|Financial Instruments and Energy Performance Contracting for Renovations
The Directorate for Energy within the Ministry of Environment, Climate and Energy (MECE) plays a crucial role in preparing and coordinating national policies and programs for reliable energy supply, energy efficiency (EE) and use of energy from renewable sources (RES). To ensure that deep renovations are implemented in the public sector and residential sector, the MECE has introduced supporting financial instruments and established a Project Office for Buildings Renovation. The office is responsible for implementing the Energy Performance Contracting (EPC) projects, including development of standardized concession acts and contracts, which are essential for establishing partnerships between public and private entities in the implementation of EE EPC projects. The office also develops standardized processes, documents, and implementation guidelines for EPC projects, including model calls for public-private partnership (PPP) promoters and calls for tenders.
The Ministry has expressed interest in developing and introducing refinancing contract clauses in the existing standard EPC contract for the public sector. The aim is to ensure that PPP EPC projects in the public sector are refinanceable, which will help reduce legal transaction costs and mitigate risks through increased transparency. As part of the standardization process, the Ministry considered inclusion of contract stipulations in the EPC contract between the EPC client and EPC provider that are required for the sale of receivables. This will help facilitate the sale of receivables and promote the development of the guarantee instrument and refinancing scheme. In addition, the Ministry is interested in upgrading capacity building for public clients, which will help improve their understanding of EE and RES projects (re)financing, as well as their ability to manage such projects effectively. This will enable public clients to take full advantage of the available and foreseen financing and guarantee instruments. The Long-term Energy Renovation Strategy for 2050 includes several financial instruments aimed at promoting the renovation of residential buildings to improve energy efficiency. Three new financial instruments are proposed in the strategy, two of which were elaborated in the REFINE projects
The Long-term Energy Renovation Strategy for 2050 includes several financial instruments aimed at supporting the deep renovation of public and residential buildings, two of which are building on the expertise of the REFINE project. The first financial instrument is guarantee instruments for the renovation of residential buildings. These guarantee instruments aim to reduce the risk for investors and encourage more investment in EE projects. The second financial instrument proposed is on-bill repayment including provision of refinancing of these renovation projects via guarantee fund. This financing mechanism allows homeowners to repay the cost of EE renovations through their energy efficiency services bills, thereby making the financing process more accessible and affordable for homeowners.
The volume of the EES/EPC market is seen as enough to support forfaiting schemes offered by Slovene commercial banks. While there is potential for forfaiting schemes, clear policy guidance is crucial for the needed development of the ESCO market and solutions for it.
The Slovenian EPC financing market has been successful in utilizing EU-wide financing instruments such as forfaiting, equity financing, and special purpose vehicles (SPVs). However, an integrated approach to energy efficiency (EE) project implementation, which includes long-term affordable financing and re-financing, bringing together financial instruments and grants, and providing technical support and performance-dependent investment grants, is needed to achieve the programmed level of EE/RES investments and prevent underperformance resulting from the fragmentation of support schemes. The programs that combine subsidies in the form of grants (EU or national) and private funds have proven to be very cost-effective in procuring deep renovation projects through the EPC model, with guaranteed savings.
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