Call: Innovative financing schemes for sustainable energy investments

The specific objectives of the sub-programme "Clean Energy Transition" are the following:

• to develop, demonstrate and promote innovative techniques, methods and approaches for reaching the objectives of Union legislation and policy on the transition to sustainable renewable energy and increased energy efficiency, and to contribute to the knowledge base and to the application of best practice;
• to support the development, implementation, monitoring and enforcement of relevant Union legislation and policy on the transition to sustainable renewable energy or increased energy efficiency, including by improving governance at all levels, in particular through enhancing capacities of public and private actors and the involvement of civil society;
• to catalyse the large-scale deployment of successful technical and policy-related solutions for implementing relevant Union legislation on the transition to renewable energy or increased energy efficiency by replicating results, integrating related objectives into other policies and into public and private sector practices, mobilising investment and improving access to finance.

This sub-programme will fund the activities responding to the specific topics defined in the annual calls for proposals which are based on the list of priority topics. Other activities related to energy efficiency and renewable energy, which do not address the specific requirements of the calls defined under this sub-programme can be submitted to the calls under the Climate Change Mitigation and Adaptation sub-programme.

The sub-programme will aim at facilitating the transition toward an energy-efficient, renewable energy-based, climate-neutral and -resilient economy by funding coordination and support actions across Europe. These actions aim at breaking market barriers that hamper the socio-economic transition to sustainable energy, typically engaging multiple small and medium-size stakeholders, multiple actors including local and regional public authorities and non-profit organisations, and involving consumers.

The sub-programme will contribute to the implementation of the energy-related actions of the European Green Deal, including the ‘Renovation wave’ initiative for the building sector and will give due consideration to territories not connected to the European grids such as the EU outermost regions. It will contribute to the Just Transition objectives by accompanying the territories and the groups of citizens negatively affected by the transition from fossil fuels to clean energy, by building capacity of actors and fostering clean energy investments, mainly in energy efficiency and locally available, sustainable, renewable energy sources. Activities related to technology development will not be included.

A significant part of this budget will be used to finance Coordination and Support Actions (CSA) under OAs grants for the four year period, whereas the possibility to finance SAPs is only foreseen as from 2023.

It will cover the following areas of intervention:

• Building a national, regional and local policy framework supporting the clean energy transition:

Increasing coherence of energy transition governance at different levels by enhancing multi-stakeholder dialogue and building the capacity of public authorities to deliver under the national energy and climate plans and/or other plans and strategies (e.g. just transition plans, long-term renovation strategies, strategies for the electrification of the transport system). Supporting the development and effective implementation of clean energy policies, including the relevant Union legislation on products and energy consumers, in the EU and third countries. Supporting actions that put into practice the enabling provisions included in the European legislation on clean energy.

• Accelerating technology roll-out, digitalisation, new services and business models and enhancement of the related professional skills on the market for the clean energy transition:

Providing support for the decarbonisation of the buildings, industry and tertiary sectors, by fostering market uptake of innovative solutions, including digitalization and circular design in line with the climate neutrality target. Accelerating the clean energy transition by enabling the development of new added-value services and innovative business models. The roll-out of technologies and innovative solutions needs to be accompanied by measures addressing market barriers including support to the development and deployment of new skills and frameworks (labels, certificates, technological and non-technological standards, e.g. for interoperability, etc.).

• Attracting private finance for sustainable energy:

To upscale investments in sustainable energy, different capital flows need to be made available by addressing both supply and demand of finance, and by using public funds effectively. Supply side activities include: data collection, methodology and evidence-based risk management; harmonisation of definition and measuring of sustainable investments; development of innovative financing mechanisms, products, services and practices; standardisation and aggregation of projects and investments; simplification of the process for investors; capacity building and dialogue. Activities should contribute to EU policy and legislation in the field of sustainable finance.

