Financing Energy Efficiency: Forging The Link Between Financing And Project Implementation

Energy efficiency is not a single market: it covers measures in a diverse range of end-user sectors, end-use equipment and technologies and consists of very large numbers of small, dispersed projects with a dispersed range of decision makers. Overall, many EE technologies are proven and economic: if properly financed, the investment costs are paid back over short periods from energy cost savings. Yet, projects with compelling economic returns remain unimplemented. Major causes for this gap are the lack of EE finance and delivery mechanisms that suit the specifics of EE projects and the lack – in some markets – of pipelines of bankable energy efficiency projects.

This report focuses on project financing for energy efficiency via financial intermediaries and is structured as follows:

• Section 2 presents the barriers to financing energy efficiency projects;
• Section 3 describes the variety of financial mechanisms common in EE financing, including supplementary public policies and programs and funding from the Structural and Cohesion Funds (SCF). Examples on how financing tools have been applied and outlines limitations and success factors for specific financing mechanisms. The review of financial instruments is not intended as all-inclusive list of all possible financing options, but covers the large majority of those most commonly used for and supportive of EE projects and by EE businesses;
• Section 4 analyses the results of the survey of financing mechanisms for energy efficiency in the Member States and points to some successful and innovative financing schemes. Annex I contains detailed country files of financing for energy efficiency available in all Member States. Annex II reviews financing tools from International Financing Institutions;
• Section 5 presents recommendations.