Short introduction to FALCO
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The document outlines various financing solutions for ambitious local climate objectives, including the Energy Renovation Loan 2.0 (ER2.0) and forfeiting solutions for accounts receivables, aimed at enhancing energy efficiency in public real estate. It discusses several barriers and solutions across different ambition levels and introduces a structured approach to loan offerings tailored for low-income households and local authorities. Key features include low-interest rates, extended loan periods, and innovative financing mechanisms to support sustainable investments in energy efficiency.
Short introduction to FALCO
- 1. Financing Ambitious Local Climate Objectives • Building blocks for financing solutions • Energy renovation loan 2.0 (ER2.0) • Forfeiting solution - Sale of accounts receivables • Financing local authorities’ real estate portfolio
- 2. Building blocks for financing solutions Barriers & solutions matrix micro meso macro Ambition level Financing solution L M H L M H L M H L M H L M H L M H x x x 1 Aggregation/Bundling +++ ++ + + + + + +++ +++ 0 0 0 0 ++ ++ ++ ++ ++ x 2 Intracting – contracting + ++ +++ + + + + + + + + + + + + + + + x x 3 Climate plan benefit contribution 0 + ++ 0 + + 0 0 0 0 0 0 0 0 0 + + + x 4 Deferment of payment of revenues from sale of EUA to industry 0 0 0 ++ ++ ++ ++ ++ ++ + ++ +++ 0 + + ++ ++ ++ x x x 5 Guarantee – Credit risk + ++ ++ 0 0 0 + ++ ++ 0 0 0 0 0 0 0 0 0 x x 6 Performance guarantee – performance risk + ++ +++ + + + + + + 0 0 0 0 0 0 + + + x x 7 Third party financing 0 0 0 + + + 0 0 0 + ++ ++ + + + + + + x x 8 Retention of subsidies 0 0 0 +++ +++ +++ ++ '++ ++ 0 0 0 + + + + + + x x 9 Credit Default Swap 0 0 + 0 0 0 0 + ++ 0 0 0 0 0 0 0 0 0 x x 10 Optimisation of use of real estate +++ +++ +++ ++ ++ ++ + + + + + + + + + + + + x x 11 Compensation mechanism (flexibility mechanism) ++ ++ ++ 0 0 0 0 0 0 + + + + + + 0 0 0 x x 12 Sale & lease back 0 0 0 ++ ++ ++ ++ ++ ++ + + + ++ ++ ++ + + + x x 13 Usufruct & lease back 0 0 0 ++ ++ ++ ++ ++ ++ + + + ++ ++ ++ + + + x x 14 PACE (Property Assessed Clean Energy) 0 0 0 ++ ++ ++ ++ ++ ++ ++ ++ ++ + + + 0 0 0 x x 15 On-bill financing 0 0 0 ++ ++ ++ ++ ++ ++ ++ ++ ++ + + + 0 0 0 x 16 Factoring 0 0 0 + + + 0 0 0 0 0 0 0 0 0 0 0 0 x x x 17 Securitisation + + + ++ ++ ++ 0 0 0 ++ ++ ++ + + + 0 0 0 x 18 Forfaiting + + + ++ ++ ++ 0 0 0 ++ ++ ++ + + + 0 0 0 x x 19 Domestic offset projects + + + + + + 0 0 0 0 0 0 0 0 0 + + + x x 20 Green investment scheme/domestic greening + + + + + + 0 0 0 0 0 0 0 0 0 + + + Financing project development costs Return deemed insufficient Cashflow problem creditworthiness is insufficient Status quo of credit position/lending capacity Economic lock-in
- 3. Energy renovation loan 2.0 (ER2.0) Key features and rationale • Personal loan for energy renovation & ancillary investments • Golden quadrant / triangle of deep energy renovation : • 0) low interest rates : taken care of by market • 1) low monthly installments => loan period up to 20 years • 2) adapted to investment amounts => loan of up to 50KEUR • 3) managing complexity of combining measures : technical assistance service Combination not available on the market • Target group: • Loan approval criteria aligned on average income households • Low-income households that do not meet loan approval criteria may be granted a loan subject to an additional guarantee covering credit default risk
- 4. Energy renovation loan 2.0 (ER2.0) Structuring the loan Borrower Debt fund (originator) SPV (Re-financing) Investors Energy houses Equity Debt Additional revenues Equity - Local authorities Debt – EIB (other private banks) Membership Card System (MCS) Fee for Technical Assistance e.g. via green bonds
- 5. Forfeiting solution- Sale of accounts receivables Key features and rationale What? • Prefinancing of energy efficiency investments by ESCO at SME client • Installment sale + performance contract • Sale of accounts receivables to a financial institution Why? • Performance guarantee + Off-balance (SME) • Refinacing mechanism (frees up capital for new investment cycle (ESCO) • Adapted risk allocation (credit vs technical performance risk) (Bank) • First cases during FALCO: school & retirement/elderly homes • Limits to this approach : creditworthiness of SME
- 6. Bank SME 1 SME 3 SME 2 ESCO Sale of receivables linked to investment Prefinancing energy efficiency Investments + maintance contractProceeds of the sale allow new prefinancing cycle Forfeiting - Sale of accounts receivables add-on solution + Public Guarantee or Forfeiting Fund
- 7. Financing local authorities’ real estate portfolio Key features and rationale What? • Portfolio financing strategy optimising energy efficiency • Needs assessment via SPREM analysis (Sustainable Public Real Estate Management (cont’d in SURE 2050) • Sale of real estate that does not fit the needs and use of proceeds & avoided expenses to finance energy efficiency investments • Use of natural renovation moments Why? - Suboptimal energy efficiency investments at single building level is not compatible with high ambitions (e.g. climate neutrality) - Putting public service delivery at the center of the real estate strategy allows a more holisticreal estate vision - Adequate timing of investments is key to reduce costs
- 8. Real estate portfolio local authorities an accelerated vs a staged approach Accelerated approach Modular approach
- 9. Further information General inquieries Website FALCO Coordinator @Nina Stiehr: please add url falco website Annick Gommers +32 485 49 28 29 annick@kenteradvies.be Inquieries on specific solutions (see below) Energy Renovation loan 2.0 SuMa Consulting Luc Wittebolle +32 479 80 94 27 lucwittebolle@sustainable marketsconsulting.com Forfeiting solution Wattson Antoon Soete +32 478 43 11 22 antoon.soete@wattson.be Financing local authorities’ real estate portfolio Factor 4 Geert Goorden +32 477 59 89 03 geert.goorden@factor4.eu