Article 7 of the EED is one of the most important instruments for achieving the ambitious European energy efficiency targets. It allows the use of an Energy Efficiency Fund which can receive amounts from payments of obligated parties (or market participants) and the public budget to finance energy efficiency actions to generate required energy savings.
Providing financing and cost effectiveness by design are key to the financial sustainability of Art. 7 policies. The most common funding sources for Art. 7 EED policies are public budget, EU funding, environmental or energy taxes, ETS funds and on-bill financing.
To find out more about how to set up and manage such funds you can listen to a recording of the webinar, to learn more about building and managing such a fund, we will have examples and best practices from countries that have a functioning fund or are developing one.
The webinar hosted three existing funds, first one from Croatia, presented by dr. Vesna Bukarica (EIHP):
EE Fund in Croatia has multiple roles, being environmental fund-collecting fees from polluters, but also being in charge of the ETS revenues distribution. Grants are available for different beneficiaries, from private and public sectors and the grants differ based on the socio-demographic status of the beneficiary and the development of the region the beneficiary comes from.
Regarding the legal obligations in energy efficiency, outside funding:
- it is obligated to ensure co-financing for energy efficiency measures in National energy efficiency action plans or Renovation programs,
- the Fund collects penalties from the obliged parties of Article 7 EED (Obligated parties in EEOS will pay 1,2 HRK/kWh to the Fund for not achieving new annual energy savings)
- it is obliged to input data about finalised EE projects into the system for M&V (SMIV) -> alternative measures.
More than 85% of achieved energy savings from alternative measurers are from projects supported by the Fund.
You can read more in the presentation on the Croatian Fund.
Diana López Gárcia from IDAE, Spain, presented Spanish experience of setting-up the Energy Efficiency Fund and described the Spanish obligation scheme, which includes both EEO and alternative measures. Alternative measures have been existing for some time, but EEO exists since 2014. The EE Fund has been established through the same law as the obligation scheme, and both have been extended to 2030. The obliged parties are energy companies of gas and electricity and oil products and LPG retailers. Obligated parties have to contribute annually to the Energy Efficiency National Fund (4 equal payments).
The EEOS and the EENF ensure budgetary stability and prediction, they are important for the next period where the objective has increased for 57%. Most of the implemented measures are public support programmes designed taking into account the target sector and their needs. The management of programmes (evaluation, implementation and verification) is highly useful enriching technical knowledge as well as the insight into the end-use energy sectors. It is used in the design of further programmes. Decentralised administration of Spain: energy is a competence of the Autonomous Communities. Bureaucracy process resulting sometimes in important delays that can directly affect to the energy savings results. Political decisions have to be made, such as financial equivalence.
Italian Fund has been presented by Dario di Santo, FIRE. The National energy efficiency fund (NEEF) was established by Legislative Decree 102/2014 (EED transposition). It was launched in 2019, with an initial budget of 310 million euros. It is financed through various sources (e.g. ETS, fines related to EED obligations, etc.). Invitalia is the agency in charge of the measure. The NEEF provides two types of support: soft loans; guarantee fund. Part of the guarantee fund is dedicated to district heating (DH). The expected leverage on investments is a 5.5 ratio.
The pandemic didn’t help in the start-up process of the Fund. Until now around 50 projects have been presented, all for soft loans, mainly from ESCOs and secondly from enterprises. Most projects are about public lighting, but there are also requests for NZEBs and thermal renewable energy sources. By 2020 90 ktoe of savings are estimated with 15 mln€ awarded. The plans for the future period include the inclusion of transport sector, better linking with other national incentives schemes and (dedicated) grants, link with the Smart finance for smart buildings European Investment Bank’s facility, administrative, promotional and refinancing upgrades.
Emilian Stoica from the Energy Efficiency Directorate (DEE) of the Energy Ministry presented the establishment process of the Fund in Romania.
The National Fund for Investments in Energy Efficiency is intended to be an economical and financial instrument meant to support and carry out projects aimed at modernizing the energy network and equipment in the energy system and at the level of the operators, increasing energy efficiency and reducing greenhouse gases, established by the Ministry of Energy. The funding comes from the annual budget allocation at the level of the Ministry of Energy, ETS, 0.5% of the annual gross value of revenues of high energy consumer companies, prosumers) and the fines, operational programs and other financing mechanisms from European funds. Funding is planned for small and medium enterprises; university education units; organizations and foundations.
Categories of projects include energy consumption monitoring in industry, intelligent storage for operators, HE cogeneration, EMS, small-scale renewable energy, energy efficiency programs for consumers, pilot projects for innovative technologies and digital data platforms.