilising the financial sector on energy efficiency Martin Schoenberg, Energy Efficiency Project Coordinator, United Nations Environment Finance Initiative (UNEP FI)

The UN Environmental Finance Initiative is a partnership between the UN and the finance sector, in which most members are banks. Through the partnership there is increasing focus on positive impacts through finance and on long-term value creation. The mandate of the initiative is to change finance to be able to finance change. Its main objective is to maximize its contribution to the achievement of the objectives of the Paris Agreement, given the enormous investment challenge it implies, of the order of 1.1 trillion US $.

At the current stage, particular attention is given to the regulation of the transition to the low-carbon economy. Energy efficiency investment is driven by its value premium; nevertheless, further action is required to upscale investment levels. Global BAU until 2035 would leave most EE efficiency potential untapped. The highest untapped potential

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is within the building sector. There is clearly a need for active involvement of private financial institutions in the conversation.

Main challenges in scaling up EE investment include complexity: Wide range of financing structures necessary for investments across sectors and asset classes; Deal size: Small ticket size causes need for aggregation; Embedder transactions: EE investment is mostly integrated into other transactions, such as real estate refinancing. Coordination: There is a need for Common frameworks for project developers, investors, financiers and project hosts.

To mainstream energy efficiency, the investment market needs to combine concessionary finance with risk sharing and standardization. In relation to this Mr. Schönberg mentioned the EEFIG initiative which in its second phase made major contributions to progressive standardization and mainstreaming through the De-Risking Energy Efficiency Platform (Now covering data for more than 10,000 industry and building projects) and the EEFIG Underwriting Toolkit (Value and Risk Appraisal Guide).

Further the G20 Energy Efficiency Investment Toolkit was presented, which was endorsed during the G20 Hamburg summit. The Toolkit provides a collaborative architecture for policy-makers and FIs to scale-up energy efficiency investments and realise the significant economic, environmental and social benefits of energy efficiency in their economies. The Toolkit collects experiences from 15 participating G20 countries.

Link to presentation

DISCUSSION - On energy cooperatives / energy communities and their perspective. Answer - assessment: should be combined with ESCOs and EPCs to survive.

- About the Energy Exchange and the Green Bonds: Answer - assessment: the green bond market is growing rapidly; the level of market aggregation will be proportional to its size.

- request for nZEB details, when will the new KENAK be updated? Answer: there is an ongoing procedure. The technical specifications for new and existing buildings need to be released, the highest percentage has already been completed. A new TEE technical directive and a new KENAK will be issued.

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PLENARY SESSION 2: MAKING ENERGY EFFICIENCY ATTRACTIVE FOR THE FINANCIAL SECTOR Moderator: Nikos Diakoulakis, Investments and Development Consultant

Initial comments and questions:

It is necessary to leverage private resources to achieve the energy objectives. Some questions were raised to be answered by the representatives of the financial institutions:

-What is their evaluation of the market and investment conditions?

-What are the products they offer?

-What are their thoughts and proposals for boosting the market in relation to energy projects?

International stakeholder engagement experiences Ioannis Orfanos, Energy Efficiency Financial Institutions Group (EEFIG)

The key role of EEFIG is to assist banks to finance energy projects. The main obstacles encountered are the lack of alignment of financial incentives among various stakeholders, as well as the inadequate understanding between people who work on the technical part and those involved in the financial evaluation. The absence of standardized rating indicators is also a major bottleneck.

EEFIG succeeded in bringing the funders into discussion by organizing forums that have submitted problems such as understanding the terms and that there is no common language for investment evaluation. EEFIG's actions include the De-Risking Energy Efficiency Platform - DEEP (2016) and the EEFIG Underwriting Toolkit (2017) to achieve de-risking, which is available online. Funders can add their projects and their data in order to achieve a greater level of understanding of both the projects themselves and the funding processes.

The toolkit and the DEEP was shortly presented, which includes 5,000 projects in buildings and 5,000 in the industry and shows where significant savings are being made. Everyone was invited to include their Greek projects (there are only 3 on the platform!). Finally, reference was made to other EU actions such as the Sustainable Energy Asset Framework; and the need to finance technical assistance for the development and implementation of projects was highlighted.