• Supporting the development of local and regional investment projects:

Build capacity of local public authorities and private investors, notably community collective investors. Facilitate dialogue with the financial sector to deliver sustainable energy investments, including tailored actions contributing to a fair society and to a just energy transition in EU regions most dependent on fossil fuels or carbon intensive processes. Promote public procurement of energy and resource efficient works, supplies and services. Support tailored approaches for local actors to develop investment concepts, implement organisational innovations and aggregate projects. Improve market conditions and develop new integrated services offers for sustainable energy in buildings, transport, ports, and SMEs.

• Involving and empowering citizens in the clean energy transition:

Support citizens in taking an active role in the clean energy transition, including targeted support for collective actions, community and citizen-led initiatives and development of new energy services and social innovations. Strengthen collaboration between local authorities and citizen-led initiatives. Support actions that contribute to alleviate energy poverty. Foster energy literacy and sustainable energy behaviour of citizens, in particular younger generations.

Objective:

The topic aims to set up innovative financing schemes for sustainable energy investments.

In view of the ambitious EU climate and energy policy, including dedicated targets for the years 2030 and 2050, significantly enhanced investments will be needed. This is also clearly reflected in the European Green Deal Investment Plan, which aims at mobilising at least €1 trillion of sustainable investments over the course of 10 years for Europe to become the first climate-neutral continent by 2050. This requires significant investment from both the public and the private sector. Public finance needs to lead the way, private actors need to provide the scale.

In this context, also the level of sustainable energy and, in particular, energy efficiency investments needs to be ramped up significantly. This requires the mobilisation of both public and private funding sources, with a specific emphasis on progressively maximising the leverage ratio of private to public finance. This is in line with the Smart Finance for Smart Buildings initiative, which aims at using public funds more effectively, and the “Renovation Wave”, which is envisaged by the European Green Deal to address the particular need to substantially enhance building energy efficiency.

In order to create the conditions for adequate supply of private finance for sustainable energy investments and enhanced engagement of private investors, there is a need to set up and roll out innovative financing schemes at regional or national level, which can be expanded and/or replicated at scale. These schemes have to be adapted to the specificities of sustainable energy investments and, in particular, to the particularities of energy efficiency investment profiles, and aligned with or go beyond the relevant EU Sustainable Finance policy and legislation and specifically the related EU Taxonomy.

Scope:

Proposals should address the set-up of innovative financing schemes leveraging private finance for sustainable energy investments, with a dedicated focus on energy efficiency. The financial solution should be operational by the end of the action, whereas the related investments may be implemented after project completion. Therefore, proposals should foresee necessary testing and exploitation activities during the action.

The financing schemes can involve various types of organisations and ownership structures, as well as diverse financing structures, including, but not limited to:

• Models applying different financing instruments such as tailored grants, equity, debt, mezzanine financing, refinancing mechanisms, guarantees or other de-risking instruments
• Specific finance models for the energy retrofit of buildings in line with the “Renovation Wave”, addressing property or rental markets and, in particular, deep energy renovation
• Specialised securitization vehicles and green bond schemes
• Local investment structures, including citizen financing (e.g. crowdfunding) for energy efficiency and other forms focusing on the role of prosumers or applying complementary local “currencies” at community scale to reinforce short circuits and local supply chains, including smart contracts
• Tailored financing solutions integrating existing market-based instruments relevant for energy efficiency (e.g. tradable certificate schemes, carbon finance instruments, including those under the European Emissions Trading System, CO₂/energy taxes, energy efficiency obligations e.g. under Art. 7 of EED or energy service/performance contracts); or
• Dedicated schemes based on aggregators or clearing houses (at regional or national level), which facilitate blending of different public and/or private funding sources, matching of demand and supply of energy efficiency finance and/or project development.

Proposals should take into account all the following elements, namely:

• Address the establishment of innovative, operational financing schemes for sustainable energy investments. In this context, they can draw on and/or upscale other innovative financing schemes for sustainable energy investments which have demonstrated to be effective
• Address the provision of finance as well as the structuring of demand, in particular at regional and national level
• Define the target region(s) and sector(s) (e.g. buildings, energy-intensive industries, insurance sector etc.)
• Clarify how the proposed scheme is tailored and innovative for the targeted region(s) and market segment(s)
• Justify how the proposed scheme complements and is additional to already available funding
• Clearly demonstrate the market potential, as well as business case and financial viability of the proposed scheme (including e.g. investment sizes targeted, expected energy/cost savings, transaction and management costs, expected returns etc.); and
• Ensure and explain alignment with the relevant EU Sustainable Finance policy and legislation and, in particular, the related EU Taxonomy, or clarify how they go beyond.

