EXAMPLES OF FINANCING MODELS IMPLEMENTED IN OTHER EUROPEAN MUNICIPALITIES AND LESSONS LEARNT - Cristina Boaretto Head of Energy team, Sinloc S.p.A.
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EXAMPLES OF FINANCING MODELS IMPLEMENTED IN OTHER
EUROPEAN MUNICIPALITIES AND LESSONS LEARNT
Cristina Boaretto
Head of Energy team, Sinloc S.p.A.
Athens, December 8th 2016
Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpA 1
Sinloc S.p.A.: activities and shareholders
Sinloc is a leader company in local development projects and in strategic advisory for local
authorities and public bodies
Sinloc’ s advisory aims at:
Realizing projects for local development and infrastructures, creating value for the territories and local
communities
Developing strategic solutions that allow for an improvement in local authorities and firms managerial and
decisional processes
Sinloc acts also as equity investor, particularly for local development initiatives realized through Public Private
Partnership
SHAREHOLDERS
Sinloc’s shareholders are eleven Banking
Fondazione Fondazione
Tercas; 5% Lucca; 5%
Foundations and «Cassa Depositi e Prestiti»
Compagnia di
Fondazione
San Paolo; 19% Thanks to the strong partnership with its shareholders,
CRC; 5%
Sinloc is able to convey amounts of resources to local
Fondazione
CARIGO; 5% projects and initiatives which can add value and
competitiveness to the territory
Fondazione
Cariforlì; 5%
Fondazione
CARISBO; 13%
Fondazione
CRUP; 10%
Fondazione
Cariplo; 10% Fondazione
CARIPARO; 13%
Cassa Depositi e
Prestiti; 11%
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2013▪ Sinloc Sistema
▪ Sinloc Iniziative
Sistema LocaliLocali
Iniziative SpA S.p.A 2
Sinloc in the energy efficiency sector
During the past years, Sinloc started several investment and consulting activities in the
energy efficiency and renewable energy sectors
1. 2. 3.
EQUITY FUND TECHICAL
INVESTMENT MANAGEMENT ASSISTANCE FOR
LOCAL
AUTHORITIES
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2013▪ Sinloc Sistema
▪ Sinloc Iniziative
Sistema LocaliLocali
Iniziative SpA S.p.A 3
JESSICA program
Sinloc is currently a technical advisor for several JESSICA funds in Italy (Sicilia, Campania
and Sardegna regions): Funds of Regional Participation were set up to invest in urban
development and/or energy production and efficiency projects
JESSICA CAMPANIA
Urban development fund for
energy and urban development
projects
JESSICA SARDEGNA
JESSICA SICILIA ENERGIE
Urban development fund for
urban development projects Urban development fund for
energy efficiency projects
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2013▪ Sinloc Sistema
▪ Sinloc Iniziative
Sistema LocaliLocali
Iniziative SpA S.p.A 4
ELENA program
Sinloc is also a leader company in developing ELENA projects: ELENA – EIB tool offers
grants for technical assistance expenditures needed for the realization of projects in the
sectors of energy efficiency, renewable energy and sustainable transport
PROVINCIA DI PROVINCIA DI PADOVA
MILANO E ROVIGO
Elena Padova – Rovigo
Progetto 3L
Elena Milano – Milano Covenant
of Mayors
PROVINCIA DI
CHIETI
PROVINCIA DI
CUNEO Elena Chieti –
Chieti Towards 2020
Fondo IEE – PROVINCIA DI
Progetto CERtuS: LUCCA
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2013▪ Sinloc Sistema
▪ Sinloc Iniziative
Sistema LocaliLocali
Iniziative SpA S.p.A 5
Threee examples of energy efficiency projects
N° of Investment
FUNDING MAIN FEATURES
buildings (mln €)
1. PROJECT ISOM 27 35 EEEF – European Use of european
HOSPITAL Energy Efficiency funding VS lack of
Fund bank lending
2. MILANO COVENANT 98 13 EIB lending Use of Technical
OF MAYORS (subisdised funds) Assistance sources
ELENA Technical Use of european
Assistance funding VS lack of
bank lending
Large scale project
EPC introduction in
Italy
3. SCHOOLS DEEP 25 50 Public lending Match funding
RENOVATION (subisdised funds) Seismic resistance
Private investments enhancement
(EPC) programs for buildings
Banking foundation
grant
Banking foundation
technical assistance
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2013▪ Sinloc Sistema
▪ Sinloc Iniziative
Sistema LocaliLocali
Iniziative SpA S.p.A 6
1. PROJECT ISOM HOSPITAL
2. MILANO COVENANT OF MAYORS
3. SCHOOLS DEEP RENOVATION
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2013▪ Sinloc Sistema
▪ Sinloc Iniziative
Sistema LocaliLocali
Iniziative SpA S.p.A 7
Project ISOM Hospital
The first project refers to the renovation of the energy production systems of the
ISOM Hospital in Bologna by means of a Public Private Partnership
CONCESSION FOR THE ENGINEERING, CONSTRUCTION AND
OPERATIONS OF POWER PLANTS, TECHNOLOGICAL SYSTEMS, WORKS
AND SERVICES FOR HEALTHCARE CAMPUS «POLICLINICO S.
ORSOLA-MALPIGHI», BOLOGNA
Contract Duration: 24 years and 6 months
Construction Works Duration: 3 years
The intervention is focused on the renovation of energy production
systems, with the construction of a new tri-generation power station
able to produce thermal energy (hot and cold fluids) and of the
distribution heating&cooling network. It is one of the largest energy
efficiency upgrade in Italy under a PPP framework
Bologna, Italy This project was realized by important Italian companies acting as partner
in a dedicated JV. Two partners were also acting as Energy Service
Company and Sinloc was an Equity Investor
Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpA
Project ISOM Hospital - Buildings
The object of the PPP procedure was the renovation of 27 buildings of the Sant’Orsola
Hospital
SITE FIGURES
Gross Area Surface 373.780 mq
Patient Area Net Area Surface 67.643 mq
Number of buildings 27
Number of beds 1765
Copyright
Copyright2016
2013▪ Sinloc Sistema
▪ Sinloc Iniziative
Sistema LocaliLocali
Iniziative SpA S.p.A
Project ISOM Hospital - Solutions
SOLUTIONS PROVIDED
new trigeneration system electrical system new
new thermal central unit configuration
new refrigerator unit enhancement of remote
renewal of steam thermal control and regulation
central unit systems
substations revamping civil works
Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpAProject ISOM Hospital – Investments and financing
The project was financed by the EEEF – European Energy Efficiency Fund through the
emission of two Project Bonds which provided market based financing sources for a total
of 32 mln euros
PROJECT FIGURES (€/mln)
Total Project size 41 (VAT included)
Equity (shareholders cofinancing) 6,5
BANCABILITY
Public contribution 2,6
Leverage
Senior Debt 26
Senior Debt 80%
VAT Facility 5,9 Equity 20%
Bancability Ratios
OPERATIONAL REVENUES (€/mln per year) DSCR target 1,30
LLCR avg 1,27
Mainteinance ~3
Energy Service ~ 11
EEEF: The European Energy Efficiency Fund (EEEF) is an innovative public-private
partnership dedicated to mitigating climate change through energy efficiency measures and
the use of renewable energy in the member states of the European Union
It focuses on financing energy efficiency, small-scale renewable energy, and clean urban
transport projects (at market rates) targeting municipal, local and regional authorities and
public and private entities acting on behalf of those authorities
http://www.eeef.eu/
Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpAProject ISOM Hospital – Stakeholders map
The project entity, Progetto ISOM S.p.A., is a special puprpose vehicle (SPV) which is the
counterparty of EEEF (bondholder). The stakeholders map is a typical PPP structure
TENDERING CONSTRUCTION SHAREHOLDERS
INSTITUTION CONSORTIUM Siram
Azienda Ospedaliera Manutencoop Manutencoop
Universitaria di Bologna Siram Sinloc
Sant ‘Orsola Malpighi Iter
Service fees - Equity and
Public shareholder
contribution loan
PPP agreement Construction Shares – Dividends – Interests –
EPC
costs Principal repayment
Project Bond
Insurance PROJECT Agreement
BONDHOLDER:
INSURANCE
COMPANY ISOM EEEF
Premiums (SPV) Reimbursement
and interests
Contracts
O&M Fees Payments
O&M fees Managerial
accounting
MANAGEMENT MANAGERIAL
CONSORTIUM ACCOUNTING
Manutencoop Sinloc
Siram
Iter
Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpA1. PROJECT ISOM HOSPITAL
2. MILANO COVENANT OF MAYORS
3. SCHOOLS DEEP RENOVATION
Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpA 13Milano Covenant of Mayors
“Energy Efficiency Milan Covenant of Mayors” is a pilot project implemented by the
Province of Milan in 2009 in order to improve the energy performance of a group of
public buildings, mainly schools and offices. It’s the first EPC - large scale project in
Italy with strong concrete results
CONCESSION FOR THE ENGINEERING, CONSTRUCTION AND
OPERATIONS OF PUBLIC BUILDINGS
IN THE PROVINCE OF MILANO
The programme was designed to facilitate and finance energy efficiency retrofits for public
buildings, mainly schools, located in selected small municipalities (Milano Covenant of Mayors – Municipalities The programme has been implemented within the Province of Milan involving 48 Municipalities with less than 30,000 inhabitants: the Province of Milan has chosen to implement the retrofitting programme on the principle of aggregation or pooling of the selected buildings https://climatepolicyinitiative.org/ Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpA
Milano Covenant of Mayors - Solutions
The most important tender (the first one) was referred to 98 buildings in 16
Municipalities. Guaranteed savings by the Energy Performance Contract are 35% of
energy baselines, 5% of which will translate into budgetary relief for the municipalities
SOLUTIONS PROVIDED
envelope insulation electrical system new
microcogeneration configuration
heat pumps enhancement of remote
condensation boilers control and regulation systems
solar thermal panels civil works
lighting sensors
http://www.eumayors.eu/
Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpA 16Milano Covenant of Mayors – Stakeholders map The stakeholders map includes actors from international public institutions, local authorities, ESCos and Private Banks (banking foundations and intermediaries). The European Investment Bank played a key role in securing financing to the program, acting both as lender for the financing of energy efficiency interventions and as administrator of a grant for capacity building – technical assistance Source: Early Lessons on Introducing Energy Performance Contracts in Italy, Milan’s Energy Efficiency Program, Valerio Micale, Jeff Deason, and Morgan Hervé-Mignucci, September 2014 Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpA
Milano Covenant of Mayors – Investments and financing
The Province of Milan has awarded the implementation of this first Energy Performance
Contract to a Consortium made up by four ESCOs. The total contract value amounts
to €13 million entirely invested by the Consortium. The EIB, through Mediocredito
Italiano, provided funding to some members of the ESCO consortium
Planed Results Notes
Investments € 90 mln € 13 mln for small Expected €18-20 mln
Munis within the void tenders
€ 5 mln for the city of
Milan
Of which from EIB € 65 mln € 5 mln Three ESCos financed
credit line: by EIB loan (out of 4)
Mediocredito Italiano
(ISP)
€ 2,1 mln € 1,8 mln Lower costs by € 300.000
Technical assistance
(90% Elena Funding
+ 10% Province
funds)
As a lender EIB provided a credit line for about EUR 65 million, covering up to 75% of ESCOs’
investment, via a local financial intermediary
The European Local ENergy Assistance (ELENA) program is a program funded by the European
Commission’s Intelligent Energy-Europe programme and run by the EIB to support local and regional
authorities to reach 20-20-20 targets. It covers 90% of technical assistance costs needed to support
the development of the investment program, for EUR 2 million
http://www.eib.org/products/advising/elena/index.htm , www.provincia.milano.it/ambiente/energia/progetti_europei/progetto_bei
Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpA1. PROJECT ISOM HOSPITAL
2. MILANO COVENANT OF MAYORS
3. SCHOOLS DEEP RENOVATION
Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpA 19Schools Deep Renovation - Stakeholders map
Based on the results of Certus, Elena and Jessica projects, a new project is going
to be developed in order to reach consistent energy efficiency savings and deep
buildings renovation for public schools. Municipalities will work together to
obtain public and private sources
PUBLIC ASSET
BANKING MOU MUNCIPALITIES
MANAGEMENT
FOUNDATION + COORDINATOR
COMPANY
Public buildings
Interest and contribution
Grant
Equity rembursement Surface rights
URBAN TECHNICAL
Contract
DEVELOPMENT Fee
ADVISORS
FUND
Contract + EPC
Fee
contract
PRIVATE ASSET Public selection
MANAGEMENT
COMPANY
Fee Contract
Construction and
CONSTRUCTION
management
AND
FACILITY MANAGER
Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpA 20Schools Deep Renovation – Investments and financing
Different financing sources will be combined: private sources from banking
foundations (grant and technical assistance) and public funds (subisidised
funds). EPC contracts could be further implemented to obtain private sources
PROJECT KEY DATA
As a provider of cheap debt, return
Project length (years) 30 expectations for the fund is low
Energy efficiency target 20%
The grant contribute of the Banking
INVESTMENTS Foundation will further reduce the average
Investments in public schools 50.000
cost of debt
Planning and design costs 750
General expenses and insurances 290
Total investment 51.040
Municipalities will pay a monthly fee for
VAT 5.100 the use of buildings
Total investment + VAT 56.140
Project length and the mix of financial
Schools (average hypothesis) sources will give the opportunity to invest
Sqm schools 50.000 on buildings deep renovation and energy
Students 5.000 efficiency (target 20%)
Sqm/student 10
Construction costs (€/sqm) 1.021
Municipalities fees (€/mq/months)
Investments 5,7
Utility contracts (energy) 1,0
Maintenance 2,1
Total monthly fee / sqm 8,8
Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpA 21Lessons learnt
Key drivers to succeed in similar projects
Large scale approach: aggregate local authorities to create high of
investments
Apply for available resources at local, national or european level both for
technical assistance and investments, especially when there’s a lack of funding
from banks
Use grants, if available, to:
prepare projects (feasibility studies, planning, desing, …) or to
invest on not sustainable energy efficiency solutions
Increase project sustainability by replicating best practices like: standard
contracts (ex. EPC), public tenders and procedures, management and
monitoring standards
Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpA
22CONTATTI
Cristina Boaretto
Cristina.boaretto@sinloc.com
Sinloc ▪ Sistema Iniziative Locali S.p.A.
Via Gozzi 2G - 35121 Padova
Phone +39.049.8456911
Fax +39.049.8456909
www.sinloc.com
Copyright 2016 ▪ Sinloc Sistema Iniziative Locali SpA 23You can also read
