In the context of the REFINE Project, we understand under this term a model, where an EES provider sells and a refinancing institution acquires receivables to be paid by an EES client, thus leading to a restructuring of the initial financing set-up which may have been ensured through the EES provider’s cash flow, credit financing, leasing financing or other financial means.
Traditionally, refinancing institutions acquire future receivables on sale from EES providers after the implementation of their initial energy efficiency investment. Refinancing institutions may be commercial banks – that may or may not be involved in loan financing towards the respective EES provider – or thematic investment funds – usually represented by specialist fund managers that search for a long-term engagement in energy efficiency investments.
What REFINE means for Refinancing Institutions
REFINE will elaborate upon refinancing instrument concepts, which describe the key aspects of such schemes in terms of value proposition, structures, business models, risk coverage, process steps, cost, host organisations, stakeholders and framework conditions, to inform their national implementation.
REFINE will seek to standardise contractual stipulations which are required for the sale of receivables. In this context, standardisation refers mainly to some regulations in the EES contract between EES client and EES provider, and potentially to certain stipulations in the loan contract between EES provider and the institution that provides initial financing of the investment.
REFINE will develop a rating system that helps to assess refinanceability of EES projects quickly and at low cost. Such a rating system could become an important facilitation service for easier match-making between EES providers that look for refinancing offers and refinancing institutions that look for purchase opportunities.
REFINE will support capacity building for financing institutions and investors. The capacity building elements in the project are combined with a learning-by-doing approach through testing of refinancing schemes as well as the supporting tools that are developed in the frame of the project under market practice conditions.
REFINE will develop business models for specified facilitation services relevant for the refinancing of EES projects, tested across 13 pilot applications.
REFINE will create a Database on refinancing instruments for EES projects available in participating countries, which will provide information on the national and international discussion on the refinancing of EES schemes.