Project development assistance as a financial instrument that supports primarily public sector investors by bridging the gap between project idea and finance.
One of the primary ideas behind ZagEE project ( http://zagee.hr) was to assess and test different financing instruments that were available in Croatia since there was no relevant experience within the city with use of instruments such as soft loans, EPC and ESI Fund grants in energy renovation projects. The project development assistance was used to fund preparatory activities while financing of the capital investment, which was approximated at 29,3 million € (26,5 mil. € for refurbishment of public buildings and 2,8 mil. € for modernization of public lighting) had to be structured during project duration.
With an underdeveloped financial market, banks in Croatia were risk averse and conservative, meaning that financing periods proposed by banks were usually too short for deep renovation of buildings. Only three viable financial instruments were available at the time (2012), before Croatia became a member of the EU:
• Grants - from the Environmental Protection and Energy Efficiency Fund (EPEEF)
• Soft loans - from the Croatian Bank for Reconstruction and Development (HBOR)
• ESCO model
At the beginning of the project an agreement was made with the EPEEF (national fund) to co-finance the total investment with a 40% grant. The rest of the investment was allocated from the city budget. Since project documentation (main designs) was already developed within the project, ESCO was not an option (ESCOs like to develop their own project documentation and technical solutions).
30 000€ for staff cost for preparation of required documentation of buildings to be financed through the financial instrument, measurement & verification and regular reporting.
Evidence of success
Financial structuring was made for renovation of 87 buildings with expected primary energy savings of 33.526 MWh/year, 8.390 tCO2/year of avoided GHG emissions and average energy savings of 49% in public buildings and 72% in public lighting.
-The project has also contributed to creation of better working conditions for buildings users and generation of 290 MWh/year of energy from renewable energy sources.
Replication level depends on specific financial market conditions and available funding schemes in each country. Political consensus and commitment from all sides is a pre-condition that has to be met before the initiation of project in order to ensure execution of such long-term capital investment.
Potential for learning or transfer
Assessment and testing different financing instruments/schemes that are available at national level since there is no relevant experience within the city with use of instruments such as soft loans, EPC and ESI Fund grants in energy renovation projects.
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