Funding Programmes and Financial Instruments
Tax incentives have been only reported by the UK: The Enhanced Capital Allowance (ECA) energy scheme provides tax allowances for energy saving products in the UK for businesses of any sector and any type of enterprises regardless of the size. It offers a 100 per cent First-Year Allowance (FYA) for investments in certain energy saving plants and machinery. For equipment that qualifies as such, one can write off, for example, 100 per cent of the cost against that year's taxable profits. This equipment includes a broad list of technologies from energy efficient motors to CHP and solar thermal equipment.
Taxes (esp. taxes on the use of energy carriers) would also belong to this group. Those taxes were not included in this study, although the level of the energy price might have an impact on the investment activity in energy efficiency and renewable energy carriers. For this study, however, this kind of taxes was not defined as financing instrument.
The disadvantage of taxes or fiscal instruments in comparison to subsidies is generally that they are not as flexible as subsidies and cannot be changed, for example, each year. In addition, usually more ministries are involved for taxes, for example, the ministry of finance in addition to the ministry of environment and/or the ministry of economics.
This instrument is heavily used in almost all participating countries, especially in Austria (KPC), Germany (KfW) and France (ADEME). Relevant programmes also exist in Spain and Poland. The advantage of subsidies is that they can be very specific and improve the pay-back of investments in energy efficiency and renewable energy. Very often the availability of subsidies increases the awareness of company managers of certain technologies. Especially for new technologies, this instrument is useful. The disadvantage is the burden for public budgets and that budgets are very often available for only one year which makes medium to long term planning more difficult for investors. Usually very economic measures (pay-back below 3-5 years) are not subsidised and de minimis rules have to be observed because of European state aid restrictions. Minimum savings or maximum subsidies per saved ton of CO2 are also usually defined. National subsidies are increased by using European structural funds.
Subsidies are mainly paid for projects in the fields of:
- Renewables and heat pumps for heat production (Austria, Germany)
- CHP (based on biomass and/or gas) (Austria, Germany)
- Energy efficiency (Austria, Germany)
- Special programmes for industrial cooling systems (Germany, Austria)
- Fuel-Switch (Spain)
- Pilot projects (Germany, Poland, France)
- Modernization of plants in the food sector (Poland)
- Investment in new technologies, implementation of CSR (Poland)
In Austria, the subsidy programme (Umweltförderung Inland) is administered by Kommunal Kredit Public Consulting (KPC). Under the heading of "energy supply" wood boiler heating systems, local heating plants on the basis of renewable energy, heat pumps, biomass CHPs, natural gas CHPs and solar thermal plants are subsidised. The support generally lies in the range of 20-30% of eligible costs with a minimum investment of 10,000 Euro.
Under the heading of "energy saving", the following energy saving measures are subsidised in Austria: Insulation of buildings (for companies), air conditioning and cooling systems (ad- and absorption cooling driven by renewables or industrial waste heat up to 750 kW), free cooling, process cooling with alternative refrigerant (NH3 or CO2), energy saving measures in companies (heat recovery, heat pumps, energy efficient production processes, efficient lighting systems, optimisation of heating systems in existing buildings), induction ovens and LED systems. In general, when a minimum investment of 10,000 Euro is necessary, the minimum pay-back of the measures must be from three to five years and the de minimis rules must be considered (200,000 Euro per company within three years). The subsidy is generally between 30-35% of eligible (environmentally relevant) costs. In Austria co-financing for such projects is available via European Regional Development Fund (ERDF) and European Agricultural Fund for Rural Development (EAFRD). (Do you mean by that, that the investor can get funds from ERDF in addition to the 30-35%, or is the EU-money already included in the UFI?)
In France the ADEME aid programme for energy savings may finance investments in newest technologies and processes of production, distribution and use of energy having the goal of energy saving for private industrial and services companies of all sizes. 20 to 50 projects are financed with 5 to 10 Mio. Euro per year by ADEME mainly through Regional Directions. This programme is made of two kinds of operations: demonstration operations which are a first use in real industrial-sized applications of new or innovative and energy efficient technology and exemplary operations, which are dedicated to validated technologies, for which it is necessary to create best practices examples in a specific territory or branch. The incentive will cover only partly the additional cost due to the energy efficiency technology. The amount of payback from energy savings during five years will be deducted from the incentive.
The ADEME Heat Fund is dedicated to support heat production projects on the basis of renewable energy sources in production companies (but also public entities) of all sizes with a high heat production capacity. With approximately 200 Mio. Euro per year around 100 plants were supported per year. It covers: Biomass industrial and agricultural plants, solar thermal plants for hot water production and 350kWh minimum per m2 with special mention of milk and cheese producers, deep geothermal production, geothermal heat pumps (with a technical specification), biogas plants of more than 100 toe except for agriculture, plus technical specifications and heating networks if supplied with at least 50% renewables or heat recovery.
In Germany several Investment Grant programmes exist. On a national level the following were considered as relevant for this study:
The Federal Office for Economics and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle (BAFA)) subsidises investment measures to improve energy efficiency by using highly efficient cross-sectional technologies available on the market, such as: pumps, electrical engines, ventilation and air conditioning, compressed air systems and systems for heat recovery and use of waste heat. Before starting measures, an energy saving concept has to be developed by an energy advisor. Measures have to reach an end energy saving of 25% at minimum to be subsidised. De minimis aid: SMEs can gain a grant of up to 30% of the eliglible costs for single measures. Other companies can gain a grant of up to 20% of the eliglible costs for single measures.
Within the Market Incentive Programme (Marktanreizprogramm, MAP) SMEs can gain investment grants for heat provision using solar thermal (up to 100 m²), biomass or heat pumps (both up to 100 kW) depending on the size and specific technology.