The Commission considers that proposals requesting a contribution from the EU of up to EUR 1.75 million would allow the specific objectives to be addressed appropriately. Nonetheless, this does not preclude submission and selection of proposals requesting other amounts.

Expected Impact:

Proposals are expected to demonstrate the impacts listed below, using quantified indicators and targets wherever possible:

• Delivery of adequately tailored innovative financing schemes that are operational and ready to finance sustainable energy and, in particular, energy efficiency investments
• Investments in sustainable energy triggered by the project (cumulative, in million Euro)
• Contribution to wide-spread implementation of the relevant EU Sustainable Finance policy and legislation and, in particular, the related EU Taxonomy, and the achievement of the underlying objectives
• Primary energy savings/renewable energy generation triggered by the project (in GWh/year)
• Reduction of greenhouse gases emissions (in tCO2-eq/year) and, if applicable, air pollutants (in kg/year)

In order to be eligible, the applicants (beneficiaries and affiliated entities) must:

• be legal entities (public or private bodies)
• be established in one of the eligible countries, i.e.:
  • EU Member States (including overseas countries and territories (OCTs))
  • non-EU countries:
    • listed EEA countries and countries associated to the LIFE Programme (participating countries) or countries which are in ongoing negotiations for an association agreement and where the agreement enters into force before grant signature
• the coordinator must be established in an eligible country

Proposals must be submitted by at least 3 applicants (beneficiaries; not affiliated entities) from 3 different eligible countries.

Entities from other countries are exceptionally eligible, if the granting authority considers their participation essential for the implementation of the action (see work programme).

Natural persons are NOT eligible (with the exception of self-employed persons, i.e. sole traders, where the company does not have legal personality separate from that of the natural person).

International organisations are eligible. The rules on eligible countries do not apply to them.

Entities which do not have legal personality under their national law may exceptionally participate, provided that their representatives have the capacity to undertake legal obligations on their behalf, and offer guarantees for the protection of the EU financial interests equivalent to that offered by legal persons34.

EU bodies (with the exception of the European Commission Joint Research Centre) can NOT be part of the consortium.

Entities composed of members may participate as ‘sole beneficiaries’ or ‘beneficiaries without legal personality’. Please note that if the action will be implemented by the members, they should also participate (either as beneficiaries or as affiliated entities, otherwise their costs will NOT be eligible).

Beneficiaries from countries with ongoing negotiations may participate in the call and can sign grants if the negotiations are concluded before grant signature (with retroactive effect, if provided in the agreement).

Special rules apply for certain entities (e.g. entities subject to EU restrictive measures under Article 29 of the Treaty on the European Union (TEU) and Article 215 of the Treaty on the Functioning of the EU (TFEU) and entities covered by Commission Guidelines No 2013/C 205/0537). Such entities are not eligible to participate in any capacity, including as beneficiaries, affiliated entities, associated partners, subcontractors or recipients of financial support to third parties (if any).

Proposal page limits and layout:

Proposals must be complete and contain all the requested information and all required annexes and supporting documents:

• Application Form Part A — contains administrative information about the participants (future coordinator, beneficiaries and affiliated entities) and the summarised budget for the project (to be filled in directly online)
• Application Form Part B — contains the technical description of the project (to be downloaded from the Portal Submission System, completed and then assembled and re-uploaded)
• Part C (to be filled in directly online) containing additional project data
• mandatory annexes and supporting documents (to be uploaded):
  • detailed budget table (mandatory excel template available in the Submission System)
  • participant information (mandatory template available in the Submission System)
• optional annexes: letters of support

Page limit - Part B: 70 pages

Topic budget: EUR 5,500,000.00