Link to presentation

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Financial tools for optimal European resource valorisation Christos Kontogeorgos, European Investment Bank (ΕΙΒ)

Initially, the PF4EE (Private Finance for Energy Efficiency) was presented, a pilot scale joint initiative between the EU and the EIB aimed to address the limited access to adequate and affordable commercial financing for energy efficiency investments. It provides: 1) a portfolio-based credit risk protection provided by means of cash-collateral (Risk Sharing Facility), together with 2) long-term financing from the EIB (EIB Loan for Energy Efficiency) and 3) expert support services for the Financial Intermediaries (Expert Support Facility).

Three complementary actions are being carried out within the framework of the action, addressed to individuals, companies and municipalities. The EIB lending terms were presented: up to 75% of the investment cost, up to 25 years and up to € 5 million.

The structure of the new Infrastructure Fund was presented, which will manage up to € 450 million, with up to 3 intermediate management bodies. Its resources come from the following institutions: € 200 million through the ESiF, € 200 million from national resources and € 50 million from JESSICA.

Reference was also made to the ELENA programme (through EIB-EC), which also finances technical assistance for the preparation of projects (cost coverage for feasibility study, design study, energy audits, etc.) and funds up to 90 %. So far, 60 contracts with a total value of € 110 million have been concluded in 20 countries with a total investment cost of € 4 billion.

Link to presentation

EBRD’s experience in energy efficiency financing Harry Damaskos, Principal Banker, European Bank for Reconstruction and Development (EBRD)

Since 1991 EBRD has been involved in more than 5,000 project with investments totaling more than €119 billion. Private sector accounted for a 79% share.

In 2017 EBRD was involved in 412 projects totaling an investment of €9.7 billion (66% private projects), inside and outside the EU, and within three pillars: business, finance, energy and infrastructure. Its main field of action is to develop tools for technical cooperation to achieve energy and investment plans, particularly in the private sector. In Greece EBRD is active in the private sector and has funded so far 32 projects with a total of € 1.6 billion, mainly infrastructure projects and oil industry projects. It also participates in financial sector support, enhancing the capitalization of banks.

The presentation of examples of action by the EBRD in the field of energy efficiency followed, highlighting the fact that so far 26 billion euros have been invested in green financing. Two main principles are followed to design credit lines, either via banks (intermediaries) or directly to companies. This was followed by the analysis of a direct financing example of Dimand SA (see presentation).

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As to the ESCO issue, the processes involved, and the funding mechanisms are quite complex. However, the EBRD has funded ESCOs in other countries, for example the Latvian “Baltic Energy Efficiency Facility”, while in Lithuania it has also funded green bonds. Finally, the PPP funding provided by the bank was mentioned, with an example of the financing of a hospital energy saving project in Turkey.

Link to presentation

Piraeus Bank’s tools for energy efficiency funding Dimitrios Verelis, Senior Director, Piraeus Bank

Piraeus Bank's interest in energy efficiency is underlined by the Group's efforts to reduce energy consumption and CO2 emissions in its branches and headquarters. The bank is consider the PF4EE programme (EIB) as a good initiative to promote the EE lending market.

The bank presented its products for individuals and businesses, as well as for green investments in the building sector. “Home Saving” was mentioned as the main programme that is in demand at the current time. Further an overview of all investment products handled by the bank was given (see presentation).

Link to presentation

NBG’s tools for energy efficiency funding Kostas Venetsanos, National Bank of Greece (NBG)

The National Energy Efficiency Plan for the period 2014-2020 was initially presented. The need to create a better framework for access to financing of EE proejcts was emphasized, including providing properly documented investment plans.

Following was a presentation of the Bank's financing solutions and alternative tools. Sources of funding may be structural funds, European funding programs and alternative mechanisms (e.g. JESSICA). The benefits stemming from co-operation with transnational bodies are increased resource leverage, better project quality, recycled funding (the amounts remain in GRNET) and private initiative. Finally, products for private individuals (Household Savings II, Green Loan, Photovoltaic House, ESTIA Green) and Businesses (Renewable Energy, through PPPs) were presented.

Link to presentation

Alpha Bank’s tools for energy efficiency funding Nikos Nezeritis, Head of Structured Finance, Alpha Bank

The bank is particularly active in PPP financing. It does not have any significant activity yet in the field of energy efficiency because of difficulties related to the current legislative

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framework, but has a particular interest in the energy investment market. Instead of individual energy usees, the bank prefers to fund multi-project set-ups with big project volumes. To avoid risk in such projects, it is important to take both the calculation risk and the Interface risk into account.

