eeef Annual Report 2016

CONTENTS INTRODUCTION European Energy Eficiency Fund Highlights Welcome Letter from the Chairman Letter from the Investment Manager 4 4 5 6 8 THE EUROPEAN ENERGY EFFICIENCY 10 FUND AT A GLANCE The Mission eeef’s Objectives eeef’s Business Proposal The Fund’s Setup Investment Structure Development of the eeef since Inception 12 14 15 16 17 18 2016 ACTIVITIES REPORT: INVESTMENTS The eeef’s Investments Bolloré City of Orléans City of Rennes SPL – Région Rhône-Alpes Jewish Museum Berlin Foundation University of Applied Sciences Munich University Hospital S. Orsola-Malpighi City of Venlo Banca Transilvania Universidad Politécnica de Madrid Ore Valley Housing Association 20 22 24 25 26 27 28 29 30 31 32 35 36 2 eeef Annual Report 2016

WELCOME Dear Reader, On 30 November 2016, the European Commission adopted a ‘Clean Energy for All Europeans’ package of eight legislative proposals facilitating measures aiming to modernise the economy and boost investments in clean energy and related sectors. The package aims to accelerate, transform and consolidate the European Union’s (EU) clean energy transition, which will also create jobs and growth in new economic sectors and new business models. The legislative proposals address energy eficiency, renewable energy, the electricity market including the role of consumers, and new governance rules for the Energy Union (the EU’s major objective for the contribution to a global and comprehensive clean energy transition and a low-carbon economy). Using energy eficiently is the most universally available way of maximizing energy resources. Putting energy eficiency irst relects the fact that the cheapest and cleanest source of energy is the energy that does not need to be produced. The Commission has recently reviewed the EU’s energy eficiency target, in line with the request by the European Council of October 2014, and considers that the EU should set a target binding all member states at the EU level of 30% by 2030. Compared to the ‘at least 27% target’ agreed in 2014, this increase is expected to translate into up to €70 billion of additional gross domestic product and 400,000 more jobs as well as a further reduction of the EU’s fossil-fuel import bill. Along with stable and ambitious climate commitments, Europe needs to leverage more private capital into sustainable energy investments, in particular energy eficiency, that generate stable revenues through energy savings, as well as multiple socio-economic beneits such as local jobs, reduced energy imports and improved work and living conditions. The European Energy Eficiency Fund (eeef or Fund) helps local and regional governments to undertake energy eficiency improvements that in turn can be examples to others and demonstrate how to develop projects, build appropriate inancial models and develop local skills to invest in eficient energy – the cheapest energy of all. The Fund also explores how inancial instruments rather than traditional grants can be used to stimulate investment from the private sector. Loans and equity shares for projects, which have clear paybacks, help to turn the energy eficiency sector into a commercial market. The eeef is an important instrument for supporting the goals of the EU to promote a sustainable energy market and to reinforce climate protection. I am conident that the eeef will continue to lead by example in the next 12 months and help us to be as ambitious as we can. Megan Richards Chair of the Supervisory Board and Director of the European Commission Introduction 5

LETTER FROM THE CHAIRMAN Dear Reader, The European Energy Eficiency Fund (eeef) celebrated its ifth anniversary in July 2016 and proudly looks back at the implementation of a funding vehicle supporting the goals of the European Union, in particular working towards the achievement of the new 30% energy eficiency target for 2030. The eeef generated in 2016 a total income of €4.6 m, with total expenses of €3.4 m, resulting in a €1.2 m net position. With no defaults recorded on its investment portfolio, the fund met its target dividend obligations. Additionally, it distributed complementary dividends to its investors and replenished the eeef’s Technical Assistance Facility. As of 31 December 2016, the eeef portfolio (financial close achieved) consisted of 11 different projects (in seven member states of the European Union) with a disbursed volume of €116.0 m and overall fund commitments of €121.0 m. In addition, two new projects, street lighting (Italy) and CHP (France), received the Fund’s internal approval and sum up to an additional eeef commitment of €12.2 m. Over the past years, the eeef has collaborated closely with 16 public authorities, allocating over €14 m in funds via its European Commission TA Facility (EC TA). To date, nine projects have been successfully facilitated, with a total investment volume of €175 m. The Fund expects to continue beneiting from the development works performed under this facility. Several projects, including the street-lighting upgrade in the city of Santander, were tendered or will be tendered in 2017 and may provide attractive investment opportunities for the eeef. In 2016, the Fund launched its own eeef Technical Assistance Facility (eeef TAF). In addition to its own funds, the eeef TAF secured European Local Energy Assistance (ELENA) funding under the Horizon 2020 Programme of the European Union. The new facility builds on the experience gained from the EC TA Facility and introduces improved features, helping public authorities to realise a higher project imple- mentation rate. One of these features, is the shorter project development time frame. On average, the development of an energy eficiency project in the public sector takes around 4.5 years (conceptual phase to implementation). The eeef TAF eficiently targets to reduce this time frame to two years by directly allocating consultancy services to the TA beneiciaries (tender completed by the eeef). Despite market challenges, the Fund has been actively involved with nearly 30 public authorities across Europe. During 2016, the eeef achieved inancial close for a senior loan facility to Cardenden Heat & Power Ltd (CHAP), inancing the replacement of existing heat boilers in more than 200 homes owned by the Ore Valley Housing Association (OVHA), as well as the construction of a small-size on-shore 6 eeef Annual Report 2016

wind farm in Cardenden, Scotland, UK. CHAP is fully owned by the OVHA, and revenues generated will support the community through grants and investments for local projects and enterprises. The Fund completed its irst investment in the wind sector as well as in the UK with this transaction, adding value to the eeef’s geographical diversiication. With the energy eficiency sector progressing, the eeef will continue boosting its pipeline with a higher focus on new countries for the portfolio going forward. At the same time, the Fund will take advantage of the inancing demand coming from more mature markets in Southern Europe. The eeef TA Facility will be an additional driver to further strengthen the Fund’s project pipeline. Established in July 2011, the eeef is an innovative public-private partnership dedicated to mitigating climate change through inancing energy eficiency measures and renewable energy projects. The fund operates under the Advancing Sustainable Energy for Europe agenda, which invests in climate change projects for municipal, local and regional authorities as well as public and private entities which act on behalf of those authorities. The eeef operates in all 28 member states of the European Union and was capitalised with an initial volume of €265 m by the European Commission, the European Investment Bank, Cassa Depositi e Prestiti and Deutsche Bank. The Fund beneits from an exemption from the Luxembourg Alternative Investment Fund Managers Law (the AIFM Law) of 12 July 2013 pursuant to article 3(2)(c) thereof. Pursuant to this article, the Fund is registered with the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg as an AIFM. I am conident that the eeef will continue to act as an important player in the European energy eficiency market. Once again, I would like to thank the clients and investors for their continuous trust in the Fund, the service providers – especially the Investment Manager – and the entire board for their excellent work in 2016. Best wishes, Peter Coveliers Chairman of the Management Board Introduction 7 30PUBLIC AUTHORITIES ACROSS EUROPE

LETTER FROM THE INVESTMENT MANAGER Dear Reader, the eeef was launched in the middle of the European debt crisis back in 2011, at a time when inancial institutions were limited in the provision of long-term inancing to energy eficiency projects or to small and medium-size (SME) energy service companies (ESCOs). In these times of uncertainty, the eeef inanced the largest energy eficiency upgrade in the public health sector in 2013, the University Hospital S. Orsola-Malpighi investment in Italy (with a commitment of more than 20 years). Since then, the project has been under construction, with full completion and inauguration expected by the end of 2017. The project has clearly beneited from the eeef’s ability to provide attractive inancing solutions for projects structured as public-private partnerships (PPPs) and won an award, the CESEF Energy Eficiency Award in the inancial category. Despite the monetary easing in the past years, the number of projects in the public sector (not able to access various subsidised funding schemes) looking for commercial funding has not picked up dramatically. Increased liquidity and access to EU structural funds have not been the sole reasons for the generally slow commercial market development. The main barrier was and remains capacity of the public authorities to conduct feasibility studies, evaluate the project opportunities and inally launch the procurement process for investment programmes they consider suitable for their cities or regions. The preparation and realisation of the projects are grounded on political willingness as well as support and a multi-annual outlook, which implies continuance in the political commitment to implement such energy-eficiency-related projects. Having mentioned this, changing of mayors and/or local governments had a challenging impact on projects from the European Commission Technical Assistance Facility (EC TA) launched in 2013. ‘In total, the eeef portfolio now consists of 11 projects, with total investments of €121 m spread across seven different EU members states.’ The TA projects that achieved completion of their project development phases, including public procurement finalisation, required around 4.5 years. In this view, the search for inancing and the construction phase are not even included. This is quite a long period of time, taking into consideration the ambition of the EU to introduce the new 30% energy eficiency target for 2030, as included in the recent update of the Energy Eficiency Directive. At the end of 2016, the new eeef Technical Assistance Facility (eeef TAF) was initiated. Financed partly with proits generated by the Fund, the eeef TAF beneited from the European Local Energy Assistance 8 eeef Annual Report 2016

(ELENA) Programme grant funding under the H2020 initiative of the European Commission. It has the objective to speed up the process of project development, targeting projects to prepare them for inancing and construction in an ambitious two-year time frame instead of the earlier-mentioned 4.5 years. The eeef intends to work closely with the public authorities and advisor teams to be more involved in the process, overcoming challenges which might arise during the development process. As a result of our continuous efforts, the eeef achieved inancial close for one further investment in a new member state (the United Kingdom), adding value to the geographic diversiication of the portfolio. In total, the eeef portfolio now consists of 11 projects, with total investments of €121 m spread across seven different EU members states. The Ore Valley Housing Association (OVHA) investment is a combination of small-size on-shore wind and boilers’ replacement in social houses. The project volume is €4.3 m. This project resulted from the EC TA, also experiencing various changes in the process of the project development since 2011. The eeef supported the OVHA in the development of a new project scope for on-shore wind turbines (with electricity sale revenues lowing into the local budget) and the replacement of over 200 outdated gas boilers in residential buildings owned by the OVHA in the Fife council area in Scotland. This transaction demonstrates the eeef’s capabilities in assisting communities in addressing the technical and inancial barriers, public entities often face when planning climate-change-related projects. As the Investment Manager of the Fund, we are proud to work on solutions with the public authorities to support the implementation of sustainable routes for European cities and regions to combat climate change. We will continue our pioneering role throughout 2017. Conident in reaching more cities and regions in Europe, we will support communities in overcoming project development dificulties and inancing the projects in a partnership. Lada Strelnikova Zarpana Signor Iñigo Prior Matthias Benz Paola Rusconi Deutsche Bank AG, Sustainable Investments Europe Introduction 9

THE MISSION The eeef’s mission is to contribute to advancing sustainable energy for Europe, in the form of a public-private partnership (PPP) with a layered risk / return structure, to enhance energy eficiency and foster renewable energy within the European Union, primarily through the provision of dedicated inancing to municipal, local, regional or national authorities or public or private entities acting on their behalf. Financing is generally provided directly or through partnerships with inancial institutions. INVESTMENTS BY COUNTRY 3 % Great Britain 7 % Netherlands 1 % Germany 39 % France 2 % Spain 21 % Romania 26 % Italy 12 eeef Annual Report 2016

INVESTMENTS BY PARTNER INSTITUTION 121.0 million euros total 25% Bolloré 4% City of Orléans 6% City of Rennes 4% 1% 0,5% 26% SPL-Région Rhône-Alpes Jewish Museum Berlin Foundation University of Applied Sciences Munich University Hospital S. Orsola- Malpighi 7% City of Venlo 21% Banca Transilvania 2% 3% Universidad Politécnica de Madrid Ore Valley Housing Association INVESTMENTS BY TYPE OF PARTNER INSTITUTION INVESTMENTS BY FINANCIAL INSTRUMENT 12% Renewable energy 21% Financial institution 25% Clean urban transport 63% Energy efficiency 79% Direct investment 10% Equity 21% Subordinated debt 69% Senior debt The European Energy Eficiency Fund at a Glance 13

eeef’s BUSINESS PROPOSAL IF YOU ARE A DEVELOPING A PROJECT IN WITH THESE FEATURES EEEF CAN SUPPORT YOUR PROJECT, PROVIDING Public entity • … similar to the City of Venlo (NL), the Ore Valley Housing Association (UK) … Renewable energy • As we have done with: The City of Orléans/ Rennes (FR), the Ore Valley Housing Association (UK) Private company liaising with a public entity • … similar to Manutencoop (IT), Enertika (ES), Bolloré (FR), EDF Group (FR), Johnson Controls (DE) … Financial institution ﬁnancing the above • … similar to Banca Transilvania (RO) … Energy efﬁciency • As we have done with: the City of Venlo (NL), SPL – Région Rhône-Alpes (FR), University Hospital S. Orsola-Malpighi (IT), Universidad Politécnica de Madrid (ES), Banca Transilvania (RO), Jewish Museum Berlin Founda- tion (DE), University of Applied Sciences Munich (DE), the Ore Valley Housing Association (UK) Clean urban transport • As we have done with: Bolloré – Paris, Lyon, Bordeaux (FR) Avoiding CO2e emissions for at least 20% of the baseline TAILOR-MADE FUNDING Debt • E.g., The City of Venlo Looking for funding in a (ﬂexible) range between €5 and €25 m In one of the 28 EU countries (NL), Bolloré (FR), SPL-Région Rhône-Alpes (FR), the Ore Valley Housing Association (UK), University Hospital S. Orsola-Malpighi (IT) Equity • E.g., The City of Rennes (FR), the City of Orléans (FR) Mezzanine • E.g., Banca Transilvania (RO) Forfaiting structures • E.g., Universidad de Politécnica de Madrid (ES), etc. TECHNICAL ASSISTANCE • 16 public authorities accross Europe * 30% proposed by the European Commission in November 2016 The European Energy Eficiency Fund at a Glance 15 increase in energy efficiency*increase in the use of renewable energy27%27%40%reduction in greenhouse gas emissions

THE FUND’S SETUP The Supervisory Board represents the Fund’s Share- holders. It conducts a permanent supervision of the management of the Fund and provides strategic advice to the Management Board on the overall development of the Fund’s activities. It is appointed by the General Meeting of Shareholders. The Management Board acts on behalf of the Fund, oversees its activities and is responsible for strategic decisions. It is the legal represen tative of the Fund. In compliance with the eeef’s founding documents and applicable laws and regulations, it has the power to administer and manage the Fund. The Investment Manager conducts the Fund’s business on behalf of the Management Board and the Investment Committee. The Investment Manager also manages the European Commission Technical Assistance Facility (EC TA) and the eeef TAF from arm’s length. 16 eeef Annual Report 2016 partnership dedicated to mitigating climate change

INVESTMENT STRUCTURE Investment decision bodies Investment instruments Investees Management Board Senior & sub-debt loans Loans Debt & equity Investment Committee Technical assistance Funding structure Investment Manager € funding Junior tranche (C shares) Mezzanine tranche (B shares) Senior tranche (A shares) Super-senior tranche (Notes) € / local FX investment Sponsors Cities (municipal / regional / national public authorities) Private partners of the public sector (ESCOs, utilities, etc.) The Investment Manager proposes potential new investment in line with the eeef’s eligibility criteria to the Investment Committee. Upon positive feed- back, the Investment Committee recommends the potential investment to the Management Board. The Management Board takes the inal decision on the investment. The investees of the eeef are municipal, local and regional authorities or public and private entities acting on behalf of those authorities, such as utilities, public transportation providers, social housing associations, energy service companies (ESCOs), etc. Funding can be provided in euros and in certain cases also in local currencies. The European Energy Eficiency Fund at a Glance 17 partnership dedicated to mitigating climate change

DEVELOPMENT OF THE eeef SINCE INCEPTION 2013 May • Financing of energy eficiency upgrade of the University Hospital S. Orsola-Malpighi in Italy • The City of Córdoba beneits from the EC TA Facility June • The eeef achieves inancial close on its irst equity investment, the City of Orléans’ CHP plant in France • La Palma cooperates with the eeef on technical assistance September • The eeef enters into a green on-lending facility with Banca Transilvania in Romania 2012 January • Operational and procedural setup of the Fund inalised March • The Jewish Museum Berlin Foundation joins the eeef as its irst partner institution via the ESCO of Johnson Controls November • Financing of building retroit project November • The municipality of Ringkøbing- at the University of Applied Sciences Munich Skjern signs a technical assistance agreement December • The City of Santander cooperates with the eeef on technical assistance • The Ore Valley Housing Association and the region of Rhône-Alpes beneit from the EC TA Facility December • The eeef achieves inancial close for its second equity investment, the City of Rennes’ CHP plant, and the Bolloré transaction (green transportation initiative for the cities of Paris, Lyon and Bordeaux) • The cities of Marbella, Terrassa and Elche cooperate with the eeef on technical assistance 2011 July • The eeef is created and capitalised by the initiators EC and EIB and the founding investors CdP and DB 18 eeef Annual Report 2016

