Financing Models for Energy Efficiency in Public Buildings and Street Lighting in Germany and Neighbouring Countries
Investment in the upgrade of public infrastructure such as public buildings and street lighting provides high energy saving potential. Although it is a cost-effective greenhouse gas mitigation solution, budgetary constraints of its owners, who are often municipalities, lead to low refurbishment rates. To overcome this challenge, innovative financing solutions should be developed to attract other investors and reduce high up-front investment costs for the public budget.
The paper presents selected results of research, which aims to identify and suggest suitable models to upgrade public buildings and street lighting in Germany. It reviews financing models, which exist in Germany and neighbouring countries, including self-financing, debt-financing, third party financing, and public–private partnerships. The chapter further analyses these models using a common framework. In particular, it provides the overview of each model, identifies the projects to which it can be applied, specifies its advantages and disadvantages, as well as jurisdictions that have applied the model. The paper concludes with recommendations for German decision-makers on finding and implementing a suitable financing model.
KeywordsEnergy efficiency investment Business models Intelligent lighting Energy efficiency financing Street light Public lighting Public private partnerships Energy performance contracting (EPC) Revolving fund
Research conducted for this paper was a part of Working Package 4, Task 7 “Technical-systemic analysis with a focus on energy efficiency in buildings” of the System Integration project under the Kopernikus platform (ENavi—https://www.kopernikus-projekte.de/projekte/systemintegration). The project was financed by the German Federal Ministry of Education and Research (BMBF).
- 1.Buchner, B., Falconer, A., Hervé-Mignucci, M., Trabacchi, C., & Brinkman, M. (2011). The landscape of climate finance. Venice: Climate Policy Initiative.Google Scholar
- 3.Energy Cities. (2016). Internal contracting (intracting). The City of Stuttgart. Fact sheet. Besancon: Author. Retrieved from http://www.energy-cities.eu/IMG/pdf/internal_contracting_stuttgart_one_pager.pdf.Google Scholar
- 5.Zirkwitz, H.-W. (2016). Financing the energy transition - Internal contracting. Besancon: Energy Cities. Retrieved from http://www.energy-cities.eu/IMG/pdf/zirkwitz_intracting.pdf.Google Scholar
- 6.Seifried, D. (2011). Finanzierungsmodelle Für Das Kommunale Energiemanagement. Frankfurt: DUH. Retrieved from http://www.duh.de/fileadmin/user_upload/download/Projektinformation/Kommunaler_Umweltschutz/Klimakommune_2010/Workshops/Workshop_Frankfurt/02_WS-I_Finanzierungsmodelle_Seifried.pdf.Google Scholar
- 7.Energy Cities. (2017). Financing energy transition in cities. Besancon: Author. Retrieved from http://www.energy-cities.eu/Focus-on-INFINITE-SOLUTIONS.Google Scholar
- 9.ESMAP. (2014). Financing municipal energy efficiency projects. Washington, DC: Author. Retrieved from https://www.esmap.org/sites/esmap.org/files/DocumentLibrary/FINAL_MGN1-Municipal%20Financing_KS18-14_web.pdf.Google Scholar
- 10.European Commission. (2014). ManagEnergy - Leaders in energy transition. Brussels: Author. Retrieved from https://ec.europa.eu/easme/en/managenergy?corner=financial.Google Scholar
- 11.Publenef. (2017). City of Litomerice. Revolving energy saving fund Litomerice [Czech Republic]. Besancon: Author. Retrieved from http://publenef-project.eu/wp-content/uploads/2017/04/GP17_PUBLENEF_factsheet_-Litomerice.pdf.
- 12.Oxfam. (2017). Blended finance. What it is, how it works and how it is used. Oxford: Author. Retrieved from http://www.eurodad.org/files/pdf/58a1e294657ab.pdf.Google Scholar
- 13.CityInvest. (2015). Model 10. Energy Fund Den Haag – ED. Retrieved from http://citynvest.eu/sites/default/files/library-documents/Model%2010_Energy%20Fund%20Den%20Haag_ED_final.pdf.