Within the Climate Initiative – Measures for industrial cooling plants the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety subsidises the following kinds of measures: energetic baseline study for existing cooling devices (Status- Check- Funding), measures for renovation of existing cooling devices, measures for energy efficient future systems and measures for the use of waste heat. The energetic baseline study (status check) has to show an energy saving potential through the application of more efficient components and systems of at least 35% . New installations have to use CO2, NH3 or non-halogenated refrigerants and installed components have to work highly efficiently. The yearly electricity use of the cooling system has to be 100,000 kWh at minimum or the cost for the electricity and power of the plant has to be 10,000 Euro per year at minimum. The system has to have a separate remote reading of the electricity meters, it has to be maintenanced by a specialised company and provisions to minimise emissions of cooling solvents have to be made. The status check is subsidised with 75% of the costs, but 1,000 Euro maximum. For the other measures the funding is between 15% and 35% of the net investment costs.
The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety subsidises new (Mini-)CHP (Combined Heat and Power) systems with an electrical power of up to 20 kW in existing buildings with a one-time investment grant. The Federal Office of Economics and Export Control (BAFA) administers this funding system. Large plants with an electric power of 19 kW are subsidised with 3,450 Euro. The German energy supplyer E.ON Energie Deutschland subsidises the installation of Micro-CHP heating devices (electrical power output of roughly 1 kW) for private customers with a grant of 1,000 Euro.
For research and development projects in the field of biomass production and energy efficiency measures, two programmes exist:
The Climate Protection Initiative - research and development for climate efficient optimisation of biomass energy recovery - subsidises the following kinds of projects: projects for development of technologies, flexible system technologies and concepts for biomass products aimed at a sustainable and efficient electricity generation and/or sustainable and efficient production of heat. Companies of the industrial economy can gain a grant of up to 50%, while universities and non-university research institutions can gain up to 75% of the eligible costs from the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety.
Within the programme, "Funding of measures to adapt to climate change" (Förderung von Maßnahmen zur Anpassung an den Klimawandel) from the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety subsidises projects in the field of development of climate friendly concepts and other areas. For SMEs, the maximum amount is 100,000 Euro per project for the development of climate-friendly and climate adapted concepts (with a duration of two years).
Within the Rural Development Programme for 2007-2013 (PROW) activities are available to support the modernization of the food sector and the development of other companies that create new workplaces in rural areas. Enterprises (employing up to 750 people with a turnover up to 200 Mio. Euro) and cooperatives with registered business in the agro-food sector (producers and wholesalers operating in urban and rural areas), e.g. processors of meat, milk, vegetables, fruits and other agricultural products, can apply for structural funds. SMEs will be able to obtain a refund of up to 40% of eligible costs for investments, such as for construction, renovation, modernization of facilities, purchase of production lines, transportation, equipment, and software. SMEs that have signed long-term contracts with producer groups for the supply of agricultural commodities will get the highest level of support (up to 50 per cent.). There were 5,478,515 applications for aid in Poland so far. This activity involves the implementation of projects in the area of production and distribution of energy generated from renewable sources.
The target of the Project "Enhancement of regional competitiveness through Corporate Social Responsibility (CSR)" is raising the level of awareness and knowledge on social corporate responsibility (CSR) among representatives of the Offices of the Marshal Centre of Service for Investors and Exporters (COIE) and SMEs. Other objective includes the promotion of socially responsible enterprises in the local policy for entrepreneurship and the implementation of CSR by means of pilot SME projects. The project is being carried out as part of the Swiss-Polish Cooperation Programme. It is financed by Switzerland as part of the Swiss programme of cooperation with new EU Member States. The total budget of the project is CHF 4,866,117. Public Partners are the Offices of the Marshal Centres of Service for Investors and Exporters. Through pilot projects, support (co-financing of projects) will be given to approximately 90 small- and medium-sized enterprises, taking concrete measures such as making greater use of renewable energy sources.
The programme PO IG 4.4 – "New investments of high innovative potential, Operational Programme - Innovative Economy, Measure 4.4 supports investment projects of Micro, Small, Medium Enterprises associated with the application of new technological, product, service or organizational solutions (technological and organizational solutions applied around the world for not longer than 3 years) and training and consultation projects necessary to carry out investment projects. Creation of new jobs associated with new investments are applicable. The anticipated allocation for the 2013 call was maximum PLN 500 Mio., the budget comes from EU-funds. The level and amount of support ranges from 40% to 70% of eligible costs, in accordance with the Regulation on the establishment of a regional aid map, wherein: the total value of the project not to exceed 50 Mio. Euro, the value of the expenditure eligible for support under the project not less than PLN 8 Mio. and not more than PLN 160 Mio.. The minimum amount of support for investments of high innovative potential is PLN 2.4 Mio..
The maximum amount of support for one entrepreneur per project was set to:
- for the investment part – PLN 40 Mio.
- for the advisory part – PLN 1 Mio.
- for the training part –PLN 1 Mio.
The programme Support for obtaining grants is addressed to enterprises which have submitted their project applications under an international innovation programme as coordinators, or participate in such a project as partners. This cooperation must involve entities from at least two countries. The amount of support for obtaining a grant may be up to 100% of expenditures eligible for grant and constitutes a de minimis aid. The amount of the support for obtaining grants allocated to one enterprise cannot exceed PLN 75,000.00 for a coordinator of an international innovation project and PLN 35,000.00 for a partner in an international innovation project.
In Spain, the following local subsidy programmes were identified:
Industrial companies located in the Madrid Region can apply for a public grant to replace or reconstruct industrial equipment using coal, LPG or diesel oil in order to allow working with natural gas, which is administered by the Energy Foundation of Madrid. The amount of the grant lies between 1,511 Euro and 6,685 Euro. This grant supplied by state funds has a budget of 5 Mio. Euro. More than 100 replacements are planned.
The target of the Renewal Plan for Industrial Boilers, which is administered by the Energy Foundation of Madrid, is to replace or reconstruct thermal installations with a heat generator based on coal, LPG or fuel from industrial processes. Industrial companies that are located in Madrid and installers of new heat generators using natural gas (steam boiler, superheated water and thermal fluid and hot water boilers) can apply for public grants depending on the thermal power.
The investment fund JESSICA – F.I.D.A.E. FEDER finances energy efficiency projects and renewable energy in industry in companies of any size via public grants. It is based on 10 autonomous communities of Andalucía, Canary Island, Castilla and León, Castilla-La Mancha, Ceuta, Comunidad Valenciana, Extremadura, Galicia, Melilla and Murcia. The Fund is financed by ERDF and IDAE and operated by the European Investment Bank (EIB) and has a budget of 123 Mio. Euro. Projects for Energy Efficiency and Energy Management such as the renovation of existing buildings, with performances in the thermal envelope, heating-, cooling-, lighting optimisation etc., and renewal or extension of existing networks of heat or cold in new buildings with an energy rating of A or B are financed. In addition, investments in renewable energy as solar thermal, PV (if integrated into an energy efficiency project) and biomass are also financed. Projects have to ensure an acceptable return on investment and have to be included in integrated plans for sustainable urban development.
This instrument is not an additional financing instrument, but it is analysed here in its own sub-chapter. Some of the GREENFOODS participating states have special programmes to support energy audits performed by independent companies via grants. In Austria there are two main programmes, the national one giving support for one initial audit and one implementing support (max. amount 2 times 675 Euro, 75% of consultant costs are paid). Within the last four years 4,000 such "Energy checks" were issued. The (longer existing) regional programmes evolved from more general environmental programmes which also now have a focus on energy. Not only energy audits, but also the consultation for the implementation of energy management systems is supported. In most cases, 50-75% of the costs are financed and consultancy support from half day to 8 days is possible. During the past 10 years 3,500 companies have benefited from those visits. In France ADEME can allocate financial incentives (grants) through regional offices to industrial and service companies wishing to realize an energy efficiency study. 500 to 1,000 (for 2012: 750) energy services per year are financed with an annual budget between 1.5 and 2.0 Mio. Euro. An energy efficiency study covers energy efficiency audits (incl. pre-audits), energy management studies, feasibility studies and assistance to investment in energy efficiency. For services for the use of renewable energy sources, it covers all sources. Maximum eligible expenses are: 5,000 Euro for pre-audits, 50,000 Euro for audits, and 100,000 Euro for feasibility studies. The maximum subsidy rates are 50% of eligible expenses for big enterprises (more than 250 employees), 60% for medium-sized enterprises (50 to 250 employees) and 70% for small-sized enterprises (less than 50 employees). Depending on the regions, particular conditions and amounts can be proposed. In Germany, the KfW Bank subsidises energy consulting for SMEs. This offer includes an initial consulting to identify potentials as well as a detailed audit to develop a prioritized plan of measures that contains efficiency potentials, proposals for renewable energies and the economic feasibility. 80% with a maximum amount of 1,280 Euro of the initial consulting is subsidised. For the detailed audit 60% of the costs are funded by the KfW with a maximum of 4,800 Euro. As part of the 11th Call for proposals the National Fund of Environmental Protection and Water Management of Poland allots funds (state and EU-funds) for audits in the amount up to PLN 5 Mio.. This includes the preparation of energy and power audits in enterprises to identify opportunities for energy saving, reduce greenhouse gas emissions and carry out investment activities to improve energy efficiency. The level of subsidisation is up to 70% of eligible costs of the project. Subsidised are energy and power audits at entities in which the minimum value of the average consumption of end energy (sum of electricity and heat energy) in the year preceding the submission of the application to fund the audit was 20,000 MWh/year:
- Energy audits of technological processes;
- Power audits of buildings and internal industrial networks;
- Energy audits of sources of heat energy, electricity and cold;
- Energy audits of internal heat installations and buildings.
The project Test and implementation of a pilot service in the area of managing energy efficiency of enterprises in Poland supports pilot services in the area of managing energy efficiency of enterprises, consulting and training service. The service is comprised of two stages: a. Stage I – energy audit, b. Stage II – consultation in implementing recommendations ensuing from energy audit. The project's main target group will be Micro, Small, Medium Enterprises. At least 3,000 enterprises will be covered by the project. The competition's total budget is PLN 4,3 Mio.. One applicant may apply for a maximum aid of PLN 500,000.00. For example, the development of enterprises by improving energy efficiency through optimisation of energy consumption, reduction of the costs of obtaining it or improvement of the system of managing energy at the enterprise will be financed. The target of the grants programme in Spain for sustainable energy development in Analucia, which is administered by the Agencia Andaluza de la Energía, Consejería de Economía, Innovación y Ciencia de la Junta de Andalucía, is to develop a sustainable energy model based on economic prosperity, social cohesion and environmental protection via funding programmes for energy saving, energy efficiency and renewable energies. Companies and company associations located in Andalucía can apply for an investment grant or tax incentives. For energy studies and audits in companies the following investment grants are offered: up to 50% in large companies or for studies unrelated to an investment up to 60% in medium-sized companies and up to 70% in small companies.
Feed In Tariffs
This instrument supports the production of electricity by renewable energy sources by offering money for electricity delivered to the public grid. Generally, the disadvantage of feed in tariffs (FITs) is that the need for support depends on the market price. In addition, usually the producer gets the tariff even if no electricity is needed in the grid at the moment of production. Therefore, discussions within the EU are to replace fixed-price FITs (FFITs), which guarantee a fixed price for every unit of produced electricity with premium-based FITs (PFITs), which pay a premium on top of the market price.
In Austria eco electricity produced from almost all renewable sources, including wind, biomass, biogas, sewage gas, geothermal and photovoltaic is supported by a guaranteed tariff for 13 or 15 years. The tariff ranges from 5 cent to 25 cent per kWh, differing from technology to technology. In some cases, only installations respecting certain minimum/maximum sizes can receive a FIT. All electricity consumers pay for this support through their invoices.