2015 January • Irish education minister Jan O’Sullivan launches technical assistance project with the Limerick and Clare Education and Training Board in Ireland 2014 April • Financing of street-lighting upgrades for the City of Venlo • The eeef achieves inancial close for a senior inancing facility for the Société Publique Locale d’Eficacité Énergétique (SPL) in the Region Rhône- Alpes September • The eeef sponsors the Smart Countries and Smart Cities Congress 2015 in Paris • The eeef’s University Hospital 2016 April • The eeef joins the Investor Conidence Project Europe to boost investments in the energy eficiency sector June • The eeef celebrates its ifth anniversary as a funding vehicle supporting the goals of the European Union • The eeef cooperates with ADHAC, the business association for the promotion of sustainable district heating and cooling networks, in Spain S. Orsola-Malpighi trans action wins the CESEF Energy Eficiency Award September • The eeef completes inancing of the technical assistance for the City of Santander in preparation for a pioneer PPP contract for the street- lighting upgrade in Spain November • The eeef closes its irst community- based transaction in the UK in cooperation with the Ore Valley Housing Association and the Renewable Energy Investment Fund December: • The eeef initiates the Fund’s own technical assistance scheme, the eeef Technical Assistance Facility June • The University Hospital of Liège and the University of Liège sign a technical assistance agreement July • The Limerick and Clare Education November • The eeef closes its irst trans action in Spain in cooperation with Universidad Politécnica de Madrid and Training Board beneits from the EC TA Facility December • The eeef completes inancing to August • GRE-Liège cooperates with the eeef on technical assistance September • Alentejo Central signs a technical the Société Publique Locale d’Eficacité Energétique (SPL), which has launched 10 refurbishment programmes for buildings with four different local authorities in the Région Rhône-Alpes in France, in total a €25.0 m investment assistance agreement • The eeef completes the December • The municipality of Zaanstad and the Roscommon County Council beneit from the EC TA Facility construction- phase inancing of the energy eficiency upgrade to the University Hospital S. Orsola-Malpighi in Italy ADVANCING SUSTAINABLE ANNIVERSARY ENERGY FOR EUROPE5th

THE eeef’s INVESTMENTS Since its inception, the eeef has invested a total of €121 m in 11 partner institutions, for which €116 m have so far been disbursed. GERMANY (Berlin, Munich) € 1.6 m • € 1.0 m forfaiting loan to the Jewish Museum Berlin Foundation via the ESCO of Johnson Controls • € 0.6 m forfaiting loan to the University of Applied Sciences via the ESCO of Johnson Controls FRANCE (Orléans, Rennes, Paris, Lyon, Bordeaux, Région Rhône-Alpes) € 47.4 m • € 5.1 m shareholder loan and equity for the City of Orléans’ CHP plant • € 7.3 m shareholder loan and equity for the City of Rennes’ CHP plant • € 30.0 m senior debt to Bolloré • € 5.0 m senior debt to the Société Publique Locale d’Eficacité Énergétique (SPL) in the Région Rhône-Alpes ITALY (Bologna) € 31.8 m • Senior loan and VAT facility to Progetto ISOM for the upgrade of the University Hospital S. Orsola-Malpighi NETHERLANDS (Venlo) € 8.5 m • Senior debt facility to the City of Venlo ROMANIA (Cluj-Napoca, Spring, Bucharest) € 25.0 m • Subordinated loan to Banca Transilvania UNITED KINGDOM (Cardenden) € 4.3 m • Senior debt facility to the Ore Valley Housing Association via the SPV Cardenden Heat and Power SPAIN (Madrid) € 2.5 m • Forfaiting loan to the Universidad Politécnica de Madrid via Enertika 22 eeef Annual Report 2016

FRANCE BOLLORÉ Project Proﬁle Bolloré signed a bond agreement worth €30 m with the eeef in 2013. The bond has a maturity of five years and was issued by Bolloré and purchased by the eeef. The eeef’s investment will be used to inance electric cars and the infrastructure (i.e. charging stations, rental places, etc.) required for Bolloré’s European electric car rental concessions, which the company won via public tenders. This transaction forms part of a green urban trans- portation initiative for the cities of Paris, Lyon and Bordeaux, which has received great feedback among the citizens. Project Partner The French company Bolloré provides car- sharing services for electric cars. Founded as a family business in 1822, it holds positions in activities around three business lines: transportation and logistics, electricity storage and solutions and communications. Highlights The project started in Paris, providing the city with environmentally friendly electric cars with the support of the city council. After the trial period and when a track record had been established, Bolloré targeted Lyon and Bordeaux for the green initiative. The funding from the eeef’s bond has mainly been used in these regions. Paris, Lyon and Bordeaux are paving the way for other cities to follow their example of an environmen tally friendly car-sharing scheme to combat climate change and contribute to the use of innovative forms of alternative technology. At the end of 2016, Bolloré had 3,944 cars and 6,493 charging stations installed across the project’s three locations where eeef funding was utilised. Preparations for the project to expand into other cities has begun, including London (the UK) and Indianapolis (USA). Sector: Clean urban transport KEY FIGURES Type of investment: Senior debt Total project size (¤m): Financial close: 23.12.2013 eeef investment size (€m): 30.0 30.0 Maturity Estimated tCO2e emission savings (p.a.): 5 years 8,803 24 eeef Annual Report 2016

FRANCE CITY OF ORLÉANS Sector: Renewable energy / biomass CHP Project Proﬁle The combined heat and power (CHP) plant has an installed capacity of 7.5 MW in electricity and 17 MW in thermal heat. The plant supplies heat to the City of Orléans and sells electricity via a power purchase agreement (PPA) to Électricité de France (EDF) at a ixed tariff set over 20 years. This project was the irst equity investment by the eeef. Project Partner Orléans Biomasse Énergie, the project’s special purpose vehicle (SPV), is majority owned by the eeef (purchase of 84.4% of its shares). Dalkia France is co-investing with the eeef and holds the remaining 15.6% and is also responsible for the operation / maintenance of the plant and the supply of biomass. The plant is ired by wood biomass which is from a sustainable source (woodlands located less than 100 km from the plant). The CHP plant commenced operation in March 2014. During 2016, the plant operated at a rate equivalent to an annual carbon reduction of 18,533 tCO2e, which is 65% compared to baseline. Highlights The project enables a decentralised energy supply for the City of Orléans using an existing district heating network. The plant allows 15,000 house- holds in the city to achieve annual savings of around €200 with the new energy source and increases the environmental sustainability. This CHP biomass plant achieves signiicant carbon savings whilst still generating heat aligned with baseline requirements. KEY FIGURES Type of investment: Junior funds Total project size (¤m): Financial close: 12.03.2013 eeef investment size (€m): 36.0 5.1 Maturity Observed tCO2e emission savings (p.a.): Perpetual 18,533 2016 Activities Report: Investments 25

FRANCE City of Rennes Project Proﬁle Following a bid for tenders launched by the French Commission de Régulation de l’Énergie (CRE3) for the production of green energy using a biomass cogeneration plant, Rennes Biomasse Énergie SAS was authorised to build and operate a combined heat and power facility with an electrical output of 10.4 MW and a thermal output of 22 MW for the next 20 years. Joining the City of Orléans project, this is the second equity investment signed by the eeef. Based on actual data analysed in the 2016 annual energy audit, the plant delivered carbon savings of 50% compared to the baseline. This CHP biomass plant achieves significant carbon savings whilst still generating heat aligned with baseline requirements. Annual CO2e emissions have been calculated and validated in accordance with the international energy standard, the Inter national Performance Measurement and Veriication Protocol (IPMVP). Project Partner Rennes Biomass Énergie, the project SPV, is majority owned by the eeef (purchase of 85% of its shares). Dalkia France is co-investing along with the eeef and is shareholder of the remaining 15% and is also responsible for the operation / main- tenance of the plant and the supply of biomass. Highlights The project enables a decentralised energy supply for the City of Rennes using an existing district network. The plant will allow 21,000 households in the city both to save money with the new energy source and to increase their environmental sustainability. The biomass required is locally sourced within a 100 km radius of the plant. Sector: Renewable energy / biomass CHP KEY FIGURES Type of investment: Junior funds Total project size (¤m): Financial close: 12.12.2013 eeef investment size (€m): 47.6 7.3 Maturity Observed tCO2e emission savings (p.a.): Perpetual 13,258 26 eeef Annual Report 2016