The terms of financing in Greece are not the same as in Western Europe, with the main problem being the low equity capital and the low maturity of the sector. Summarizing it was pointed out that banks are quite restrained in energy projects and prefer more secure and guaranteed options.

Link to presentation

Eurobank’s tools for energy efficiency funding Spyros Venetsianos, Head of Structured Finance, Eurobank - Dimitris Andritsos, CEO, Eurobank Property Services

Initially, a brief analysis of the bank's financing models was presented.

Financing of energy upgrade through Capital Expenditure (CAPEX) was mentioned as one preferred option, and as a relatively easy model for banks to handle. ESCO projects was mentioned as complex and as difficult to analyse and they are usually connected with relatively small-scale projects. The bank prefers to contract with the public through PPPs and facility manager features.

Next, the improvement of the energy performance of Eurobank buildings and branches was described with a target of 10% annual energy savings. The project data is expected to be posted on the DEEP platform soon. The investments amounted to € 1 million for minor improvements, and with an average payback time of 6 years. With regard to major refurbishments, the payback time was approximately 12 years. The investments are connected with implementation of energy management procedures.

It was stated that there is a gap in relation to standardization of energy projects and specialisation in new energy technologies. Overall, the bank looks positively on green business loans, preferring pay-as-you-save scenarios (turnkey solutions, one stop shops).

Link to presentation

DISCUSSION - Question about international market experiences and suggestions for Greece –

Answer (Mr. Orfanos): Greece should not be a special case. We will need to gain significant experience from others

- Are the ESCOs viable in the Greek market? - Answer (Mr. Orfanos): Within this framework, no, they will need to combine packages with other types of services (e-mobility etc.)

- Are EBRD interest rates competitive? - Answer (Mr. Damaskos): No, the

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differences of EBRD products are the tenure and technical assistance provided. The main risk for such investments is uncertainty in cash flows, while for small ESCOs the main risk is their growth.

- - What is the green interest rate and how is energy efficiency included in the banks' evaluation analysis? - Answer: In the Greek market ranges between 0.5 - 1%, but to include in the Bank's analysis an energy efficiency improvement action requires a high level of technical competence.

- Main problems with project finance in Greece? - Answer: mainly small projects are targeted, as it is difficult for the big ones to appreciate the benefit. The hedging of the kilowatt-hour is hardly achievable in the Greek market. Especially catalytic role can be played by ESCO, mediating between bank and contractors.

- What is the Energy Efficiency Fund status (Law 4342)? - Answer: it is not yet established but there is a commitment to its establishment. They can work with the Infrastructure Fund, but they have another function and different resources.

- What is the potential of the EBRD green climate fund for Greece and Cyprus? - Answer: Greece and Cyprus are not yet involved in the green climate fund actions.

- On the basis of efficiency, are photovoltaics the priorities of funding energy efficiency actions? - Answer: It is one of the best investments, complementary to efficiency projects and within the scope of implementation of smart technologies such as net metering.

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PARALLEL SESSION 1: ENERGY EFFICIENCY FINANCING IN RESIDENTIAL BUILDINGS

Moderator: Vassiliki Sita, Ministry of Environment and Energy, Greece

The “Saving at Home” Programme in Greece Dimitrios Tsalemis, Ministry of Environment and Energy, Greece

The “Save Energy at Home” Program offers citizens who meet specific income related criteria, incentives (subsidies up to 70% and interest-free loans) to carry out major interventions for improving their houses’ energy efficiency. The program also sets an energy objective for improving the energy performance of the household by at least one energy class. The programme has been implemented through a revolving Fund.

The “Saving at Home I” programme accepted 50,041 applications with a total funding of € 500 million (2007 – 2013).The major challenges were related to the creditworthiness of applicants, as well as the mandatory check of reported data, which led to long delays in processing.

The "Home Savings" Programme II was designed as a follow-up to the "Home-saving" program of the 2007-2013 programming period. The Program is funded by ERDF and national resources and provides incentives in the form of a grant (direct support) and a loan (the "Saving II" Fund) with an interest rate subsidy. The Beneficiary of the Program and Operator of the "Savings Program" Fund is the National Entrepreneurship and Development Fund ETEAN www.etean.gr

For “Saving at Home II”, a total of around € 400 million will be available. Up to now, € 224 million is available for direct support (grants), and € 68 million is allocated for the loan fund. It will not be allowed to submit applications for dwellings that were already included in the 2007 – 2013 programme, with the exception of apartment buildings.