- 14.ManagEnergy. (2017). Municipal bonds emission for energy efficient retrofitting of street lighting – Varna, Bulgaria. Limerick: Author. Retrieved from www.managenergy.net/instruments/6?casestudy=1505&pagename=usecases#.WMphC_JmqKV.Google Scholar
- 15.LBNL. (2012). Using QECBs for street lighting upgrades: Lighting the way to lower energy bills in San Diego. Berkeley, CA: Author. Retrieved from https://energy.gov/sites/prod/files/2014/06/f16/street-lighting-qecb.pdf.Google Scholar
- 16.Kinzey, B. (2015). Restoring Detroit’s street lighting system. Richland, WA: Pacific Northwest National Laboratory. Retrieved from https://energy.gov/sites/prod/files/2015/09/f27/2015_restoring-detroit.pdf.Google Scholar
- 17.Boza-Kiss, B., Zangheri, P., Bertoldi, P., & Economidou, M. (2017). Practices and opportunities for energy performance contracting in the public sector in EU Member States, EUR 28602 EN. Luxembourg: Publications Office of the European Union. ISBN 978-92-79-68832-4. Retrieved from http://publications.jrc.ec.europa.eu/repository/bitstream/JRC106625/kjna28602enn.pdf.Google Scholar
- 19.GuarantEE. (2017). Public street lighting in the City of Tona – Spain. Berlin: Author. Retrieved from http://guarantee-project.eu/bestpractice/tonas-city-hall-spain/.Google Scholar
- 20.GuarantEE. (2017). Street lighting in Sapareva Bania Municipality – Bulgaria. Berlin: Author. Retrieved from https://guarantee-project.eu/bestpractice/street-lightening-bulgaria/.Google Scholar
- 21.Geissler, M. (2013). Energy performance contracting. The Example of Berlin and the EU-wide experiences. Retrieved from http://slidegur.com/doc/5189263/epc.
- 22.Sustainable Energy Authority of Ireland. National Energy Services Framework. (2014). Energy performance related payments (EPRP). Guide. Dublin 2: SEAI. Retrieved from https://www.seai.ie/resources/publications/Energy-Performance-Related-Payments-EPRP-Guide.pdf.Google Scholar
- 23.The Climate Group. (2013). LED street lighting. Climate Group document - Financial section. London: Author. Retrieved from https://www.theclimategroup.org/sites/default/files/archive/files/LONDON-Working-Document-finance.pdf.Google Scholar
- 24.Makumbe, P., Weyl, K. D., Eil, A., & Jie, L. (2016). Proven delivery models for LED public lighting: Synthesis of six case studies (Energy Sector Management Assistance Program). Washington, DC: World Bank. Retrieved from http://documents.worldbank.org/curated/en/869131477561325418/Proven-delivery-models-for-LED-public-lighting-synthesis-of-six-case-studies.CrossRefGoogle Scholar
- 25.ESCAP. (2008). A primer to public-private partnerships in infrastructure development. Bangkok: Author. Retrieved from http://www.unescap.org/ttdw/ppp/ppp_primer/01_why_and_what.html.Google Scholar
- 26.Mazzolini, M. Director of Agenzia Per l’Energia del Friuli-Venezia Giulia. Feedback to the survey conducted in June 2017.Google Scholar
- 27.Patrick Duguet. Head of public lighting of the City of Paris, France. Email communication on 7 December 2018 and 4 December 2018.Google Scholar
- 29.Esty, B., & Sesia, A. (2010). An overview of project finance and infrastructure finance – 2009 Update. In Harvard Business Review Background Note 210-061. Cambridge, MA: Harvard Business School Publishing.Google Scholar
- 30.Scottish Futures Trust. (2013). Street lighting toolkit - How to assess the impact of an energy efficiency investment in the street lighting asset. Edinburgh: Author. Retrieved from http://www.scottishfuturestrust.org.uk/files/publications/Street_Lighting_Toolkit.pdf.Google Scholar
- 31.WBG, World Bank Group. (2016). Lighting Brazilian cities: Business models for energy-efficient street lighting. Washington, DC: Author. Retrieved from https://ppp.worldbank.org/public-private-partnership/library/lighting-brazilian-cities-business-models-for-energy-efficient-street-lighting.Google Scholar
- 36.HM Treasury. (2016). Private finance initiative and private finance 2 projects: 2016 Summary data. London: Author. Retrieved from https://www.gov.uk/government/publications/private-finance-initiative-and-private-finance-2-projects-2016-summary-data.Google Scholar
- 37.European Commission. (2016). Good practice in energy efficiency. Commission staff working document. Brussels: Author.Google Scholar
- 38.Bettervest. Heating network with two CHPs and retrofitted Heat boiler for Wilhelmstadt gymnasium in Berlin [Nahwärmenetz mit zwei BHKWs und modernisierten Heizkesseln für das Wilhelmstadt Gymnasium in Berlin]. Retrieved from https://www.bettervest.com/en/projekt/nahwaermenetz_wilhelmstadt_gymnasium_berlin#beschreibung.