FRANCE SPL – Région Rhône-Alpes The SPL is expected to lead a new and ambitious renovation initiative – an area commonly seen to attract few investments. By setting the example of upgrading the public buildings and going beyond standard thermal regulations, the region aims to achieve its 2050 objectives for energy consumption and greenhouse gas reduction. Sector: Energy efficiency / building retrofit Project Proﬁle The Société Publique Locale d’Eficacité Éner gétique (SPL) signed a mid-term loan agreement for €5.0 m to inance the refurbishment of public buildings during their construction phase and to pave the way for raising further long-term inancing. The SPL has engaged 10 refurbishment programmes with four different local authorities, totalling €25.0 m investment. This demonstrates that the innovative inancial and legal structure proposed by the SPL meets the requirements of the stakehold- ers, including public authorities, building consortia and lenders. By the end of 2016, eight of these programmes were completed, totalling €20.2 m. Two remaining projects are expected to be completed in 2017. The irst annual energy audits are expected in 2017 to validate project savings. The annual primary energy savings are expected to be 4,157 MWh. Carbon savings are 58% compared to baseline. Project Partner The SPL was initiated by the region of Rhône-Alpes as a private special purpose company under the French Commercial Code, but operating with public capital. It is associated with a number of public authorities in the Region and is dedicated to implementing energy-efficient refurbishment projects for public buildings (including mainly schools), including renewable energy production. Highlights This refurbishment project is linked to the prepa- ration works resulting from technical assistance. The SPL beneited from funding from the European Commission Technical Assistance Facility (EC TA Facility). KEY FIGURES Type of investment: Senior debt Total project size (¤m): Financial close: 03.04.2014 eeef investment size (€m): 25.0 5.0 Maturity Estimated tCO2e emission savings (p.a.): 5 years 992 2016 Activities Report: Investments 27

e h e i Z s n e J : e r u t c i P , n i l r e B m u e s u M h s i w e J © GERMANY Jewish Museum Berlin Foundation Project Proﬁle The Jewish Museum Berlin and the energy service company (ESCO) Johnson Controls entered into an energy performance contract (EPC) for the museum buildings in 2012. The eeef’s initial investment totalled €1.7 m. The Jewish Museum Berlin and the ESCO agreed to a revised approach in 2015 which amended the overall scope of the project and as a consequence also the eeef’s investment size to €1.0 m. The project includes a number of energy eficiency measures, comprising the optimisation of the heating, ventilation and air conditioning and an eficient energy management system. The revised project expects to achieve 3,856 MWh of primary energy savings annually. The project is fully implemented, and a project energy audit will be conducted in H1 2018. Project Partner The museum, set up as a foundation, owns two buildings in Berlin, which are both used for various cultural events. Since its opening in September 2001, several million people have visited the Jewish Museum Berlin, making it one of Berlin’s most visited museums. Offering guided tours, temporary exhibitions and a diverse calendar of events, the museum is a lively centre for Jewish history and culture. Sector: Energy efficiency / building retrofit Highlights The Jewish Museum Berlin Foundation transaction is an innovative public private partnership (PPP) building sustainable communities for a better environment and facilitating small and medium- sized investments in the energy eficiency sector. It was the winner of the European Energy Service Initiative’s Award for the best European energy eficiency service project in 2011, conferred by the European Energy Service Initiative 2020. KEY FIGURES Type of investment: Forfaiting loan Total project size (¤m): Financial close: 20.03.2012 eeef investment size (€m): 1.4 1.0 Maturity Estimated tCO2e emission savings (p.a.): 10 years 933 28 eeef Annual Report 2016

GERMANY University of Applied Sciences Munich Sectors: Energy efficiency / building retrofit / CHP plant Highlights This constitutes an innovative forfaiting structure for inancing energy eficiency measures in a public building, with a focus on low carbon solutions, which will improve the learning environment for students as well as staff. Although it is a small project, it demonstrates the concept of combating climate change through a smarter use of energy which also benefits the public budget. It even includes a small component of decentralised energy production for the university’s own use. This project serves as a model for further energy efficiency investments in educational facilities such as universities, schools and kindergardens. Project Proﬁle The University of Applied Sciences Munich and the energy service company (ESCO) Johnson Controls entered into an energy performance contract (EPC) for both of the buildings on the university’s campus in Munich-Pasing, with a total EPC volume of €1.1 m. The ESCO and the university agreed to energy eficiency measures comprising the optimisation of the heating, lighting, metering, building manage- ment and pumping, as well as the installation of a 49.5 kW combined heat and power (CHP) plant. The project was implemented in 2013 and conti nues to achieve savings aligned with projections. In 2016, it achieved 1,974 MWh of primary energy savings compared to baseline, which is equivalent to 34%. The ESCO has guaranteed that the university will achieve these energy savings each year and will conduct the building operations and maintenance services for a contract period of 10 years. Project Partner The University of Applied Sciences Munich was founded in 1971 and is the largest university of applied sciences in Bavaria, with approximately 18,000 students, 475 professors, 750 lecturers and 745 non-academic staff. It offers its educational agenda in 14 departments. KEY FIGURES Type of investment: Forfaiting loan Total project size (¤m): Financial close: 15.11.2012 eeef investment size (€m): 1.1 0.6 Maturity Observed tCO2e emission savings (p.a.): 10 years 58 2016 Activities Report: Investments 29

ITALY University Hospital S. Orsola-Malpighi Project Proﬁle The project entity Progetto ISOM signed a con- cession agreement with the University Hospital S. Orsola- Malpighi. The eeef provided a project and VAT bond facility of €31.8 m. Initiatives are planned in order to improve the energy efficiency of the entire fluid production and distribution system and to reduce energy consumption. Such measures include the adoption of energy eficient equipment such as centrifugal chillers and absorbers, the reconstruction of the heat distribution networks, the renovation of heat exchange substations and the inclusion of a tri- generation plant for the combined production of cooling, heat and power (CCHP), based on the energy consumption of the hospital facility, which is fuelled by methane gas. A technical implementation report was issued by Arcadis, the technical advisor, at the end of H2 2016 and identiied that the major construction works on the different sites of the project were complete. The project is operational and is expected to achieve inal commissioning in H2 2017. An initial annual audit of the project was conducted at the end of 2016. The project still needs some inal monitoring equipment to be installed. It is anticipated that when complete data is available and when the systems have been in operation for an entire heating cycle, the savings will become optimal. In 2016, carbon savings were 26% compared to baseline, and primary energy savings were at 24%. Arcadis validated the data, which provides an upside regarding the baseline analysis of expected primary energy savings. Project Partner With more than 400 years of history, the university hospital St. Orsola-Malpighi Polyclinic was the irst hospital in Bologna. Every year, the hospital handles approximately 72,000 admitted cases and an estimated 4,000,000 outpatient visits with medical specialists. An estimated 20,000 people including staff, students, university teachers, patients, visitors and suppliers are present on the hospital grounds on a daily basis. Highlights This upgrade of the entire energy system of the university hospital has been the biggest energy efficiency upgrade in Italy completed as part of a PPP. For the local public healthcare, it is a signiicant step forward, as the university hospital is one of the biggest hospitals (1,758 beds), making it a model for other hospitals in Italy. This is a major project which demonstrates the positive impact of energy eficiency measures in public buildings that have to be run 24 / 7, showing how it can improve the underlying conditions for providing healthcare services to citizens of the Emilia-Romagna region. The project won the CESEF Energy Eficiency Award 2015 in the inancial category. Sector: Energy efficiency/ upgrade of entire energy system KEY FIGURES Type of investment: Senior funds Total project size (¤m): Financial close: 08.05.2013 eeef investment size (€m): 41.0 31.8 Maturity Observed tCO2e emission savings (p.a.): 20 years 7,881 30 eeef Annual Report 2016

NETHERLANDS City of Venlo This street lighting project is linked to preparation works resulting from technical assistance. Venlo benefited from funding from the European Commission Technical Assistance Facility (EC TA Facility). This enabled the city to tender and select the equipment manufacturer for the provision of the LED equipment. Sector: Energy efficiency / street lighting Project Proﬁle The City of Venlo and the eeef signed a long-term inancing contract for €8.5 m. The city’s existing public lighting is the biggest consumer of electricity on its electricity bill. The city therefore prioritised upgrading its street lighting in order to reduce its energy consumption and CO2e emissions as well as to save costs for the public budget. 17,150 luminaries were replaced with LED tech- nology by the end of 2016, with a small fraction left for 2017. The project is further proof of the City’s commitment to environmental sustainability. Project Partner Venlo has 100,000 inhabitants and was among the irst cities in the Netherlands to initiate climate and energy programmes, starting in 2004. The City of Venlo considers cradle-to-cradle an innovative economic design principle, with the highest possible sustainability as a result. Highlights The Venlo transaction is the Fund’s first direct lending structure to a municipality, and it demonstrates the wide variety of inancial products the eeef can offer. KEY FIGURES Type of investment: Senior debt Total project size (¤m): Financial close: 03.04.2014 eeef investment size (€m): 9.1 8.5 Maturity Observed tCO2e emission savings (p.a.): 15 years 946 2016 Activities Report: Investments 31

