D6.4: Report on Investment Pipelines and Novel Business Models for FCs

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The deliverable D6.4: Report on Investment Pipelines and Novel Business Models for FCs was submitted by Officinae Verdi (OV) with contributions from Sestao, Smolyan, Písek, Võru, and Alba Iulia in October 2023. The executive summary of the deliverable is available below and the full deliverable is at the end for download:

“This report presents the outcomes and results from the work on sustainable investments, their bankability and potential funding sources performed within the +CityxChange project with the follower cities Alba Iulia, Písek, Sestao, Smolyan, and Võru.

The project has focused on supporting these five cities in setting up investment pipelines and replicating the implementation of novel business and investment models for the establishment of Positive Energy Blocks/Positive Energy Districts (PEBs/PEDs) that have been developed for and with the Lighthouse cities of Trondheim and Limerick and previously preliminarily assessed in Feasibility Studies.

The work comprises the outcome of a long and complex dialogue with the mentioned cities, in order to better understand the interventions already defined within the Feasibility Studies and give them a chance to be concretely implemented by way of checking their bankability, defining innovative business models and potential funding sources. Innovative business models and funding sources have been shared with the cities and assessed against their potential to be implemented in their contexts. Financial and economic analyses have been performed, based on costs and revenues, capex and opex, payback times. We started from the experiences carried out in the Lighthouse models and where possible they have been applied through adaptation to local conditions in cooperation with the cities operating in the PEB (eg. in Smolyan, the Tool for bankability of building renovation investment -developed for Limerick city- has been used). In some cases, radically new solutions that had not been already assessed in the framework of the feasibility studies have been developed, as they emerged during the discussion with the cities, for actual implementation.

At this aim, we can mention the definition of a framework for a Revolving Fund to be established in Estonia and to be proposed by Võru Municipality to national entities. In the case of Sestao, the report describes the experience with the EU financing facility European Energy Efficiency Fund in the framework of which innovative solutions will be developed.

The assessment of the sustainability of each investment is described according to the main player and beneficiary, i.e. the city government. The foreseen PEBs are in fact all of a public nature due to the limited current possibility to actually take advantage of self consumption, energy trading, energy communities, etc. because of legal barriers. Such a situation has finally redefined the foreseen vision and related interventions for each PEB, limiting them involvement of stakeholders and the ability to deploy innovative business models and financing schemes.

The following models have been developed and applied: PV, battery storage, local grid, revolving fund, European Energy Efficiency Facility, building renovation. All the models represent interventions that make up the seeds for the deployment of PEBs/PEDs in the future.

The main conclusions from the elaborated business cases are:

  • FCs are following a step by step approach which foresees a gradual PEB deployment. This process if on the one side makes the whole transformation path simpler and more easy to finance, on the other side it may not allow to take full advantage of cross benefits (eg. connecting energy efficiency and renewable sources interventions).
  • As it happened in LHC, in most of the FCs innovation has faced legal and governance barriers, in terms of regulation (legal entities like the REC and financial schemes like EPC not approved yet) but also in terms of technical innovation.
  • LHC experiences have been very inspiring for FCs for future PEB developments when more complex interventions might be possible
  • Citizens from different countries have their own approach and “values” which affect decisions upon energy technologies to install or buy. Culture influences citizens’ and public administration decisions. Some cultures are more oriented to value collectivism (Smolyan and Võru for example) they look at peer-to-peer solutions instead of purchasing a product, for example a RES system at home.
  • An important result is that key interventions can be carried out without incentives: the identified (and prioritised) financial solutions for the selected interventions have been designed so as to generate positive payback periods (SPP) and Return On Investment (ROI) even without incentives. Therefore funding sources, even if always advisable, are not strictly necessary. On the other hand, the current years (from 2023 and up to 2027), are offering many opportunities in terms of EU and national funds and non refundable money managed through ERDF or RRF which are expected to be applied for.

All the elaborated business models present a step by step approach, with simpler, mature, safer and limited positive investments that can be brought forward in the short term. They can be used as basis for application to public grants as well as with more complex investments and financial cases which need legislative changes or further work to find larger funds, technical design or also the engagement of stakeholders. In this sense the proposed business models can be defined as fully sustainable and “durable” in time.”


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