Financing energy efficiency and deep renovation of public buildings
Using the available funds, Croatia needs to start making sustainable investments in energy efficiency, climate change adaptation and mitigation actions. Ambitious energy efficiency targets should not be seen as a burden but as an opportunity to grow, develop, generate new revenues and create added value.
Julije Domac, Managing Director, REGEA
The EnPC model (ESCO model), combined and aligned with standardised documentation, standardised measurement and verification process, and a good understanding of project finance and costs, can help achieve higher rates of renovated public buildings.
Paolo Bertoldi, JRC
By using the EnPC model for the energy renovation of public buildings (excluding government and ministry buildings) in the financial perspective 2014-2020, Slovenia has renovated more than 1.9 million m2 of public buildings, thus succeeding to achieve better results than those defined by national strategic documents. The key to the successful implementation of this model was a well-established legal and policy framework, which defined goals and the organisation of the project office that worked on the preparation of the project portfolio.
Damir Staničić, Jožef Stefan Institute
EU’s 2050 ambitions indicate that significant funds are needed to achieve the decarbonisation targets, for which it will be necessary to combine public and private capital. Although grants are the most commonly used mechanism in Croatia, the use of financial instruments offers a number of advantages to final recipients.
Dijana Bezjak, Ministry of Regional Development and EU Funds
Given the extremely demanding and ambitious energy and climate goals by 2030 and 2050, it is necessary to intensify efforts in the implementation of energy and climate projects and start applying innovative and advanced financial models that must be considered as a necessary (and only) option if Croatia strives to make a significant step forward in the field of energy and climate.
Ivan Ivanković, City of Zagreb
Financing energy efficiency measures and deep renovation of public buildings
Of the total EUR 750 billion available through the Next Generation EU instrument, Croatia was allocated ca. EUR 9,92 billion, of which ca. EUR 6,31 billion in grants and the remaining EUR 3,61 billion in loans. In addition to the funds available through the European Recovery Plan, Croatia will also have funds from the multiannual financial framework (2021-2027, ca. EUR 9,68 billion).
The use of an Energy Performance Contract (EnPC) which transfers technical and performance risks to the service provider and the renovation is financed from energy savings, creates the possibility of mobilising private capital, which could be a solution to achieving ambitious energy & climate goals.
Scarcity of available and verified information causes mistrust in the EnPC model, related risks and achieved savings and results of energy renovation. Therefore, it is necessary to work on increasing transparency, quality assurance and improving local public capacity as much as possible through one-stop shops.
Standardisation of contract and tender documentation for EnPC was highlighted as an important factor in stimulating the ESCO market, investments in energy renovation of public buildings and mobilising private capital in this area.
The development of a dedicated financial mechanism to support EnPC projects can be key leverage to encourage the ESCO market to participate in EnPC projects, providing them with access to more favourable dedicated capital, but also guarantee and equity programmes.
Setting up and the establishment of permanent technical assistance for project preparation (primarily intended for public sector representatives) was highlighted as a fundamental aspect due to the currently low capacity of the public sector in the preparation and implementation of projects using alternative procurement models. In the Slovenian example facilitators played an important part and it was noticed that the projects in which the facilitators participated achieved greater savings, and the quality of implemented measures was much higher.
To mobilize private capital and combine it with publicly available funds, it is crucial to ensure a project pipeline with a substantial potential so that commercial banks are interested in negotiating the possibility of establishing a new financial instrument.