Sector: Energy efficiency / renewable energy / clean urban transport ROMANIA Banca Transilvania Project Proﬁle The eeef provided a reinancing facility to Banca Transilvania (BT) for a green on-lending programme to support energy eficiency and renewable energy investments by the public sector in Romania. It is the irst cooperation between the eeef and a inancial institution as well as the irst investment in Eastern Europe. The eeef is supporting BT in sourcing and evaluating underlying projects where needed. BT is ensuring that the inanced projects comply with the eeef’s requirements with respect to a CO2e emission / primary energy consumption reduction of at least 20%. Furthermore, the eeef can jointly inance projects with BT if larger inancing amounts are required. At the end of 2016, BT had completed the inancing of eight projects. Further details on three trans- actions included within the BT loan portfolio are included within the Project Highlights section. The cumulative savings of the projects implemented up to the end of 2016 are 241,779 MWh in primary energy savings. Project Partner Founded in 1993, Banca Transilvania is one of the largest banks in Romania in terms of assets. The bank’s activity is based on three main business lines: corporate, small and medium-sized enterprises (SMEs) and retail. BT counts over 6,000 employees, a network of almost 550 units and 1,76 million active clients and is registered in Cluj-Napoca (Romania). Highlights In BT, the eeef has gained a strong local partner with a history of inancing several energy eficiency projects and which has a solid footprint in inancing SMEs. This cooperation will help to strengthen the Romanian banking sector by providing inancing to energy eficiency and smaller-scale renewable energy projects, primarily through the provision of inancing to public and private building owners, homeowner / condominium associations and municipalities, public sector entities and private sector companies acting on behalf of the public sector. KEY FIGURES Type of investment: Subordinated debt Total project size (¤m): Financial close: 26.09.2013 eeef investment size (€m): 25.0 25.0 Maturity Estimated tCO2e emission savings (p.a.): 10 years 22,606 32 eeef Annual Report 2016

1RETROFIT OF RESIDENTIAL FLAT BLOCKS IN THE AREA OF BUCHAREST Background Recon & Doje is a wholly owned Romanian private company founded in 1992, based in Pipera village, Bucharest. Recon & Doje offers a full range of services in the ield of construction and building upgrades. They hold a solid market position within Romania. They have a good relationship with a number of municipalities within the country and have carried out works on the modernisation of road systems and the development of water supplies and sewerage networks. Project Description BT has granted Recon & Doje a non-recourse factoring limit for the renovation of approx. €3.3 m in November 2016 to complete energy eficiency upgrades for buildings constructed between 1965 and 1975. Previously, Recon & Doje already held a working capital credit line with BT for around €400,000. The €3.3 m factoring limit was granted to inance the six contracts that Recon & Doje had won in relationship with Bucharest City Hall within Sector 2. KEY FIGURES Disbursement date: Sub-loan size (€): 17.11.2016 3,295,906 Estimated annual tCO2e savings: Estimated annual primary energy savings: 4,103 tCO2e 17,442 MWh 2016 Activities Report: Investments 33

RETROFIT OF RESIDENTIAL FLAT BLOCKS IN BUCHAREST, DISTRICT 6: PHASE 5 2 Background Constructii Erbasu is one of the main Romanian construction companies, founded in 1991, with expertise in the construction of both residential and industrial buildings. The company also has a good track record in the municipal sector with the reconstruction of roads and the renovation of sewer networks. Project Description BT provided financing to Constructii Erbasu for a project tendered by the Bucharest Town Hall, which they won for the renovation of 273 blocks of lats within Bucharest. Most of the blocks of lats in Romania were built between 1950 and 1990 and need building envelope upgrades including insulation improvements and replacement doors and windows. Through the eeef facility, BT has now inanced ive phases of the project. Phase 5 saw BT issue Constructii Erbasu another non-recourse factoring limit, this time for approximately €3.3 m. KEY FIGURES Disbursement date: Sub-loan size (€): 22.07.2016 5,493,177 Estimated annual tCO2e savings: Estimated annual primary energy savings: 6,248 tCO2e 26,074 MWh 3Background STREET LIGHTING MODERNISATION IN SIX VILLAGES Elbi Electric & Lighting (Elbi) is a company that offers a complete range of electrical products and industrial and decorative light ixtures. Elbi has a large portfolio of own brands and built a solid market position. It has over 140 employees, eight warehouses and 10,000 clients. Project Description BT has provided Elbi a medium-term ceiling facility of circa €2.2 m. Currently, Elbi has upgraded lighting points in six locations in Cluj County. Most projects are in villages with less than 5,000 inhabi tants. Chiuiesti, Cluj County, is one of the beneiciary villages where 301 existing mercury vapour or sodium lamps were replaced with Philips LEDs. KEY FIGURES Disbursement date: Sub-loan size (€): 34 eeef Annual Report 2016 18.11.2015 2,197,271 Estimated annual tCO2e savings: Estimated annual primary energy savings: 237 tCO2e 1,555 MWh

Sector: Energy efficiency / building retrofit SPAIN Universidad Politécnica de Madrid Project Proﬁle Following directive 2012 / 27 / UE of the European Parliament, in June 2015, Universidad Politécnica de Madrid (UPM) invited energy ser vice companies (ESCOs) to present their proposals to improve the system of heat and water supply across the campus and to reduce CO2e emissions while switching to a cleaner fuel source. In August 2015, the project was awarded to Enertika – Ingeniería y Servicios de Eficiencia Energética S. L. (Enertika), an engineering company specialising in energy generation, energy eficiency and remote manage ment services. Within three months of the inancial close, Enertika delivered an integrated balanced heat system combining natural gas boilers, distributed valve mesh and solar thermal heating systems for uniform water and space heating. Annual audits for the project were issued for 2016 validating that carbon and primary energy savings are above 20% compared to baseline. Preliminary actual savings were issued at the end of 2016; however, this did not include an entire heating season. It is anticipated that savings will increase in 2017, when an entire period is measured. KEY FIGURES Project Partner Universidad Politécnica de Madrid (UPM) is a prestigious university in the Comunidad de Madrid with 20 schools across two sites and is recognised as a Campus of International Excellence. In total, its campus includes 32 buildings for the current 18 departments and governing buildings, which over 35,000 students use annually. Highlights The timeline of the project demonstrates the efficient replacement of the existing 63 gas oil boilers, consuming on average 946,479 litres per year of gas oil. They were replaced with 66 natural gas boilers in all 32 buildings of the campus. To ensure uniform heating of water and space, 6,800 thermal valves were installed, along with 34 thermal solar panels for hot water production. UPM also beneits from the installation of a remote monitoring system to ensure 24 / 7 reporting and control of the new installations, including a total guarantee for these measures and Enertika’s corrective and preventive maintenance services for the entire nine years of the project duration. Type of investment: Forfaiting loan Total project size (¤m): Financial close: 18.11.2015 eeef investment size (€m): 2.8 2.5 Maturity Actual tCO2e emission savings (p.a.): 9 years 852 2016 Activities Report: Investments 35

UNITED KINGDOM Ore Valley Housing Association Project Proﬁle Cardenden Heat and Power (CHAP), a subsidiary of the Ore Valley Housing Association (OVHA), received funding from two external inancing parties, the eeef (senior debt) and the Renewable Energy Investment Fund (REIF) delivered by Scottish Investment Bank (junior debt). The project (total volume €5.5 m) is a combination of small-sized on-shore wind and boiler replacements in social housing. The wind turbines planned will be located at sites within Fife and are being provided by market leaders such as Enercon. Operation is scheduled to commence by March 2017, and the project will beneit from a guaranteed feed-in tariff for 20 years from the Ofice of Gas and Electricity Markets (Ofgem), as well as from selling renewable power through to the national grid. The wind project will contribute to the OVHA’s Community Investment Plan. The plan outlines local initiatives that can beneit from the income generated from the project, and these will be agreed in consultation with the local community. Project Partner The OVHA is a Scottish housing association, a registered social landlord with charitable status operating in Central Fife. Its aim is to provide good quality affordable housing and deliver business diversiication for community beneit. Sector: Energy efficiency / renewable energy 99% Overall, the project’s target is to achieve cumulative annual savings of 99% for primary energy and 96% for CO2e compared to baseline. 36 eeef Annual Report 2016 96%

‘An innovative collabo ration to combat fuel poverty and increase renewable energy within the overall Scottish electricity mix.’ Highlights The eeef closed its first community-based transaction in the UK in cooperation with the OVHA and the Renewable Energy Investment Fund. The OVHA was one of the first technical assistance (TA) beneficiaries under the eeef European Commission TA Facility. Since deploying TA funds, the eeef has worked closely with the OVHA by providing guidance to support project development in realising investments. The eeef supported the OVHA in the development of a new project scope for on-shore wind turbines and the replacement of over 200 outdated gas boilers in residential buildings owned by the OVHA in the Fife council area in Scotland. This transaction demonstrates the eeef’s capabilities in assisting communities in addressing the technical and inancial barriers public entities often face when planning climate change related projects. KEY FIGURES Type of investment: Senior debt Total project size (¤m): Financial close: 04.11.2016 eeef investment size (€m): 5.5 4.3 Maturity Estimated tCO2e emission savings (p.a.): 16 years 1,612 2016 Activities Report: Investments 37