An overview of the application process was presented in relation to the electronic submission and monitoring information system (see also link in the presentation). The grant may reach up to 250 € / m2 of housing area and 70% of the costs, with a maximum of € 25,000 excluding VAT. The energy goal is 40% of the consumption of the reference building (before interventions), for income categories 1 and 2, and 70% of the consumption of the reference building (before interventions), for the income categories 3 to 7.

45,600 final applications have been already received for the second programme, and the currently preferred financing scheme is that of 60% through loan and 40% own financing. he preferred measures are as follows: around 48% opts to replace window frames, 30% thermal insulation and 26% heating / cooling system installations. Submissions are accepted until 31.12.2021 if funds are available.

Link to presentation

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The “Saving and Upgrading of Households” Programme in Cyprus Andreas Lizides, Ministry of Energy, Commerce Industry and Tourism, Cyprus

The Scheme aims to promote deep energy renovation of existing households, by providing non- repayable financial support through Call for Proposals. The programme is funded by the Cohesion Fund and the Republic of Cyprus with a total funding of € 18.4 million. It is addressed to existing residences and owners who are natural persons, provided that the building permit is before 21/12/2007 and it does not matter whether the residence is permanent or not. Categories of eligible costs include building refurbishment (e.g. thermal insulation), equipment (e.g. heat pumps), as well as services.

There are three types of upgrades:

1. Deep Energy Renovation of Buildings for achieving at least B class of energy efficiency in the Energy Performance Certificate ( EPC ) or energy saving at least 40 % relative to the total building energy consumption before upgrading

2. Deep Energy Renovation of Buildings for Upgrading to nearly zero energy buildings, as defined in the relevant ministerial Decree

3. Implementation of individual energy saving measures to households that are used as permanent residence

The maximum grant amount could reach €25.000 per building or €20.000 per building unit (apartment). The important point for applications is that 50% of the cost should be covered by the owner.

The statistics for the first call were presented, with 1139 applications submitted in total, of which 945 were approved with an average of 9390 € / dwelling, while for nZEB dwellings the average was around 21,150 € / dwelling. For the second call within 6 weeks, 579 applications have already been received. As far as interventions are concerned, 86.5% target B type buildings, 9.4% target nZEB buildings and 5.2% demand for vulnerable consumers.

The most popular upgrade categories through the program were (percentage of the total number of applications): 86.2% roof insulation, 73.7% replacement of window frames and 66.7% thermal insulation of walls.

Link to presentation

Private Finance for Energy Efficiency (PF4EE) instrument Konstantinos Vrachimis, Cyprus Cooperative Bank

Initially, a presentation of the CCB, which controls € 11.7 billion worth of assets, was given as well as an analysis of the Cyprus energy market in relation to the national energy targets. 36% of the current energy consumption is related to dwellings and 41% to commercial buildings. 45% of the household energy consumption is related to heating.

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In 2005, the first products in the market for homes and SMEs (Sunflower package for businesses and individuals) appeared.

The PF4EE tool (EIB Framework Loan), was presented in which CCB is an intermediary bank between the EIB and loan beneficiaries. The PF4EE instrument provides a portfolio-based credit risk protection provided by means of cash-collateral (Risk Sharing Facility), together with long-term financing from the EIB. Up to 75% of each investment can be financed by the EIB. Loan beneficiaries benefits from long term loans with a low interest rate (slightly above 1 %). The risk sharing mechanism keeps an amount in reserve to cover potential losses. In addition, technical support is provided to the bank for the loan portfolio (marketing etc.) to promote loans in the market. For Cyprus, the product will be promoted in the private sector (households). The overall portfolio for Cyprus amounts to € 40 million.

Link to presentation

Integrating Energy Efficiency in Mortgages: The EeMAP and EeDaPP initiatives Déborah Leboullenger, European Mortgage Federation-European Covered Bond Council

The role of the initiative is to co-ordinate pan-European guidelines for the financing of the improvement of the EU’s building stock by way of financial incentives linked to the mortgage to encourage energy efficiency investments by households.

The idea behind this initiative is to create a standard framework for specific mortgages that take into account all economic benefits of an energy performant building: an increased economic value of the upgraded buildings, and lower probability of default for the borrower.

