The European Energy Efficiency Fund (eeef) targets investments in the Member States of the European Union.
The final beneficiaries of eeef are municipal, local and regional authorities as well as public and private entities acting on behalf of those authorities such as utilities, public transportation providers, social housing associations, energy service companies etc. Investments can be made in Euro, or local currencies, however the latter is restricted to a certain percentage.
To reach its final beneficiaries, eeef can pursue two types of investments:
These comprise projects from project developers, energy service companies (ESCOs), small scale renewable energy and energy efficiency service and supply companies that serve energy efficiency and renewable energy markets in the target countries.
- Investments in energy efficiency and renewable energy projects in the range of €5m to €25m
- Investment instruments include senior debt, mezzanine instruments, leasing structures and forfeiting loans (in cooperation with industry partners)
- Also possible are equity (co-)investments for renewable energy over the lifetime of projects or equity participation in special purpose vehicles, both in cooperation directly with municipalities, or with public and private entities acting on behalf of those authorities
- Debt investments can have a maturity of up to 15 years, equity investments can be adapted to the needs of various project phases
- The Fund can (co-)invest as part of a consortium and participate through risk sharing with a local bank
Investments into Financial Institutions
These include investments in local commercial banks, leasing companies and other selected financial institutions that either finance or are committed to financing projects of the Final Beneficiaries meeting the eligibility criteria of eeef.
- Selected partner financial institutions will receive debt instruments with a maturity of up to 15 years
- These instruments include:
- senior debt
- subordinated debt
- No equity investments in financial institutions
- Financial institutions onlend to the beneficiaries of the Fund meeting the eligibility criteria to finance energy efficiency and/or renewable energy projects
The European Energy Efficiency Fund can invest in three categories of projects:
Energy Saving and Energy Efficiency investments include:
- Public and private buildings incorporating renewable energy and/or energy efficiency solutions including those based on the usage of Information and Communication Technologies (ICT)
- Investments in high energy efficient combined heat and power (CHP), including micro-cogeneration, and district heating/cooling networks, in particular from renewable energy sources
- Local infrastructure, including efficient lighting of outdoor public infrastructure such as street and traffic lighting, electricity storage solutions, smart metering, and smart grids, that make full usage of ICT
- Energy efficiency and renewable energy technologies with innovation and economic potential using the best available procedures
Investments in Renewable Energy sources include:
- Distributed generation from local renewable energy sources, to medium and low voltage (110kV and lower) distribution networks
- Smart-grids enabling higher renewable energy sources uptake
- Energy storage to allow storing part of the energy produced from intermittent sources during low-consumption hours and feeding this energy back at times of peak-demand
- Decentralised energy sources can also be the injecting of locally produced biogas into the natural gas network
- Microgeneration from renewable energy sources meaning distributed energy from renewable energy, typically providing below 50kW output that is concerned with heat and/or power production technology aimed at the individual domestic households, houses of multiple occupancy, multiple dwellings, and light commercial sectors. The technologies include but are not limited to photovoltaic, micro-wind power, micro-hydro power, ground-, water- and air source heat pumps, solar heating, solid biomass/biogas heating, and micro CHP using renewable energy sources
Investments in Clean Urban Transport include:
- Clean urban transport to support increased energy efficiency and integration of renewable energy sources, with an emphasis on public transport, electric and hydrogen vehicles and reduced greenhouse gas emissions. The projects will support a progressive substitution of oil by alternative fuels and the development of vehicles which consume less energy and generate fewer pollutant emissions
Module 1 – Initial screening
The Investment Manager screens the eligibility of the projects proposed by the project developer and reviews whether these are in line with the eeef’s general criteria, have a public link and deliver a positive social and environmental impact. In the event of positive screening, detailed due diligence (including on-site) with legal and technical advisors will be carried out.
Module 2 – Due diligence
During the due diligence phase, the Investment Manager conducts thorough, in-depth due diligence of the investment opportunity and carefully evaluates the project’s impact. The Investment Manager reviews the project’s technical documents submitted by the project developers to ensure that the information provided is complete and is aligned with the eeef’s energy and carbon calculation and reporting principles. The Investment Manager evaluates the project’s eligibility along with the various criteria, including estimating the project’s carbon and/or primary energy savings using validated calculations. The avoided CO2e amount in tonnes per million euros invested should also fall within the range that appears in the market standards given geography and project scale. Aside from this, the project developer is also requested to submit an SEMS questionnaire, so that the eeef can ensure compliance in the project’s social and environmental aspects according to the EU Directives on Environmental Impact Assessment.
Module 3 – Preparation of financial close
An Investment Committee proposal is drafted by the Investment Manager, containing her/his investment recommendation and a summary of the findings on the main due diligence areas, project economics and risk mitigation strategy. The findings are presented in the IC proposal for decision.
Step 4 – Investment Committee approval & execution
Upon approval by the Investment Committee, the signing of documentation and disbursement up front or according to agreed milestones follows. Contracts will comply with local legislation and the SEMS provisions of the Fund.
Step 5 – Monitoring and reporting
Partner institutions are required to provide quarterly data on energy consumption and primary energy/CO2e savings. The Investment Manager reports project-specific primary energy and carbon savings and aggregates the savings across the portfolio on a quarterly basis. The realised investments are included in the quarterly report. S&E reporting is also conducted on a periodic basis on each project level. A dedicated team from the Fund manages the eeef’s annual audits and ensures that project lifetime savings and S&E aspects are aligned with estimations and investment criteria. When necessary, an on-site audit plan is proposed for assurance of project savings, especially for investments through local financial institutions.
The eeef has achieved financial closing for following investments: