Making the energy efficiency market investible

Topic description

Specific Challenge:

Sub-optimal levels of investment in sustainable energy (in particular energy efficiency) are linked, among others, to a lack of trust of investors and financiers in the financial viability of energy efficiency measures. Banks, institutional investors and asset managers lack the skills and operational tools to effectively assess sustainable energy investments and integrate energy efficiency in their investment strategies. Access to the capital markets for energy efficiency investments is hampered by the lack of standardisation of assets.

Proposals should address one or more of the following issues:

• Development, demonstration and promotion of frameworks for the standardisation and benchmarking of energy efficiency investments such as labelling schemes, project rating methodologies and risk assessment tools, standardised legal and financial structures of assets (loans, guarantees, energy performance contracts etc.) in order to develop securitisation and rating models for energy efficiency based financial products, which should enable the development of and access to secondary markets. Proposals integrated in a broader approach such as socially responsible investment should focus on the energy component.
• Gathering, processing and disclosing large-scale data on actual financial performance of energy efficiency investments, in order to create a track record for energy efficiency in different sectors (buildings, industry, transport, etc.). Further integrating the 'green value' of buildings in property valuation through collection of market data across the EU and actions targeted to the key actors in the sale or lease process (e.g. real estate agents, property valuers, notaries, etc.)
• Targeting institutional investors (e.g. public pension schemes) in order to increase the share of their funds invested in energy efficiency, or to develop specific funds or investment products. Supporting the integration of energy efficiency in portfolio management strategies for institutional investors and/or fund managers, including through re-definition of fiduciary duties.

The Commission considers that proposals requesting a contribution from the EU of between EUR 1 million and EUR 1.5 million would allow this specific challenge to be addressed appropriately. Nonetheless, this does not preclude submission and selection of proposals requesting other amounts.

Proposed actions are expected to demonstrate the impacts listed below (wherever possible, use quantified indicators and targets), depending on the activities of the proposal:

• Reduced uncertainty as regards investments into energy efficiency and increased investors' confidence;
• Frameworks, standardisation, benchmarking, standardised descriptions and data evidence of financial returns of energy efficiency investments agreed and accepted by the market;
• Higher allocation of institutional investments to energy efficiency; standardisation of assets enabling securitisation; development of a secondary market for energy efficiency assets.