REFINE Toolbox to enhance refinancing of EES projects

To mainstream refinancing schemes in Europe standardization is of high importance. Therefore, the REFINE project has developed tools that support stakeholders in applying refinancing schemes.

The first tool is a detailed description of standardization of contract modules for refinanceable EES projects. In providing standardized contractual stipulations, we distinguish between two stipulations in the main contracts in refinancing arrangements:

• Stipulations whose incorporation is advisable in energy efficiency service contracts to facilitate their subsequent refinancing by a financial institution.
• Stipulations whose incorporation is advisable in refinancing contracts signed by a financial institution and an EES provider.

With respect to stipulations for EES contracts, a distinction is made between:

• Must-Have-Stipulations deemed indispensable for the EES contract to be refinanced at a later date. Should they not be included, the chances of the operation not being refinanced at a later stage are high.
• Nice-to-Have-Stipulations that, if included in the EES contract, would increase the chances of it being refinanced later, but which are not indispensable in order to get a refinancing operation arranged.

The distinction between Must-Have-Stipulations and Nice-to-Have-Stipulations is made exclusively from the point of view of refinanceability of an EES contract. For a good contractual relationship between the client and the EES provider, however, many of the Nice-to-Have-Stipulations can be seen as rather compulsory.  More details and additional explanations on the required contract stipulations for the EES as well as for the Refinancing Contracts can be found in the Guideline “Standardised Contract Stipulations for Refinancing of Energy Efficiency Services“.

The summary appraisal of refinanceability of EES projects is elaborated within the REFINE rating system. The approach is based on existing rating systems that are used to assess creditworthiness of borrowers as well as methodologies that are discussed and/or applied specifically for the context of EES projects.

It is comprised of a risk assessment system that can be applied specifically when a financing institution analyses the refinanceability of an Energy Efficiency Services (EES) project. The system supports the application of refinancing schemes in the EES business by

• incorporating elements specific to energy efficiency projects
• reflecting on the impact which the client’s cash surplus derived from energy savings can have on the improvement of the client’s creditworthiness
• diminishing financial institutions’ due diligence and transaction costs

The rating system consists of two documents:

• The rating system template, which is an elaborated Excel-file directly applicable for the evaluation of EES projects;
• The report “Rating system on the refinanceability of EES projects” consisting of explanatory notes for the use of the rating system

If you have any questions on the use of rating system template, don’t hesitate to contact the REFINE project team.

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