In Germany, the EEG (Law for the Preference of Renewable Energies) regulates the compensation for electricity fed into the grid for biomass, biogas, PV, wind energy. Biomass plants operators can gain between 6.0 to 14.3 cent/kWh (depending on the size) and, 4.87 cent/kWh for wind. In Germany, in addition plant operators of highly efficient and modern CHP systems can gain a so-called CHP compensation from the Federal Office of Economics and Export Control (BAFA) over a certain period of time for the produced electricity fed into the grid. The payment is done by the energy supplier to whose electricity grid the plant operator is connected.
In the UK (from 2010), any business that invests in renewable electricity systems gets cashback from energy companies from using one’s own electricity and for exporting excess capacity in the form of feed in tariffs (FIT). The energy suppliers will make the FITs payments to any businesses. The large energy suppliers are required by law to provide them; smaller suppliers are not, but many have opted to offer them anyway. The following technologies (with a declared net capacity of 50kW or less) are covered: solar electricity (PV), anaerobic digesters and micro combined heat and power (CHP). The Renewable Heat Incentive in the UK uses a similar form for the support of heat produced by renewables: Launched in November 2011 this scheme provides payments to industry, businesses and public sector organisations for the generation and use of renewable energy to heat their buildings (thermal energy end users). It provides cash back for maximum duration of up to 20 years and is based on the amount of kWh of heat the renewable heat user has consumed. This instrument mentioned above in the UK is a form of a subsidy but is categorised as a special “feed in tariff”, as it depends on the amount of heat used and shows that this form of support can also be used for heat. The disadvantage of this instrument is that the user has (depending on the price of the energy carrier) an incentive to use more heat than he needs and has no incentive to reduce the heat demand.
According to the final draft of the FprCEN/CLC/TR 16567:2013 a white certificate is an “official certificate, tradable on an open market or bilaterally, issued by an authority or an independent certifying body, confirming the claims of energy savings by an entity consequent on energy efficiency improvement actions”. In this section the schemes in France and Poland are described.
The energy saving obligations or white certificates were created by the French law n° 2005-781 on July 13, 2005. The programme and objectives are renegotiated every three-year period. The budget is decided by the energy suppliers themselves. This system relies on a three-year obligation of energy savings required by public authorities to energy suppliers (the obligated). These suppliers are in consequence incited to promote energy efficiency towards their own customers; households, public and private sectors. The programme obliges, therefore, energy producers/suppliers in the first and private industrial and services companies in second rank. The CEEs (Energy Saving Certificates) are allocated under conditions by the Ministry in charge of Energy services to the eligible actors who carry out energy efficiency operations. The energy efficiency operations can be implemented in all kind of activity sectors like housing, tertiary, industry, agriculture, transport etc. A large range of eligible actions covering most energy uses can be implemented. Those who are eligible may implement these energy efficiency operations on their own property or on other properties where they encourage, persuade or support energy efficient operations. The obliged also have the option of buying the CEEs from other stakeholders who succeeded in achieving energy efficiency operations; It is based on two systems; standardised operations or specific operations (evaluated by ADEME): Standardised operations records, defined by law, have been made in order to ease building up energy efficiency operations. In each sector, these records define a lump-sum amount of energy savings for the most frequent operations. Energy saving achieved without these standardised operations (specific operations) are to be proven and validated by ADEME. At the end of the three-year period, the “obliged” energy suppliers have to validate that they succeeded in achieving their energy saving obligation in holding the required CEE amount. If they don´t have enough CEEs, they must pay a penalty of 0.02 Euro per missing kWh.
The White Certificates System in Poland is based on the already existing systems for supporting cogeneration and renewable energy resources (the so-called „colourful certificates”). The system covers a broad group of recipients, enterprises to invest in IAIEE, irrespectively of their size:
- Energy company selling electric energy, heat or natural gas to end users connected to the network in the territory of Poland
- End users connected to the network in the territory of Poland being a member of the commodity exchange (pursuant to the Article 2 point 5 of the Commodity Exchange Act of 26 October 2000), in respect of transactions entered into on his own behalf on a commodity exchange
- Commodity brokerage house or brokerage house (referred to in Article 2 points 8 and 9 of the Commodity Exchange Act of 26 October 2000), in respect of transactions performed on a commodity exchange pursuant to orders by end users connected to the network in the territory of Poland
The following types of investments in energy efficiency are considered eligibile under the WC scheme: Insulation of industrial installations; alterations or renovation of buildings; modernisation of appliances intended for domestic use, appliances and installations used in industrial processes; local heating grids and heat sources; energy recovery in industrial processes; heating or cooling facilities with energy produced in own renewable energy sources and others. The White Certificate system is a system that enables receiving additional funds for the investments made in the energy efficiency via selling them through bids. The budget itself is not defined but the amount of White Certificates offered in the first tender were 550 000 units, each one priced with 1,000 [max. zlotych] is 550 Mio. zlotych (approx. 131 Mio Euro). The Energy Regulatory Office (ERO), the central body of state administration has the following responsibilities:
- Organizing the tenders
- Tender announcement, defining the pool of White Certificates (WC), information about it
- Issuing of White Certificates at the request of the entity, information on WC and audit card in Public Information Bulletin of ERO
- Notification about issuing of White Certificates for an accomplished IAIEE (initiatives aimed at increasing energy efficiency). Crediting the account in the Register of Energy Efficiency Certificates with WC. Establishing property rights arising from WC
The Ministry of Economy - state administration prepares the legal act and prepares a list of initiatives aimed at increasing energy efficiency and publishes it in the Official Gazette of the Polish Government.
Credits/Loans (with and without subsidy)
A wide range of loans were reported by the different countries. Usually activities in the field of energy efficiency and renewable energy are eligible for special conditions (e.g. lower interest rates, grace periods). Guarantees are also available for this kind of loan. Three kinds of loans can be identified:
- general loans that are given by private banks (usually similar to other forms of loans)
- loans that are supported by public sources and have a general target (esp. regional growth) and
- loans for special investments in energy efficiency and/or renewable energy sources (esp. used in Germany KfW).
In Austria, loans financed from the funds of banks are issued by all big banks located in Austria. In the case of soft loans, re-financing of the bank loans may be from EIB (European Investment Bank) or a similar institution or a combination with guarantees e.g. from Austria Wirtschaftsservice (AWS), ERP-Funds or Agencies active in only one Province. The main criterion for the decision of the bank is whether the client is expected to be able to repay the loan. The exact conditions of the loan depend on the general and financial standing (credit rating) of the company, and whether securities are available. The AWS as business development /subsidy bank of the federal government supports companies to finance their projects with erp-loans, guarantees, and subsidies. The money comes from the ERP Funds and underlies the European law on state aid. In principle, the use of Energy Efficient Technologies and Renewables can be supported for SMEs. Big Companies can be supported under specific circumstances. The financing guarantee for bank loans for investments with the character of environmental protection is 80% (quota), with a running time of 6-12 years. Examples for investments are energy saving measures, measures for improving energy efficiency, use for renewable energy or highly efficient CHPs. The Erp-SME Programme supports SMEs with a loan with a financing volume from 100,000 Euro to 7.5 Mio. Euro, the running time is 6 years (one year payback grace period). The interest rate is 1%. Erp small-loan supports small companies in the modernization and capital-widening investments with a financing volume of 10,000 Euro- 100,000 Euro.
Fonds de garantie des investissements de Maîtrise de l’énergie (FOGIME) guarantees funds for loans and lean purchases for SMEs. When an SME asks its bank for a loan, if it concerns energy efficiency or renewables, the bank asks for a financial guarantee to FOGIME which will cover 70% of the loan. Thus, the SME will not pay for this guarantee. The duration of loan must longer than 2 years and an outstanding maximum of 750,000 Euro.
In Germany, within the Funding Initiative Energy Transition (Finanzierungsinitiative Energiewende) the KfW Bank offers financing of large investment projects of companies in Germany which target one or more of the following measures: reconstructions or new buildings that fulfill, or in the case of a new buliding, exceed the requirements of the “Energieeinsparverordnung 2009”; energy efficiency measures that lead to an energy saving of 15% compared to the average of the specific branch; replacement investments in technical installations, if the energy consumption is at least 20% below the average of the past three years; further and new development of energy saving technologies for efficient energy production, for energy storages and for efficient energy transmission; investments for using renewable energies. Industrial companies whose consolidated sales revenue is between 500 Mio. Euro and 4 billion Euro can apply for a loan which can cover up to 50% of the overall loan that is required for a specific investment. Generally, these are between 25 Mio. Euro and 100 Mio. Euro per project. Within the KfW – Energy Efficiency Funding Programme (KfW – Energieeffizienzprogramm) the KfW Bank subsidises the following investment measures in energy efficiency: building equipment and appliances, energy and plant technology, process heat and cooling, measurement and control technology and the renovating and construction of builings. The investments have to lead to substantial energy savings. Replacement investments of energy efficiency measures have to lead to a specific energy saving of at least 20%, compared to an average of the past three years. New investments of energy efficiency measures have to lead to a specific energy saving of at least 15%. Industrial companies whose consolidated sales revenue is up to 2 billion Euro (in exceptional cases up to 4 billion Euro), as well as companies providing (energy) services for a third party within contracting can gain a low interest loan. The loan can be gained up to 100% of the eligible investment costs, generally up to 25 Mio. Euro per project. Within the programme Renewable Energies – Standard the KfW Bank offers a low interest loan for projects that use renewable energies to produce electricity or electricity and heat in CHP plants, as well as for investments in close low and medium voltage grids, especially the installation, expansion and acquisition of facilities and grids that comply with the EEG (Renewable Energies Law) and measures that improve the environmental situation. The loan can be gained up to 100% of the investment costs up to a maximum of 25 Mio. Euro. Within the programme Renewable Energies - Premium especially large scale installations for the use of renewable energies in the heat market are subsidised: large solar thermal collectors, solid biomass for thermal use, heat driven biomass CHP, heat supply grids driven by renewable energies, large scale heat storage, large efficient heat pumps and plants for the exploitation and use of deep geothermal energy. Companies (SMEs) and other organisation can apply for a low interest loan. The loan can be gained up to 100% of the investment costs, generally not more than 10 Mio. Euro per project. For geothermal projects up to 80% of the net investment costs can be subsidised.
In Poland a wide range of credits/loans is available from different sources: The JASPERS (Joint Assistance to Support Projects in European Regions) initiative supports the preparation of large projects, i.e. projects of a total value exceeding 50 Mio. Euro, which qualify to be supported from the European Regional Development Fund and the Cohesion Fund. (European Structural Funds). For example: gas networks, electricity distribution grids, retrofitting of public buildings, energy efficiency topics. Projects being put forward to JASPERS should be characterized by one of the following properties:
- they should have a unique, exceptionally complicated character, for instance, associated with environmental issues, public assistance, eligibility etc.