FUNDING SITUATION The European Energy Eficiency Fund S.A., SICAV-SIF was initiated by the European Commission in cooperation with the European Investment Bank. The initial capital provided by the European Commission (€125.0 m) was increased by contributions from sponsors European Investment Bank (€75.0 m) and Cassa Depositi e Prestiti (€59.9 m), as well as the Fund’s Investment Manager, Deutsche Bank (€5.0 m). The eeef has initiated its fundraising activities, ready to ensure constant investor commitments from the private and public sectors to grow the Fund sustainably. SHAREHOLDER STRUCTURE BASED ON CALLED AMOUNTS 1.4 m (1.0%) Deutsche Bank 21.2 m (15.5%) European Investment Bank 16.9 m (12.4%) Cassa Depositi e Prestiti SpA 97.0 m (71.1%) European Commission 136.5 million euros total CURRENT DIVISION OF INVESTMENTS COMMITTED TO THE eeef 125.0 m (47.2%) European Commission (EC) 75.0 m (28.3%) European Investment Bank (EIB) 59.9 m (22.6%) Cassa Depositi e Prestiti SpA (CDP) 5.0 m (1.9%) Deutsche Bank (DB) 264.9 million euros total 40 eeef Annual Report 2016

CURRENT DIVISION OF SHARE CLASSES ACCORDING TO CALLED AMOUNTS AND REMAINING COMMITMENTS Notes A shares B shares C shares TOTAL Total commitment in € Drawn in € Undrawn in € – 116,900,000 23,000,000 125,000,000 – 32,881,087 6,602,435 97,044,383 – 84,018,913 16,397,565 27,955,617 264,900,000 136,527,905 128,372,095 The eeef funds itself across three different share classes: class C shares, which represent the Fund’s first loss piece and how shares are referenced; class B shares, which rank senior to the class C shares; and class A shares, which rank senior to the other two share classes but junior to all of the Fund’s other creditors. All these share classes bear voting rights. While class C shares are essentially designed to correspond to the expec- tations of governments, the other two share classes are of a more commercial nature and are currently held by development banks and the Investment Manager Deutsche Bank. The Fund can issue notes designed for private investors. Private investors are senior to all share investors but bear no voting rights. 2016 Activities Report: Funding 41

EUROPEAN COMMISSION TECHNICAL ASSISTANCE FACILITY The Fund has been beneiting from the European Commission Technical Assistance Facility (EC TA Facility), which supports the mission and strategic direction of the Fund and is primarily for assisting public partner institutions in their project development activities in preparing valuable investments. The application phase for securing grants under the EC TA Facility ended on 31 March 2014. In total, over €14.0 m in EC TA Facility funds have been allocated to support the project development work of 16 public beneiciaries in eight different countries. Purpose To raise municipal awareness of lowering or even neutralising carbon footprints, the European Commission provided the eeef with the EC TA Facility. This facility has been aiming to accelerate investments in the fields of energy efficiency, small-scale renewable energy and clean urban transport. The EC TA Facility supported its beneiciaries, which are exclusively public entities, in developing their green project ideas further by providing grants for up to 90% of the total development costs, subject to subsequent partial inancing by the eeef. The technical assistance grants have been aiming to facilitate project implementation by supporting the preparation of feasibility studies, business plans, tendering processes, etc. LA PALMA Activities The eeef closely supported 16 public authorities in their project development activities, with a total funding volume of €14.0 m. 1. Ore Valley Housing Association (Scotland) – on-shore wind and boiler replacements 2. City of Santander (Spain) – public lighting, building retroit 6. Ringkøbing-Skjern (Denmark) – decentralised district heating powered by biogas 7. City of Marbella (Spain) – public lighting, building retroit, renewable energy 3. City of Córdoba (Spain) – public lighting, building retroit 4. SPL – Région Rhône-Alpes (France) – building retroit 5. Cabildo of La Palma (Spain) – public lighting, 8. City of Terrassa (Spain) – public lighting, building retroit, clean urban transport, renewable energy 9. City of Elche (Spain) – public lighting, building retroit, building retroit, clean urban transport clean urban transport, renewable energy 44 eeef Annual Report 2016

CARDENDEN RINGKØBING-SKJERN ROSCOMMON LIMERICK ZAANSTAD VENLO LIÈGE RHÔNE-ALPES SANTANDER TERRASSA ALENTEJO ELCHE CÓRDOBA MARBELLA 10. City of Venlo (Netherlands) – public lighting 11. University of Liège (Belgium) – building upgrades 12. Limerick and Clare Education and Training Board (Ireland) – building upgrades, renewable energy 13. Groupement de Redéploiement Economique de la province de Liège (GRE Liège) (Belgium) – building upgrades 14. Alentejo (Portugal) – public lighting, building retroit, clean urban transport, renewable energy 15. Zaanstad (Netherlands) – open smart energy network 16. Roscommon (Ireland) – biomass district heating Technical Assistance Support 45

Outcome Looking back, the EC TA Facility has been an incredibly powerful tool for public authorities to receive the capacity needed (whether internally or externally) for elaborating on their potential investment programme ideas, in particular on the feasibility and bankability of the projects. From a total of 16 TA projects, nine projects with a total investment volume of €175 m have been facilitated by the EC TA Facility. Projects having successfully completed the TA phase are at various stages of realisation. Three of them (€39.6 m) have already achieved inancial close for the investment with the eeef, including Région Rhône-Alpes, the City of Venlo and the Ore Valley Housing Association. Three further TA projects (€99.5 m) including the Groupement de Redéploiement Economique (GRE) Liège, the University of Liège and the City of Córdoba are under completion with the TA beneiciaries’ own funding and / or other regional sources. Further projects including the City of Santander, Terrassa and Alentejo aim to reach completion, with eeef inancing under discussion. TA PROJECTS REALISED WITH eeef FINANCING TA beneiciary TA volume provided so far (in € m) Investment programme (in € m) SPL – Région Rhône-Alpes City of Venlo Ore Valley Housing Association TOTAL 1.1 0.4 1.4 2.9 25.0 9.1 5.5 39.6 TA PROJECTS TO BE REALISED WITH OWN FINANCING / REGIONAL SOURCES TA beneiciary GRE Liège University of Liège City of Córdoba TOTAL TA volume provided so far (in € m) Investment programme (in € m) 2.0 1.4 0.5* 3.9 59.9 32.6 7.0 99.5 * TA amount to be adjusted due to reduced investment size 46 eeef Annual Report 2016

TA PROJECTS TO BE REALISED WITH EEEF FUNDING UNDER DISCUSSION TA beneiciary City of Santander City of Terrassa Alentejo TOTAL TA volume provided so far (in € m) Investment programme (in € m) 0.5 0.6 0.5 1.6 9.2 8.1 19.8 37.1 The preparation and realisation of the TA projects are only possible if the required political support and a sustainable multi-annual outlook are given. This implies in particular continuance in the political commitment to implement energy efficiency related projects. As mentioned, the changing of mayors or / and local governments had a negative impact on some projects from the EC TA Facility, which were launched in 2013 but not continued or abandoned completely. This resulted in projects not reaching the inancing stage and even a potential repayment of the TA grant funding provided. At the same time, some projects proved to be technically and / or economically unfeasible based on the outcome of the TA phase (small savings potential, regulatory changes not in favour of project, restructuring, etc.). The EC TA Facility will close its operations by the end of 2017. Going forward, public authorities will receive TA support from the Fund’s newly created TA Facility, introduced in the next section. 8.4 million euros TA funding provided so far million euros projects facilitated 175 37 million euros more investments expected for eeef Technical Assistance Support 47

eeef TECHNICAL ASSISTANCE FACILITY NEW eeef TA TO CREATE FURTHER INVESTMENTS The Fund had initiated the eeef Technical Assistance Facility (eeef TAF) by the end of 2016. In addition to its own funding received from the eeef’s proits, the eeef TAF is beneiting from European Local Energy Assistance (ELENA) funding under the Horizon2020 Programme of the European Union. The new facility builds on the experience gained from its predecessor facility and introduces improved features, helping public authorities to realise a higher project implementation rate. Eligible applicants are regions, city councils, universities, public hospitals and other public entities located in the member states of the European Union. On average, the development of an energy efficiency project in the public sector requires around 4.5 years from the conceptual phase to implementation. The eeef TAF eficiently reduces this time frame to two years by directly allocating consultancy services to the TA beneiciaries (tender completed by the eeef). The eeef published a call for proposals and selected a pool of consultants who will work closely with the public authorities during the preparation of feasibility studies, energy audits, public tender processes, etc., as well as providing legal support. TA BENEFICIARY (PUBLIC ENTITY) TA work performance on eeef mandate TA agreement eeef TA eeef CONSULTANT Consultancy agreement eeef 3. Joint definition of project scope 2. eeef to match consultant with TA beneficiary 1. eeef selected consultants 48 eeef Annual Report 2016