The draft standardisation consists of the following steps: a. Property valuation, b. Estimate current EPC, c. Assessment of changes, d. Making changes, e. Post-change energy audit, f. Valuation after changes.

According to recent studies, upgrading from class "E" to "B" leads to a benefit of 24,000 € / home in 30 years.

The initiative is currently entering a pilot phase and 35 European banks are already on board. No banks from Greece or Cyprus have decided to enter the pilot scheme yet but they are highly welcomed to do so.

Link to presentation

DISCUSSION - June 30th is the final date for submissions in the “Saving at Home II” System. Will

the applications be cleared on July 1? What about new submissions? - Answer: Until 30 June for 11,500 applications. ETEAN will evaluate special cases. If there

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is additional money, a new round of applications may be announced. - What is the PF4EE interest rate? What kind of projects can apply for funding?

Answer: It is mainly for class upgrade measures and some for nZEB. - Is PF4EE competitive with Saving at Home programme? - Answer: No. It is a

product offered by the bank, it is not related to actions through the Greek government.

- Has any promotion been made for the pilot phase of EeMAP in Greece and Cyprus? - Answer: Promotion is in the desired direction for Greece and Cyprus. The fact that any problems or obstacles occur are common between different projects.

- What is the percentage of applications for nZEB in Greece? Answer: It has not been estimated, it is rather small.

- Since the goal is to achieve nZEB-type buildings then why are not RES financed? Answer: For Cyprus only grants are given for net metering to vulnerable consumers. For Greece, it is covered by the parallel program for net metering. Heat pumps are considered to be in the desired direction of nZEB.

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PARALLEL SESSION 2: ENERGY EFFICIENCY FINANCING IN PUBLIC BUILDINGS

Moderator: Sotirios Karellas, National Technical University of Athens

Financing tools for Energy Renovation of public buildings Yanna Nikou, Ministry of Environment and Energy, Greece

Initially, an overview of the overall picture of available resources was given. Over € 20 billion is available for the European Structural Funds and Investment Funds (GRNET), of which € 8.16 billion comes from the European Regional Development Fund (ERDF). The actions are divided into 7 sectors and 13 operational programs. The thematic objectives are 4: Low carbon economy and 7: Sustainable transport and infrastructure, energy and electricity. Total resources for energy upgrading actions are 1.4 billion €, of which 400 million for energy and 700 million for savings. An increase in available resources is expected from the forthcoming revision of the European directives. Priority is given to the combination of financing tools (grants, loans and guarantees).

In the field of buildings, integrated interventions is aimed for, setting high targets (40-70%), but the final savings will be proportional to income levels. The public building tools provide for a grant of up to 100% with operational programs in 14 regions and a total investment of € 247 million (origin: EPANEK, Infrastructure Fund, JESSICA), EIB by end 2017 (subsidy up to 70%). These tools do not only target public buildings, but also funding of private actions with equity> 10%. The criteria for selecting buildings include the energy efficiency class, the building permit issuing date (must be before 2010), as well as the characteristics and maturity of the project.

For the future, additional private capital is budgeted through PPPs, as well as funding through the Deposits and Loans Fund and the CRES, and a study of the existing procurement procedures is also expected. Finally, a solar PV program is expected with virtual net metering at a three-year depth.

Link to presentation

Development of Energy Efficiency Projects in 7 Municipalities in Attica Eva Athanasakou, PRODESA project

PRODESA aims to assist seven major municipalities in Athens Metropolitan Area to launch showcase energy efficiency and renewable energy projects, utilizing innovative financial tools and attracting private investments. Funding is provided through the Horizon 2020 (Project Development Assistance).

So far, actions have been taken in 116 buildings, producing 3.2 MW of PV and 6.3 MW

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of street lighting, leading to savings of 3 million euro per year and having a direct impact on 0.5 million citizens.

The objectives of the PRODESA project were presented:

• Technical and economic studies of energy projects and categorization based on energy efficiency and performance

• Bundling of energy projects in relation to energy performance contracts (EPCs) • Configure the financial scheme to safeguard the interests of the parties and reduce

business risks • Contribute to the standardization of EU projects in municipalities (studies,

specifications, collateral, contracts, certification) • Demonstrate financing and organisational innovation for the municipalities in

Greece and produce “Data Evidence” on performance of EPCs and investments.