- they should have a form of pilot projects so that the results of the given project may be used in other, similar projects, and
- value of the project should condition the success of the entire priority/programme
JEREMIE (Joint European Resources for Micro to Medium Enterprises) is a joint initiative established in 2007 of the Directorate General for Regional Policy (European Commission) and European Investment Fund (EIF) with participation of European Investment Bank. The target is to support micro, small and medium-sized enterprises to get better access to financing within regional policy. The forms of financing include credits, loans and sureties for those companies. In Poland, the JEREMIE initiative does not constitute additional European Union resources but it is separated from the resources within Regional Operational Programmes for 2007-2013 envisaged for the development of entrepreneurship. The JEREMIE initiative is being implemented as part of ROP in the following provinces: dolnośląskie, kujawsko-pomorskie, łódzkie, pomorskie, wielkopolskie and zachodniopomorskie. The Funds may support, for example, technological modernization of production structures to aid in achieving targets in the area of low carbon economy. The initiative JESSICA – (Joint European Support for Sustainable Investment in City Areas) is an instrument of financial engineering developed by the European Commission (the European Structural Funds), the European Investment Bank (EIB) and the Council of Europe Development Bank (CEB). The target is to support investments of any size enterprises in urban areas, including enterprises engaged in public and private partnerships. The scope of support as part of this initiative covers an ever wider thematic range – starting from revitalization, through education, culture, tourism, transport, to renewable sources of energy. The initiative offers repayable financial instruments (loans, guarantees), which make it possible to better use the resources from the structural funds and to gain participation of financial institutions, banks and entrepreneurs, among other things, thanks to public and private partnership. In Poland JESSICA is being implemented regionally as part of Regional Operational Programmes (ROP). Five provinces have made the decision so far, which are: wielkopolskie, zachodniopomorskie, śląskie, pomorskie and mazowieckie. The Polish Sustainable Energy Financing Facility gives funding in the form of a loan or a lease of up to 1 Mio. Euro for investments to SMEs (production companies) for participating in the programme through administering partner banks and leasing companies. Banks participating in the programme are: Millennium, BNP Paribas, BGŻ, BZ WBK. More than 1,500 companies from the Polish SME sector have financed their investments in improving energy efficiency or in renewable energy solutions through PolSEFF. The following kind of projects are financed:
- Projects to improve Energy Efficiency solutions based on individual energy savings (reaching at least 20%), financing may not exceed 1 Mio. Euro (technical qualification of the project in terms of energy savings is performed by consultants PolSEFF).
- Projects aimed at enhancing the efficiency of energy use in buildings by 30%.
- Investments in renewable energy sources.
- Investment projects to improve Energy Efficiency based on devices and solutions from the the list of eligible materials and equipment (LEME), for projects the funding of which will not exceed 250,000 Euro.
Private banks in Poland offer the following credits: The private bank BOŚ Bank (Bank For Environmental Protection) gives credits (Energy-saving Credit) for investments leading to reduction electricity consumption to entrepreneurs and housing cooperatives and Micro Enterprises, e.g. for replacement and/or modernization of interior and exterior lighting in industrial buildings, replacement of industrial electric motors, modernization of technology into a less energy consuming one and use of energy-saving products and devices in new installations. The following credit conditions are available, partly depending on the borrower: up to 80% of the investment costs, crediting period up to 10 years (with possible grace period in repaying the principal amount), interest rate - variable WIBOR 1M/ 3M/ 6M + margin. It is possible to repay the credit from savings resulting from reduced consumption of electricity, achieved thanks to the investment. In this case, a calculation of the electricity savings and financial savings should be attached to the credit application form. The investment credit from NIB (Nordic Investment Bank) line is a long-term financing for a client's projects aimed at improving the natural environment in Poland in three strategic sectors associated with protection of air, water and waste management. The maximum exposure of NIB in financing the project is 50%. The private bank BOŚ Bank (Bank For Environmental Protection) is the national bank offering those credits. There is the possibility to spread the costs of the investment over many years thanks to an extended period of financing the investment, which will make it possible to adjust the instalments to the borrower's financial capabilities. The credit conditions are favourable interest rates, crediting period: minimum 3 years - not later than until 30 May 2019, possibility to have a grace period in repaying the principal amount up to 2 years, possibility to combine different sources of financing - credits from the NIB line may co-finance projects supported by funds from the European Union. Financed are production of electricity using wind turbines and the thermomodernization of existing buildings, if this will contribute to reduction of emissions into the air and will improve the energy efficiency of the buildings or if they consist in a switch from fossil fuel to renewable sources of energy. The BOŚ Bank (Bank For Environmental Protection) gives credits to micro-enterprises for the purchase or installation of environmental protection devices and products for one's own home, apartment and office. (Credits for environmental protection devices and products). Maximum value of the credit is up to 100% of the costs of purchase and costs of installation, the crediting period is up to 8 years. Financed are solar collectors, heat pumps, heat recovery units, sewage treatment plants, building insulation systems and many other efficiency technologies. An investment credit is available at the private Bank Zachodni WBK, Santander Group, which offers financing of various types of investments. The targetgroup are enterprises planning investments and development of any size. This is a flexible form of a long term credit with a maximum repayment period of up to 15 years (it cannot exceed the investment's depreciation period) with possible grace period for the company's investment needs. The credit is granted for up to 80% of the expenditures and up to 95% of the investment's value. The private banking (BOŚ Bank) offers long-term financing (credit with climate) for micro, small and medium enterprises and large enterprises concerning energy efficiency. The terms are: maximum share in financing the projects is 85% of the investment's cost, maximum credit value of 1 Mio. Euro, a period of financing of up to 10 years, the minimum period of financing is 4 years. The following activities can be financed for increasing the energy efficiency consisting in a reduction of the demand for heat energy and electricity: modernization of small thermal power networks, modernization of buildings consisting in insulation, replacement of lighting or installation of an efficient ventilation or cooling system, assembly of a renewable energy installation in existing buildings or industrial plants (biomass furnaces, solar panels, heat pumps, photovoltaic panels, it is admissible