ELIGIBILITY CRITERIA AND APPLICATION PROCEDURE A request for technical assistance has to meet the following eligibility criteria: • Beneiciary has to be a public authority (mu nicipal, local, regional or national authority) • Primary energy savings of at least 20% on an annual basis (20% reduction of CO2 equivalents for certain other technologies, i.e. renew able energy) • Minimum leverage factor of 20 (inal investment volume of the project divided by TA support amount) • Financing of the project to be provided by the eeef (€5 – 25 m) A irst call for proposals for TA beneiciaries planning sustainable investment programmes was initiated end of 2016 and successfully closed in Q1 / 2017. The newly launched facility attracted interest among various public authorities seeking support to develop their sustainable project plans. The remaining funding is available on a irst come, irst served basis by applying directly to the Fund. New applications can be submitted to: technical_assistance@eeef.eu Further details: http://www.eeef.eu / eeef-ta-facility.html 4. Progress monitored monthly by eeef 5. Bankability built allong the development process. eeef providing project funding is a condition to receive TA support APPLICATION BY PUBLIC AUTHORITY • Submission of standard application • Selection in case eligibility criteria are met SCOPING OF THE TA PROJECT TA IMPLEMEN- TATION MONITORING AND REPORTING PUBLIC PROCUREMENT FINANCING • Allocation of eeef • Advisory services • Monthly time • Upon positive • Entering into consultant • Scoping of works jointly by TA beneiciary and consultant according to agreed implementation timeline sheets to monitor TA progress • Further reporting outcome, invest- ment programme to be procured • Selection of ESCO / s inancing phase with eeef • Financing contract signing Maximum two years Technical Assistance Support 49

PROJECT ASSESSMENT AND MONITORING ELIGIBLE PROJECTS The eeef can invest in a range of energy eficiency, small scale renewable energy technologies and clean urban transport, providing the carbon or primary energy savings investment criteria are met. Each project must achieve at least 20% primary energy and / or carbon savings compared to baseline. The Fund may only invest when savings are in addition to other investment criteria. Project Assessment and Monitoring As the eeef can inance a variety of technologies, the initial technical assessment and ongoing monitoring of investments must strike the correct balance between accuracy and practicality of implementation. How the eeef evaluates technical eligibility is based upon the project’s technology and loan size, for example small standard (e.g. street-lighting) project savings can be calculated using validated calculations from the Investment Manager’s Carbon and Environment Impact Management (CEIM) tool, greenstem™. For larger and more complex technology projects, detailed energy analysis is required in the form of third-party-validated reports. As part of the due diligence process and throughout the lifespan of the loan, the eeef evaluates and monitors the project savings performance in alignment with the International Performance Monitoring and Veriication Protocol (IPMVP), which requires every project to establish baseline energy consumption and then a post-project implemen- tation assessment. The Investment Manager’s CEIM team reviews the technical details of all eeef investments and works with project managers to enter relevant data points into greenstem™. greenstem™ All of the eeef portfolio-report impact indicators are tracked in greenstem™, a proprietary web- based tool from the Investment Manager which automatically and consistently calculates anticipated and realised energy, primary energy and carbon savings. For small loans and standard technologies, greenstem™ completes calculations based upon project-speciic data inputs and project location / technology conversion factors. The tool stores energy and emission conversion factors to ensure a consistent reporting approach across the port folio. Factor sources include the Chartered Institution of Building Ser vices Engineers for technology benchmark data and the Intergovern- mental Panel on Climate Change for the conversion of energy data into greenhouse gas emissions. All calculations and data sources used within the tool have been validated by a third-party engineering company. greenstem™ provides comprehensive, timely and accurate reporting charts and dashboards which have been configured specifically for eeef user groups. The tool is lexible and can be customised to include additional technologies in the portfolio. 52 eeef Annual Report 2016

PRIMARY ENERGY AND GREENHOUSE GAS EMISSION SAVINGS 2016 eeef projects aim to achieve at least 20% primary energy savings on an annual basis (higher for the building sector) and a 20% reduction of CO2e equivalents for transport and renewable energy projects. The quality of the methodology used to calculate the expected savings of projects is crucial. This allows the eeef to ensure its projects satisfy international standards regarding CO2e and primary-energy-saving reporting. Due to the wide variety of technologies included in the eeef’s portfolio, the Invest- ment Manager has developed a standardised approach to calculating the project energy, primary energy and carbon savings for the eeef’s most common project technologies. 54 eeef Annual Report 2016 11

CO2e and primary energy savings were reported for the entire portfolio of 11 investments for a range of energy eficiency and renewable technologies including CHP biomass, building retrofits and electric vehicles. Once a project has been in operation for a full year, the eeef receives annual audits stating its actual energy consumption. Year-on-year consumption variances are expected due to a number of factors, such as weather and static data, and therefore project savings can change annually. As shown below, these projects achieved total accumulated savings of 243,683 tCO2e and 191,761 MWh of primary energy savings through the end of 2016. PROJECT NAME Bolloré City of Orléans City of Rennes Société Publique Locale d’Efﬁcacité Énergétique Jewish Museum Berlin Foundation University of Applied Sciences Munich University Hospital S. Orsola-Malpighi City of Venlo Banca Transilvania2 Universidad Politécnica de Madrid OVHA TOTALS3 REPORTING THROUGH THE END OF Q4 20161 CUMULATIVE PRIMARY CUMULATIVE PRIMARY ENERGY SAVINGS (MWh) ENERGY SAVINGS CARBON (%) SAVINGS (tCO2e) CARBON SAVINGS (%) 21,662 –125,460 –133,435 11,432 19,280 7,671 129,638 12,590 241,779 4,362 2,242 191,761 16 –25 –34 42 23 34 24 56 55 22 99 41 27,824 68,804 48,189 2,728 4,665 236 29,554 2,486 57,082 1,712 403 243,683 96 65 50 58 26 7 26 56 55 36 96 52 1 All project savings are calculated following international protocols, including the International Performance Measurement and Veriication Protocol (IPMVP) for energy accounting and ISO 14064 for carbon accounting. All methodologies used by the eeef are validated by a global engineering company. Currently, all projects with concrete data are reporting in alignment with these guidelines, and all new projects are aligned with these frameworks. Project savings represent total project investment volumes. The eeef uses up-to-date and project-speciic conversion factors from sources including the International Energy Agency and the Greenhouse Gas Protocol. For some projects within the portfolio, factors cannot be updated due to project speciics, so they continue to report on factors issued within the loan documentation. 2 The cumulative BT savings represent 10 sub-projects. The portfolio’s percentage savings are calculated based on all sub-projects’ savings. . Projects contribute to cumulative savings until the sub-loan has matured from the portfolio. 3 For carbon, percentage savings are based on the entire portfolio and use the average. For primary energy, percentage savings are calculated using the average but only include projects from the portfolio which provide primary energy savings. Carbon, Environment & Impact Management 55 11INVESTMENTS ACHIEVED CO2e AND PRIMARY ENERGY SAVINGS

CO2 SAVINGS (IN tCO2e) PRIMARY ENERGY SAVINGS (PES) (IN MWh) 19,119 Quarterly CO2e savings (tCO2e) 76,474 Annual CO2e savings (tCO2e) 243,683 Cumulative CO2e savings (tCO2e)* 24,611 Quarterly primary energy savings (MWh) – all projects 98,444 Annual primary energy savings (MWh) 191,761 Cumulative primary energy savings (all projects) * Cumulative data includes calculations from inancial close to loan maturity, based on estimations for projects under construction and with less than one year of operations and actual data for projects which have been in operation for over one year. Savings are for total project investment volume (i.e. eeef and non-eeef investments). 56 eeef Annual Report 2016

SOCIAL AND ENVIRONMENTAL MANAGEMENT SYSTEM (SEMS) The eeef aims to conduct its operations in line with the highest expectations regarding social and environmental responsibility. The eeef's social and environmental management system (SEMS) deines the respective roles and responsibilities of the Fund and its partner institutions in promoting social and environmental sustainability. In general, these are in accordance with the European Investment Bank Statement on Environmental and Social Principles and Standards. For both types of investments – direct and inancial institution investments – the eeef SEMS has specific performance requirements and procedures which are applied. Compliance with these is assessed during the due diligence process and monitored later on during the lifetime of the project. The Environmental and Social (E&S) screening checks areas such as the following – as well as other E&S issues and reputational risk: 1. General environmental and social issues EU policy, legal context and compliance, environmental impact assessment process, E&S principles and standards 2. Environment, biodiversity and climate change Environmental/trans-boundary impacts, protected areas, critical habitants, biodiversity, forestry, cultural heritage, vulnerability to climate change, climate change mitigation 3. Social Social assessment, involuntary resettlement, vulnerable groups, Indigennous People, labour standards, etc. Carbon, Environment & Impact Management 57