Each municipality participates with 20-25 buildings, while 3 municipalities participate in the street lighting activities. The benefits of bundling the projects include the possibility of saving on a large scale, diversification of risks and the creation of more attractive investment opportunities for building contractors, ESCOs, maintenance companies and the financial sector. Other advantages are fast execution and shorter payback times.

Link to presentation

Innovative energy efficiency financing for public buildings and street lighting Vlassis Oikonomou, PROSPECT project

The PROSPECT has focused on learning public authorities how to carry out simple energy interventions to secure investments for joint sustainable initiatives? Further it has focused on what public authorities can learn from successful and less successful projects and initiatives to provide better access to financing.

As such the project has implemented a learning program through facilitators. The learning programme enables peer-to-peer learning in regional and local authorities in order to finance and implement their sustainable energy and climate action plans. The programme builds upon successful financing schemes implemented in cities and regions in the European Union. It will help local and regional authorities to benefit from the lessons learnt and the experience of their peers in order to launch their own investment programmes.

Five manuals have been published with examples of best practice within five thematic areas.There has been a special focus on energy performance contracting and the importance of the facilitator's role in the implementation process.

Three examples of actions under the PROSPECT program was presented: UMEA Sweden Siemens (renovation of 130 buildings, costing € 15.2 million and training 100 people), Rotterdam (swimming pool project) and Ljubljana (EPC in public buildings).

Link to presentation

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Energy Performance Contracting in the Public Sector – Barriers and proposals Aris Papadopoulos, Zero Energy Building SA

A short review of the institutional framework (N3855/2010, N4342 / 2015), which provides for standardization procedures, smart meters and promotion of ESCOs was given. The state of the public sector including existing problems (multiple owners of public buildings, lack of electricity meters, absence of recording of energy consumption, building legislation issues) were highlighted.

Steps to address these problems will include information, transparency actions (online information, tax audits, public accounting) and promotion of the EPC concept. Available funding for EPCs is not being sufficiently exploited, banks are not sufficiently involved and there is a general lack of know-how and trust. As a result, there are currently very few EPC projects

It was suggested to learn from international experience, implement pilot projects and to evaluate current and concluded projects with third party involvement.

Link to presentation

DISCUSSION - When will a public building renovation finance scheme be announced? - Answer:

Announcements will not come out centrally, every region will make its own call for applications.

- What is the experience so far from municipalities that differ greatly joining in the same work? - Answer: They are in general difficut to gather at the same table. Such projects have an appeal to the public, but there is no common language, there is pressure, sometimes the pre-project is easy, but time is too long for notices, elections are also expected soon.

- Comment (Mr. Oikonomou): To convince, you actually show them what others did in the same phase (mentoring), it's better than giving general instructions.

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PARALLEL SESSION 3: ENERGY EFFICIENCY FINANCING IN SMES AND INDUSTRIES

Moderator: Christos Tourkolias, Centre for Renewable Energy Sources (CRES)

The Sustainable Energy Asset Evaluation and Optimisation Framework (SEAF) Caroline Milne, Joule Assets Europe

The Joule Assets Europe aims at promoting energy efficiency projects in SMEs and contribute to the creation of the energy efficiency market, focusing primarily on energy efficiency and demand response projects. In Brussels, the company founded the SmartEn Association to digitize the landscape of energy policy.

SEAF is a two year project that enables investment in small to medium sized projects in Sustainable Energy Assets (SEA) such as Demand Response, Energy Efficiency and Distributed Renewable Generation through a holistic online platform, eQuad, designed to function across Europe.

It has up to now raised € 1.7 million to scale up actions in SMEs in an effort to bridge the gap between projects and investors. The lack of standardization and technical assistance were highlighted, with the conclusion being that today only 5-15% of all project applications are successfully funded. The goal is to make every sustainable project accessible to finance.

To address gaps in standardization they developed the electronic eQuad platform, a platform to bridge the financial gap between project developers and investors. eQuad significantly lowers upfront due diligence costs for investors by standardizing pre-qualification processes. Funds or investors can grow their investment pipeline from a larger pool of already vetted, insured, and certified opportunities that meet their investment criteria. The platform helps reducing management costs, prioritizing sustainable solutions, addresses business risk, and provides technical assistance. Joule Assets Europe's interest in Greece and Cyprus is limited to the private sector.