to integrate renewable sources of energy with the existing source of heat or to exchange it for renewable sources of energy), liquidation of the individual source of heat and hooking the building up to the local network, installation of devices increasing energy efficiency, installation of small cogeneration or tri-generation units. The target of the priority programme 12 Call for proposals "Efficient use of energy. Part 2) Funding investment tasks leading to energy savings or increased energy efficiency of enterprises” is to fund investment projects being carried out by entrepreneurs, leading to efficient use of energy or to measurable energy savings. The loans are selected by a competition of the National Fund of Environmental Protection and Water Management. Payouts of funds from assumed and planned commitments for repayable forms of funding the programme amount to PLN 742 Mio. Companies with an average energy consumption of 20,000 MWh during the year preceding the moment the application was filed can apply for the loan. The scope of investments supported covers modernizations and improvements in new facilities, and control systems, technical installations and equipment at the plants, whose aim is to improve energy efficiency, as well as technological changes at existing facilities. The minimum qualified cost of the project must equal to PLN 5 Mio.; the value of the loan can range from PLN 3.5 Mio. to PLN 90 Mio.; the value of the loan can be up to 75% of the eligible costs of the project; annual interest rate on the loan is WIBOR 3M -100 base points but not less than 3.5%. The loan may be granted for a period not longer than 10 years, a grace period may be given The aim of the call for proposals unter NFOSiGW programme (Support of distributed, renewable sources of energy. Part 1) BOCIAN - Distributed, renewable sources of energy) is to reduce or avoid emission of CO2 by increasing production of energy from installations using renewable sources of energy (wind, PV, geothermal, small water power plants, biomass heating, biogas plants and high efficient biomass CHPs). Therefore, loans are financed for such kind of projects. Payouts of funds from undertaken and planned commitments for repayable forms of funding amount to PLN 420,000,000.00. Depending on the renewable energy technology the funding is between 30 and 75% of the eligible costs of the project. The value of the loan can range from PLN 2 Mio. to PLN 40 Mio.; ) annual interest rate on the loan is WIBOR 3M -100 base points but not less than 2%. The loan may be granted for a period not longer than 15 years, a grace period may be given. The programme's 5.1. RES and cogeneration (Part I, II and III) target is to increase production of energy from renewable sources and high efficiency cogeneration plants. Financed are production of heat from biomass (distributed energy sources lower than 20 MWt); production of electricity in combination with heat from biomass (distributed energy sources lower than 3 MWe); production of electricity and/or heat from biogas created as a result of sewage treatment or decay of plant and animal remains, high efficiency cogeneration without using biomass, and other investments. Loan can range from PLN 4 Mio. to PLN 50 Mio.. The equivalent of the gross subsidy cannot exceed 30% of discounted eligible costs of the project and cannot exceed PLN 20 Mio. per project. Minimum total cost of the project must be PLN 10 Mio.. The value of the loan can be from PLN 4 Mio. to PLN 50 Mio.. The annual interest rate on the loan is WIBOR 3M -100 base points but not less than 4%. The loan period may not exceed 15 years, a grace period may be given. The value of the loan can be up to 75% of the eligible costs of the project. Payouts of funds from undertaken and planned commitments for repayable forms of funding amount to PLN 1,222,305,900.00. Part II of the programme will offer loans for the regional divisions of the Fund. The aim of this programme (financing of long term investment activities) is to allow private and public enterprises to carry out investment projects. It gives active support of the development of large and medium enterprises – financing them on market terms – for long-term operations. In particular, the Industrial Development Agency (ARP S.A.) engages in innovative, modernization and energy-saving investments. Support may be given to material as well as capital investments. It offers two instruments loans or sureties financed by state funds, as ARP is a national agency. The conditions of the loan are: for a period of up to 7 years, up to 80% of the net value of the project being financed, one-off fee – ranging from 0.3% to 1%, depending on the assessment of the risk of financing, the interest rate is WIBOR rate accordingly: 1M, 3M, 6M or 1R + margin ranging from 1.2% to 5%, set individually. The conditions for the surety are: up to 80% of the value of the financial liability and a quarterly fee ranging from 0.3% to 1.5%, depending on the assessment of the risk of financing. ARP S.A. charges a fee for processing the application in the amount of PLN 1,500.00. The Industrial Development Agency (ARP S.A.) gives financial support (financing of developmental restructuring) to finance activities leading to the improvement of profitability and effectiveness of business activity for big (private and public) enterprises in the form of loans, sureties, bonds, shares. Activities financed are for example modernization of the plant, investments covering comprehensive modernization of the current machine park, fundamental changes in the production technology and other pro-efficiency activities. Maximum 80% of the total costs directly associated with the project can be financed. A loan period of up to 7 years is possible with a grace period in repaying the principal amount. One-off fee ranging from 0.35% to 1% and a variable interest rate both depending on the assessment of the risk of financing and the level of collaterals. The fee for the surety is set depending on the assessment of the risk of financing and the level of collaterals. The programme “Financing of on-going activities” gives active support for the development of large and medium enterprises – financing them on market terms – for on-going operations. The aim of financing is to support the enterprise's financial liquidity, in particular, liquidity allowing it to perform contracts/orders. It offers two instruments loans or sureties financed by state funds, as ARP is a national agency. The conditions of the loan are: One-off fee – ranging from 0.3% to 1%, depending on the assessment of the risk of financing and the level of collaterals and an interest rate of WIBOR rate accordingly: 1M, 3M, 6M or 1R (depending on the frequency of repayment of interest charges and the duration of the lending period) + margin ranging from 1.2% to 5%, set individually depending on the assessment of the risk of financing and the level of collaterals. The condition for the surety is a quarterly fee ranging from 0.3% to 1.5%, depending on the assessment of the risk of financing and the level of collaterals.
Within the programme “Grants to finance tourism and agro industrial companies in the area of Extremadura”, which is administered by the Ministry of Agriculture, Rural Development, Environment and Energy, upgrades, modifications or extensions of thermal plants that use solar energy and/or biomass are subsidised. Micro, small or medium-sized enterprises belonging to tourism and agro industrial sectors in the area of Extremadura can gain the following subsidy: The subsidy consists of a grant of 5 percentage points of interest calculated on the first two years under the terms of a loan arranged. The minimum eligible investment shall not be less than 10,000 Euro. Likewise, the maximum eligible investment per project cannot exceed 100,000 Euro.