BALANCE SHEET STATEMENT OF FINANCIAL POSITION (in €) ASSETS Loans and receivables Investments in subsidiaries Receivable on subscription Interest receivable Prepaid expenses and other receivables Cash and cash equivalents TOTAL ASSETS LIABILITIES Derivative ﬁnancial instruments Payable on eeef Technical Assistance Facility Accounts payable and accrued expenses Distribution to holders of redeemable ordinary shares Net assets attributable to holders of redeemable ordinary A shares Net assets attributable to holders of redeemable ordinary B shares Net assets attributable to holders of redeemable ordinary C shares 31 December 16 31 December 15 110,639,917 106,970,597 3,326,809 – 881,355 31,349 26,510,091 3,135,573 22,358,042 602,064 22,122 6,608,549 141,389,521 139,696,947 1,409,365 281,723 2,336,299 644,450 1,017,163 287,157 1,389,058 641,797 32,881,080 32,881,080 6,602,445 6,602,445 97,234,159 96,878,247 TOTAL LIABILITIES 141,389,521 139,696,947 60 eeef Annual Report 2016

INCOME STATEMENT STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (in €) 31 December 2016 31 December 2015 INCOME Interest income Increase in fair value of investments in subsidiaries Commission and fee income Realised and change in unrealised gains on derivative instruments Other income TOTAL INCOME EXPENSES Direct operating expenses Decrease in fair value of investments in subsidiaries Change in unrealised loss on derivative instruments Change in unrealised loss on exchange Performance fees eeef Technical Assistance Facility Interest expenses TOTAL OPERATING EXPENSES 4,473,973 3,853,473 191,236 142,500 927 5,000 – 61,332 231,545 22,000 4,813,636 4,168,350 (2,391,396) – (392,202) (11,646) (351,185) (272,724) (394,121) (2,036,711) (2,074,174) – – (360,133) (195,980) (212,116) (3,813,274) (4,879,114) OPERATING PROFIT 1,000,362 (710,764) Distribution to holders of redeemable ordinary A shares and B shares Attributable to holders of redeemable ordinary C shares TOTAL COMPREHENSIVE INCOME FOR THE YEAR (644,450) (355,912) – (641,797) 1,352,561 – Financial Statements 61

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE ORDINARY SHARES (in €) Net assets attributable to shareholders AS OF 31 DECEMBER 2014 Issue of redeemable shares Redemption of redeemable shares Increase in net assets attributable to shareholders from transactions in shares Increase in net assets from operations attributable to holders of redeemable ordinary C shares AS OF 31 DECEMBER 2015 Issue of redeemable shares Redemption of redeemable shares Increase in net assets attributable to shareholders from transactions in shares Increase in net assets from operations attributable to holders of redeemable ordinary C shares AS OF 31 DECEMBER 2016 97,529,086 40,185,247 – 40,185,247 (1,352,561) 136,361,772 – – – 355,912 136,717,684 62 eeef Annual Report 2016

SUPPLEMENTARY INFORMATION NUMBER OF SHARES OUTSTANDING Class A shares – tranche 1 Class B shares – tranche 1 Class C shares – tranche 1 NET ASSET VALUE PER SHARE CLASS (€) Class A shares – tranche 1 Class B shares – tranche 1 Class C shares – tranche 1 NET ASSET VALUE PER SHARE (€) Class A shares – tranche 1 Class B shares – tranche 1 Class C shares – tranche 1 31 December 2016 31 December 2015 31 December 2014 328.8108 132.0489 328.8108 132.0489 276.6677 111.5449 1,569,960.9156 1,569,960.9156 1,029,853.9117 32,881,080 32,881,080 27,666,770 6,602,445 6,602,445 5,577,245 97,234,159 96,878,247 64,285,071 100,000.00 100,000.00 100,000.00 50,000.00 50,000.00 50,000.00 61.93 61.71 62.42 Financial Statements 63

CASH FLOW STATEMENT STATEMENT OF CASH FLOWS (in €) OPERATING PROFIT AFTER DISTRIBUTIONS TO HOLDERS OF RE- DEEMABLE ORDINARY A SHARES AND B SHARES NET CHANGES IN OPERATING ASSETS AND LIABILITIES For the year ending 31 December 2016 For the year ending 31 December 2015 355,912 (1,352,561) (Increase)/decrease in fair value of investments in subsidiaries (191,236) 2,074,174 (Increase)/decrease in prepaid expenses and other receivables (Decrease)/increase in accounts payable and accrued expenses (Decrease)/increase in unrealised loss on derivative ﬁnancial instruments Increase in contribution to the eeef Technical Assistance Facility Increase in interest receivables (9,228) 947,240 392,202 (5,433) (279,291) 20,642 500,733 (231,545) 195,980 5,385 (Increase)/decrease in receivables on subscription 22,358,042 (22,358,042) Distributions paid to holders of redeemable ordinary shares 2,654 132,756 NET CASH FLOW (USED IN)/FROM OPERATING ACTIVITIES 23,570,862 (21,012,478) CASH FLOWS USED IN INVESTING ACTIVITIES Increase in loans and receivable ﬁnancial assets (3,669,320) (19,711,737) NET CASH FLOW USED IN INVESTING ACTIVITIES (3,669,320) (19,711,737) CASH FLOWS FROM FINANCING ACTIVITIES Issue of redeemable ordinary shares NET CASH FLOW FROM FINANCING ACTIVITIES – – 40,185,247 40,185,247 Net increase/(decrease) in cash and cash equivalents 19,901,542 (538,968) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 6,608,549 7,147,517 CASH AND CASH EQUIVALENTS AT END OF THE YEAR 26,510,091 6,608,549 64 eeef Annual Report 2016

IMPRINT Publisher: The European Energy Eficiency Fund, S.A., SICAV-SIF 31 Z.A. Bourmicht L-8070 Bertrange Grand Duchy of Luxembourg Photo credits: Alex Kraus, Jeff Molliere Disclaimer The Fund is an investment company with variable capital (société d’investissement à capital variable) under the form of a public limited-lia bility company (société anonyme) governed by the laws of the Grand Duchy of Luxembourg which is subject to the Law of 13 February 2007 on specialised investment funds, as amended or supplemented from time to time, and qualifies as an internally managed alternative investment fund (AIF) within the meaning of the Luxembourg law of 12 July 2013 on Alternative Investment Fund Managers. The Fund is reserved for certain eligible investors as deined in the issue document. The information given in this report constitutes neither an offer nor a product recommendation; it is provided for individual information purposes only. No guarantee is given or intended as to the completeness, time- liness or accuracy of the information provided herein. This report is neither an issue document, as speciied by applicable law, nor the annual report of the Fund, nor the management report. The current issue document is obtainable at the registered ofice of the Fund. Please request the Fund’s issue document and read it carefully and seek advice from your legal and / or tax advisors before investing. The distribution of the issue document and the offering of shares and / or notes may be restricted in certain jurisdictions. The issue document does not constitute an offer or solicitation in jurisdictions where such an offer or solicitation is considered unlawful, or where a person making such an offer or solicitation is not qualiied to do so or where a person receiving the offer or solicitation may not lawfully do so. It is the sole responsibility of any person in possession of the issue document and of any person wishing to apply for shares and / or notes to inform themselves of and to observe all applicable laws and regulations of relevant juris- dictions. Distribution of the issue document by an unauthorised person is prohibited and shall be solely at their own risk. Investors should inform themselves and should take appropriate advice as to possible tax consequences, foreign exchange restrictions or exchange control requirements which they might encounter under the laws of the countries of their citizenship, residence, domicile or other applicable laws and which might be relevant to the subscription, purchase, holding, redemption or disposal of the shares and / or notes of the Fund. The shares and / or notes of the Fund have not been and will not be registered under the United States Securities Act of 1933 as amended from time to time (the ‘1933 Act’) or any other applicable securities laws of any of the states of the United States, for offer or sale, directly or indirectly in the United States of America, except pursuant to an exemption from the registration requirements of the 1933 Act as part of their distribution, and the Fund has not been and will not be registered under the United States Investment Company Act of 1940. This work is protected by copyright law. All rights reserved, in particular with respect to translation, reproduction, communication, copying of images and tables, broadcasting, microfilming or reproduction by other means, as well as storage on data- processing equipment, even where such use only applies to excerpts. Reproduction of this work or parts thereof is permissible only within the scope of the statutory provisions. Financial Statements 65