A case study for the conversion of a house into a hybrid home was presented, which will ultimately benefit up to 20,000 homes with an initial investment of € 12 million. The main difficulties are found in relation to the differences between financing models (different risk-taking policies, types of invested funds, etc.), the credit risk of the client and the contractor, but also in relation to technical challenges. As a result, considerable time and effort is required to ensure the final investment.

Link to presentation

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Financing tools for energy savings in SMEs George Markou, Ministry for Environment and Energy, Greece

Initially, the 2 NSRF actions were presented, as well as the possibility of assistance through the “Development Law.” Through the NSRF there is now the possibility of self-production with net metering for up to 1 MW, not only for PV, but also for CHP, biomass and other RES.

The objective is to improve energy efficiency in SMEs (public expenditure of € 32 million and project budget of up to € 50,000 - a call for tender is expected in 2018), and support for heating and cooling from RES (€ 35 million public budget and project budget up to € 1 million, a call for tender is expected in 2018). CHP installations can only be funded when powered by RES and only for self-production. It also includes a criterion for measuring and verifying the projected savings for new applications.

The eligibility requirements and the corresponding local criteria and size criteria were presented for each category of expenditure. Priority will be given to the actions that achieve the highest savings.

Link to presentation

The role of Cooperative Banks in contributing to local economies’ development Maria Mizithra, Epirus Cooperative Bank

A review was made of the history of the Union of Cooperative Banks of Greece.The challenges for the industry today arise mainly from the over-concentration of the banking system. The strategic advantage of cooperative banks is their flexibility and proximity to the customer. This led to an increase in the credit expansion of cooperative banks in the years of the crisis, contrary to the general trend in the banking sector.

Reference was made to participation in Community initiatives and actions to support social entrepreneurship, such as the SEE-GR program. The experience of cooperative banks in the field of energy efficiency financing consists of projects for financing private R & D investment, often having the role of facilitator in co-financing schemes with national or Community programs, but also projects to finance energy improvements in private buildings (mainly tourist and industrial properties), again with co-financing models with national or Community programs.

Some case studies were mentioned, such as the project of energy improvements in a 5-star hotel in the Region of Epirus, co-financed by the Development Law, as well as the installation of a 350 kW PV plant at the industrial unit in Ioannina with a total investment cost of 800,000 €, where 600,000 € came from the Cooperative Bank of Epirus and the rest were found out of equity. The first financing of an energy community was also mentioned in the Energy Cooperative of Karditsa, which is active in the field of biomass and biogas, where the cooperative bank of Karditsa participated with a loan of 500.000 € and the remaining cost of the investment was covered by a LEADER programme.

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In summary, the importance of co-operative banks for the provision of non-financial services (advisory) has been emphasized, which contributes in the long run, beyond course by reducing management costs and reducing delays in repayment of loans.

lLink to presentation

Energy Performance Contracting Plus (EPC+) Yorgos Polymenopoulos, HELESCO SA

Initially there was a short summary of the action of the EPC + program, funded through Horizon 2020, The project which aims to standardize the activities of ESCOs (technical, financial and legal) and to promote energy-efficiency partnerships between companies, both domestically and in community.

It was emphasized that EPC projects has not been a priority until now. The main problems are related to delays in the renovation of public buildings and the lack of access to specialized financial tools. ESCOs (those that are not energy utilities or equipment suppliers) are not willing to finance energy efficiency projects, because this will limit the number of projects they can undertake. Accounting wise, they will be loss-making companies until the repayment of each investment. In the private sector, especially ESCO's risk is linked to its remuneration. Third-party funding schemes, on the other hand, provide low-to-zero guarantees of true energy efficiency. Pay-as-you-save contracts provide little guarantee of both energy efficiency and repayment time.

A total of 19 partnerships were set up in the 11 countries that participated in EPC+, and in total 28 pilot demonstration projects were implemented. Approximately € 3.3 million was leveraged into the private sector as a direct result of the project. As a result of the pilot / demonstration projects, approximately 2.4 GWhel / year and 6.7 GWhth / year are saved.To achieve the new objectives, maturity, or at least the steady pace of maturing, is a prerequisite. The starting point should be mandatory energy audits, which was the initial subject of cooperation between the EENE members.

Some pilot projects were presented including relighting and operational optimization at a retail store in Greece (see presentation).

Link to presentation

DISCUSSION

- Comment (C. Milne) on the vital importance of standardizing and aggregating projects to facilitate access to financiers. Investors need clearly defined cash flows to give the green light for the investment.