Regional Growth Funds (RGF) programmes in the UK are schemes run by national or local organisations which have been awarded Regional Growth Funds cash to offer grants and/or loans to businesses, usually not specific for investments in energy efficiency or renewable energy but they can also be used for such purposes (under some circumstances). Each Regional Growth Fund programme will have specific criteria for applications. SMEs applying for a grant or loan must be based in England, want to strengthen, consolidate or grow their business, create or protect jobs, be investing private capital, be unable to find funding elsewhere for the application, and be State Aid compliant.
On Bill Financing
This instrument is a kind of loan that is repaid through the bill of the utility. It was only reported by the UK, though on the level of utilities this instrument is also offered in other countries (e.g. in Austria by the local utility of Vienna): In the UK the Green Deal borrows money for investments in certain energy saving technologies to household and to companies. Repayment is made through electricity bills. The longest repayment period will be 25 years. Green Deal will allocate around £6,500 – £10,000 per property. Technologies covered are solar photovoltaics, heat pumps, micro CHPs, flue gas heat recovery, et al.
Contracting programmes and initiatives should help to overcome major barriers of energy efficiency investments: the high costs in the beginning and the risk attached to such projects. In one region of Austria, in Poland and in Germany, support for contracting is available either via subsidies or via loans. In Austria, the members of DECA (Dienstleistung Energieeffizienz und Contracting Austria, an association of ESCOs that are active in Austria, which had 20 members in Oct. 2013) have invested around 100 Mio. Euro in the period from 2005-11 only in Energy Performance Contracting (EPC). DECA Members have realized approximately 750 EPC and Energy Supply Contracting (ESC) projects in the period 2005-2011. In manufacturing and industry, Energy performance contracting is usually used for the optimisation of heating and lighting in office buildings, manufacturing halls, storage rooms and garages. EPC can also be used within the manufacturing processes, such as optimisation of compressed air system and the use of efficient motors, ventilators etc. but this type of projects is less frequent. Energy supply contracting is being used relatively frequently for the supply of heat and electricity (e.g. via combined heat and power). In one region of Austria, Upper Austria, a programme supports energy performance and energy supply contracting projects in businesses and municipalities by partially covering the client's payments to the ESCO via a public grant. The goal of the programme is to give an additional impulse for the contracting market and foster the offer of new qualified services. So far, more than 150 projects, with investments of about 40 Mio. Euro (which were financed by contracting) have been supported with approx. 2.6 Mio. Euro. The amount of investment must be between 50,000 and 500,000 Euro. The percentage of the subsidised investment depends on the type of contracting (EPC or ESC) and the duration of the contract and lies between 5,5 and 20%. In France, contracting maintains a very bad reputation as in most cases the contracts are made to maximise the supplier income and not really improve the customer´s energy efficiency. In Germany the KfW-bank supports under investment measures in energy efficiency also contracting companies with low interest loans. (see under “credits”). In Poland the Third Party Financing (TPF) (offered by BOS) means that a specialized enterprise (Implementer) carries out an investment at the user's (Contracting party's) facilities, supplying technical and organizational solutions (and also guarantees financing), under the assumption that the return of the costs of the undertaking will be achieved thanks to savings in the costs. Entrepreneurs (Implementors) implementing a new technology at the contracting party's facilities for the purpose of gaining profit from the savings or fees can get a credit under this programme. The credit is available under the following terms: Max. value of the credit - up to 80% of the task's costs, crediting period - up to 10 years, grace period - not longer than 6 months of the date of completion of the task. Projects like investment projects whose aim is to save electricity, heat energy, water consumption or to reduce fees for commercial use of the environment can be financed.
This instrument is quite similar to the financing of energy audits, which is usually done with a grant, but it is not restricted to energy related services. In the UK, innovation vouchers are TSB (Technology Strategy Board) grants helping business companies to work with an external knowledge expert for the first time by paying towards the cost of their services. It must address a real challenge, not just a small improvement or to fund general business needs such as training or equipment. Applicable is any SMEs that has yet to form working partnerships with research organisations. The Federal Ministry for Economics and Technology (Bundesministerium für Wirtschaft und Technologie – BMWi) in Germany subsidises external consultancy services in industrial as well as crafts companies. The funding programme comprises the modules "innovation management" and "resource and material efficiency". The module "resource and material efficiency" supports the technical consultancy in companies for a profitable increase of the resource and material efficiency in the production process or the use of the products by clients. It addresses SMEs. The maximum subsidy amount in level 1 is 17,000 Euro within a maximum consultancy duration of three months. For both levels, there is a maximum subsidy amount of 80,000 Euro. In Poland the target of the programme “Innovation Voucher - support for the smallest enterprises” is to initiate contacts of micro and small enterprises with scientific institutions. Support offered as part of the programme Innovation Voucher can be solely allotted towards the purchase of a service related to implementation or development of a product or technology. The programme is addressed to micro and small enterprises, which did not use any services of a scientific institution related to the implementation or development of a product or technology. The value of the support given to a single entrepreneur as part of the programme Innovation Voucher cannot exceed PLN 15,000.00. The value of the support may equal 100% of the expenditures eligible for support, provided that the actual net cost of the service amounts to a maximum of PLN 15,000.00. 500 projects received a positive score. Due to the Programme's budget, 451 entrepreneurs were recommended to be given support. The aim of the Programme “Support as part of the large voucher, Pilot programme – 2013 edition” is to support the purchase of a service involving development of a new product, design project, new production technology or significant improvement of a product or production technology. The programme is intended for micro and small enterprises pursuing a production. The value of the support as part of the Large Voucher may equal 80% of the expenditures eligible for support. The value of the support given to a single entrepreneur as part of the Programme cannot exceed PLN 50,000.00.