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Possible future developments of municipalities EE portfolio

Complex and larger investment measures also require greater know-how in planning, implementation and financing. During the planning phase, municipalities should look for a suitable specialist planner for planning and support during implementation, i.e. specialised experts for financing from energy agencies or consultants with special expertise who support the municipalities in the development of implementation and financing models and then help to find alternative model of EE financing like ESCO, or contractors, or develop participation models for citizens in order to involve them in the implementation and success, as is often the case with PV or wind farms.

Equity and credit financing are standard possibilities and good for manageable measures and costs, however, even good projects sometimes fail, because the municipality cannot and is not allowed to get into debt further due to Maastricht or other criteria and cannot raise the financing from its own strength.

Often, truly innovative financing instruments are not considered because knowledge and experience are lacking. There is a variety of instruments that make it possible to implement projects as indicated in this last short overview:

  • Energy Performance Contracting: energy saving projects can be implemented by a contractor making the investment in energy saving measures and financing them, the municipality only pays the contracting rate, i.e. the previous energy costs until the investment has amortized, after which the energy costs decrease. The advantage is that the municipality gets a more energy-efficient building without having to invest itself, it does not get into debt, but enters into a partnership with a specialised contractor.

  • Energy supply contracting, a contractor (ESCO, private companies) establishes an energy supply, which can be, for example, a biomass heating system. The contractor constructs, operates and finances the plant. A heat supply contract is concluded with the municipality; the municipality only pays for the energy supply and the heat actually obtained, and therefore has full service and no risk. For both EPC and ESCO you can get more info in the Transnational Methodological Framework

  • Green municipal bonds can be a good alternative to the conventional financing. Municipalities can use successfully implemented examples, especially in the financing of PV and wind farms, as a model. Citizens can participate in the projects in the form of bonds and this way participate in their success. The citizens contribute the necessary equity capital and receive an attractive interest rate in return.

  • Citizen cooperatives which can be defined as cooperatively-owned renewable energy projects whose financial revenues stay within the local community. One of their important roles is transforming a centralized market dominated by large utilities into a decentralized market with many active energy citizens. However, without active involvement of citizens and their participation in the benefits coming out of cooperatives this energy transition is not possible.

  • Crowdfunding, the collective effort of many individuals who network and pool small amounts of capital to finance a new or existing business venture. Each campaign is set for a goal amount of money and a fixed timeframe, each day is counted down and the money raised will be tallied up for visitors to follow its success. Actually, crowdfunding for sustainable energy and climate projects is the natural extension of the citizen cooperative model to even larger communities.

  • On-bill lending, a method of financing energy efficiency improvements that uses the utility bill as the repayment vehicle. Energy suppliers collect the repayment of a loan through energy bills. It leverages the relationship, which exists between a utility and its customer in order to facilitate access to funding for sustainable energy investments.

  • Revolving loan funds, sources of money from which loans are given for multiple sustainable energy projects. Revolving funds can provide loans for projects that do not have access to other types of loans from financial institutions or can provide loans at a below-market rate of interest (soft loans).