- What are the funding options for a Greece based ESCO? – Answer (C. Milne): The situation is still quite fluid. Joule Assets proposes private equity as a flexible bond, while stressing the importance of an ESCO's sales strategy, especially in the long run, in order to achieve a favorable partnership with a financier. Systemic

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banks are also reluctant to change, although with time investor perceptions are changing and moving in the right direction, so ESCOs have to look for alternative sources of financing beside banks.

- How are small projects aggregated by cooperative banks in Greece, are there any plans for clustering into project pipelines? – Answer (M. Mizhitra): The Association of Cooperative Banks of Greece sees a difficulty in co-operating with similar enterprises in the country in order to achieve synergy, creditworthiness and debt sustainability. Clustering so far has failed, but we are learning from the mistakes of the past. There is a clear focus on small projects, the rest is a matter of will and available resources, and a new guarantee program is expected within the year.

- Will “Saving at Home II” applications be in the form of an electronic platform same as with “Saving at Home I”? Will all engineers be granted access to submit applications for SMEs? – Answer (G. Markou): The classical dossier submission process will be followed for SMEs, relevant consultation procedure is expected to commence soon.

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CLOSING PLENARY SESSION

Moderator: Stavros Stamatoukos, EASME, European Commission

The new Eurostat guide on EPC statistical treatment in Member State Budgets Laurent Bender, European Investment Bank (EIB)

The role of ESCOs, which offer a technical but economical solution to customers through EPC contracts, was initially described. More EPCs are expected with the participation of the public sector, although many new projects, especially for street lighting, are already under development. Public authorities will have to firmly state their infrastructure requirements and the market will be self-regulated accordingly.

The description of the guide issued by the EIB followed, covering typical EPC benefits and structures. Basic contract benefits and standard EU approaches to EPCs are thoroughly analyzed. With regard to energy saving, the organization will benefit from a reduction in energy consumption and the benefit should be greater than the sum of the operating costs and the grant given. Only 1/3 of the excess energy saved is the ultimate benefit for the operator. The remaining share is borne by the ESCO. There is a risk-sharing mechanism, as well as for the benefit sharing, with savings and payment proportions. This means that if savings are not achieved, ESCOs will not be paid. If the savings achieved are greater than those initially estimated, then the ESCO will earn the extra profit.

Next steps for the EIB to promote EPCs are the organization of events and workshops with public bodies and ESCOs. Lastly, reference has been made to the EPC projects funded by ELENA: 68 projects have been supported so far, with an expected investment cost of approx. € 5 billion.

Link to presentation

Short reports on parallel sessions by Moderators A brief summary of the main conclusions from each parallel session was presented by the session moderators.

The discussion within the first session ”Energy Efficiency financing in residential buildings” addressed some technical questions related to the presented financing programmes, including experience on why some projects are not integrated into the programmes. It was further discussed how the European mortgage programme could develop into Greece and Cyprus.

The discussion within the second session “Energy efficiency in public buildings” was related to financial instruments and the use of structural funds. Various success stories was highlighted related to public buildings, PV and streetlighting in municipalities. It will

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be important to learn from the various projects and ensure private sector involvement to leverage public funds. Also a project like PRODESA (H2020 Project Development Assistance), which is the first of its kind in Greece, could bring useful experience for many municipalities.

The role of facilitators was further discussed, who could advice municipalities on financing issues and facilitate contact between the various municipalities to exchange best practice and experience. The current problems and barriers in relation to the potential ESCO market was also discussed, and it was stressed that many countries face similar problems like Greece in relation to this market.

The Third session, “Energy efficiency financing in SMEs and industries”, discussed the need to promote audits and mechanisms for verification of energy audits in SMEs and industries. This would also be important for the development of the ESCO market. As many projects in particular SMEs are small, the possibility for aggregating projects was discussed as well as the barriers for this and in particularl unwillingness from SMEs to cooperate with each other.

It was mentioned that experience from the Cooperative banks may be useful, as they are used to finance smaller projects at local level.

It was proposed to create various clusters around the one-stop-shop concept.

The EPC concept was also discussed, and the need to provide further stimulus to the market through a.o. a supportive framework.

Closing remarks Mr. Stamatoukos informed about the planned follow-up in the form of a Round table with four parallel sessions.

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