NEWLIGHT - Energy retrofitting of public buildings and ...

NEWLIGHT - Energy retrofitting of public buildings and street lighting

Julije Domac, Ivan Przulj

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15 October 2015

15 October 2018

NEWLIGHT

57 cities/municipalities

Total investment: app. 20 Mil. €

EIB contribution: 790.000 €

Implements REGEA on

behalf of two counties

First ELENA project in Croatia

Najbolja praksa korištenja obnovljivih izvora energije

NEWLIGHT project – Bright side

• Methodology for energy audits of street lighting and specialized GIS based software for data inventory (over 72,000 luminaires - more than 4,5 million attributes)

• 21 cities and municipalities completed EPC tendering process

• Mayor impact on development of EPC market in Croatia and South-East Europe

• Overall investment so far is over 17 million € with a leverage factor of 27.4 (and still growing)!

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Public lighting Energy Audits


Action plans


NEWLIGHT project - Lessons learned

• Introducing new models of contracting in public administration requires time and patience - having reference projects can help

• The market is still undeveloped - EPC or PPP projects need to be communicated as early as possible (contract model etc.)

• Take into account election calendar, creation of public budget process and political logic

• Communication, communication, communication• Financial instruments can and should play an important role in

boosting the market!

…but the main message is:

Buy service, not products!It is cheaper, safe and more clever…

What next?Oh boy, not again…

Buildings!

http://www.google.hr/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjch-bT547NAhVC0xQKHfLMDYcQjRwIBw&url=http://www.eurosolar.de/en/index.php/solar-prizes-mainmenu-24&psig=AFQjCNE_m1nouuW4c4_XOTi0F25_Wk5jnA&ust=1465144741801231

2011: 10 M kn

2014-2020: >300 M EUR


It looks all excellent but…

• Project documentation has to be developed without any guarantee for co-financing by ESI funds = risk of a substantial and unnecessary (upfront) cost for public authorities

• Poor quality of project documentation and poor quality of construction (civil) works = ineligible costs, higher whole life cycle costs, lower quality of the public service provided

• Securing of own financial share limits the possibility of launching more projects over a short period of time (even with the 85% co-funding rate from EU grant)

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One concrete example (10 schools, 1 hospital)

Projected 79,44 M HRK Planned in County budget

Contracted 88,16 M HRK To be additionally secured

Realized (contracted + unexpected) 102 M HRK To be paid!

ESIF co-financing rate 60% equals 53 M HRK

Own component 35 M HRK

Additionally needed 14 M HRK Ineligible for ESIF, not planned

Own component in total 49 M HRK Loan - 10 M HRK for 10 years

Actual ESIF co-financing rate 52,0%

Grants 100% Grants


Some math… and some reality!

• Full life costs up to 2050:– Karlovac County (145 buildings) = 1.125 Bln HRK– Zagreb County (207 buildings) = 2 Bln HRK– Krapina-Zagorje C. (166 buildings) = 1.5 Bln HRK

• nZEB retrofit and O&M• PPP recognized as the most feasible (and

only!) option• Future participation in ESIF grant schemes

highly questionable! Own component?• PPP remuneration through ESIF (2021-2027)?

Having in mind our goals = m2 = EUR, we need 6X more money!!!

Good example from the neighborhood

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Good example from the neighborhood (2)

What they actually do?

Math teacher Cardiologist Politician

School headmaster Hospital director County prefect

NEWLIGHT one more time:

Let’s build Croatia!And yes, we can do it on a clever way…


Buildings first!

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PRIVATE PARTNERPUBLIC PARTNER

Financial mehanism

Service (renovation, building, maintenance!)

VAT

escrowaccount

Stable growth and employment

Programme:- Guidelines- Documentation- Project

pipeline

Some big numbers…

1 Bn eur(total value)

VAT: 550 M eur(present value)

125 M eur(over 25 yrs)

10.000 jobs

3 Bn eur total project value


…and some big advantages

• Administrative and fiscal relief of the public sector

– Simpler/quicker preparation and implementation of projects by standardized value for money (VfM) methodology

– Contract/procurement documentation, technical standards and output specifications prepared as an of the shell solution

• Lower whole life cycle costs of public buildings

• Quality of expenditure and effective use of EU/ESI Funds;

• Realization of projects without contingencies (turn-key contracts) and payments based on performance or/and availability;

• More projects over a much shorter period of time 28


Conclusions

• For scale and dynamics - blending of public funds and private capital is the key!

• Long-term vision, transparency and stability is critical for involving private partners and capital

• Contracting service is the (only) future!

• Ambitious vision in needed on a national and EU level

• Energy transition supports EU cohesion

NEWLIGHT - Energy retrofitting of public buildings and ...

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