Innovative financing tolls tested in
the framework of the JESSICA
Holding Fund in Lithuania
Financing Sustainable Energy Action Plans: How to combine
EU Structural and Cohesion Funds with innovative financing
instruments and Energy Performance Contracting?
10 October 2013, Brussels, Belgium
1
Overview of JESSICA
Joint European Support for Sustainable Investment in City Areas

A management and advisory programme, launched by the EU Commission in
collaboration with EIB, to assist Member States and regions to invest Structural
Funds in urban projects (including energy efficiency)

Overall JESSICA objectives:

Higher productivity of Structural Funds / public funds
Increase efficiency and productivity of Structural Funds by making use of
innovative and revolving financing instruments in the urban sector
(complementary to grant financing)

Leverage effect
Mobilise additional public and private sector resources for the benefit of
sustainable and integrated urban development (schemes)

Expertise - new partnerships and synergies
Utilise financial, managerial and project implementation expertise from
private sector or international financial institutions such as EIB
2
General JESSICA implementation model
EUROPEAN COMMISSION
Structural Funds
Grant (not repayable as long as EC
Regulations adhered to)
OTHER INVESTORS
(Public & Private)
MEMBER STATE
Via a designated Managing Authority
CITIES
Holding Fund (HF)
optional
Contribution (repayable or non-repayable)
URBAN DEVELOPMENT FUND (UDF)
Investment (equity, loan or guarantee)
IFIs/Public
Agencies/
Banks
Projects forming part of an Integrated Plan for
Sustainable Urban Development
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Holding Fund Lithuania
4
Background to JESSICA in Lithuania
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The Lithuanian Housing Strategy was approved in 2004 with the aim to ensure effective use of
existing housing, maintenance, upgrading and modernization, including the rational use of energy
resources.
The Renovation Programme of the Government of Lithuania was launched in 2006 and ran out of
money in late 2007.
The intention to implement JESSICA for the modernisation of multi-apartment buildings is foreseen in
the Law on State Support for Housing (approved in July 2009, amended in 2013) and in the
amended Programme of the Government of Lithuania (approved in December 2008, to be
amended in 2013).
Programme for Renovation (Modernisation) of Dormitories of Higher Educations Institutions
and Vocational Education and Training Institutions approved in December 2011.
JESSICA Holding Fund in Lithuania (EUR 227m of which EUR 149m actually been contributed)
established in June 2009.
The functioning of JESSICA Holding Fund, managed by EIB, is supervised by an “Investment
Committee” consisting of the members appointed by the Ministries of Finance and of Environment.
The Lithuanian national co-financing contribution is, in turn, funded from an EIB framework facility
of EUR 1.13bn, signed with the Ministry of Finance in early 2009 as co-financing for Lithuania’s
overall 2007-2013 Cohesion funding programme.
European Investment Bank – JESSICA and Investment Funds
1st financial product
Multi-apartment building renovation
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Basic facts about Lithuania and multi-apartment building
sector
•Population - 3 million and declining
•More than 38,000 multi-apartment
blocks (24,000 needs to be
refurbished)
•More than 800,000 apartments
66 % of population lives in multiapartment buildings built before 1993
97% privately owned, only 3%
municipal rental stock (to take
!!! JESSICA loan- majority of homeowners vote for modernisation
50%+1)
The age structure of buildings:
26 % built before 1960
65 % built between 1960 – 1990
9 % built after
1990
For JESSICA - constructed before 1993
· 65 % of multi-apartment
blocks are served by district
heating systems
· Average energy savings
for a single building are
estimated to be circa 50%
European Investment Bank – JESSICA and Investment Funds
JESSICA scheme in Lithuania: renovation of multi-apartment
buildings
Ministries of Finance and of Environment
contribution of EUR 149m from Operational Programme:
« Promotion of Cohesion 2007-2013 »
JESSICA Holding Fund managed by EIB
Contingent
loans
Investment
Committee
Urban Development Funds
Modernisation Loans
Repayments
PROJECTS:
BORROWERS:
Eligible energy efficiency projects in
multi-apartment buildings
Individual owners of apartments in multi-apartment
buildings / administrators of commonly used
premises of multi-apartment buildings
European Investment Bank – JESSICA and Investment Funds
Housing Energy
Saving Agency
(HESA)
Technical
assistance
Key parameters of a JESSICA loan in Lithuania
for energy efficiency renovation of a multi-apartment block building
Support
elements
100% grant or JESSICA loan* to prepare renovation
documentation
15% loan rebate for where minimum energy efficiency
level is met (class “D” level, 20% reduction) + 25%*
grant from CCP, i.e. sale of AAUs (40% reduction)
Exceptional 100% subsidy on all expenses for lowincome persons
Maturity
up to 20 years
Interest rate
fixed for entire loan period at 3% p.a.
Self-financing
bank may require a down payment (not more than 5%)
Maximum monthly
instalment
determined for each multi-apartment building
Insurance
no loan insurance requirements
Guarantees
no third party guarantee requirements
Grace period
2 years, during construction
*Until 31/12/2014
European Investment Bank – JESSICA and Investment Funds
Example: JESSICA project (Vaišvilos 9, Plungė)
10
2590 m2
Area of apartments
5
Number of floors
50
Number of apartments
1978
Year of construction
September 20, 2011
Date of completion
385.319,16 EUR (Šiaulių bankas UDF)
Investments
Implemented measures
Heating and hot water system upgrading;
replacement of windows and exterior doors; roof
insulation; wall insulation; basement ceiling
insulation; insulation of base; drinking water
pipelines and equipment replacement; repair
works of sewage system; floor insulation on the
ground; electrical wiring repair works; and
stairwell repair works
Energy efficiency class
(according to Energy
Performance Certification
classification)
before upgrading – E, planned value – C,
achieved value – B
Heating before upgrade
293,94 kWh/m²
Heating after upgrade
121,01 kWh/m²
Energy saving
European Investment Bank – JESSICA and Investment Funds
65%
Example of renewables: JESSICA project (Marijonų 31,
Panevėžys)
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European Investment Bank – JESSICA and Investment Funds
Programme implementation models
1.
Home-owners on their own initiative prepare
investment projects, take loans and
implement modernisation
-
-
investment projects initiated by homeowners
projects
are
implemented
by
the
Administrators appointed by the homeowners
loan is taken by Administrator on behalf of
home-owners
home-owners together with Administrator
are organising procurement
2.
Investment projects are implemented based
on the Energy Efficiency Programmes
approved by the municipalities:
-
investment projects initiated by the
municipalities
projects
are
implemented
by the
Programme Administrator appointed by the
municipality
loan is taken by the Programme
Administrator
Programme Administrator is organising
procurement as well taking all the
responsibilities
with
respect
of
implementation and financial management
of the project
Amount contracted by UDFs with final beneficiaries is
approx. EUR 20m. This corresponds to almost
150 projects signed/renovations of multiapartment buildings financed. Around 400
projects in pipeline.
1 June 2013 amendments to the Law: where a community decides to renovate the multi-apartment block, those
who have declined participation in the decision-making process would receive a 50% smaller
compensation for the heating bills during the proximate heating season and no compensation from the next
heating season until the block renovation project is completed but no longer than 3 years.
European Investment Bank – JESSICA and Investment Funds
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Distribution of costs to consumers under the new Programme
0 - 10%
50 - 40%
50%
Heating
SAVING
Renovation
repayment
100%
50%
Before
renovation
Heating
After
renovation
No additional payments to owners of apartments after renovation
European Investment Bank – JESSICA and Investment Funds
Pipeline and stages of new model
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58 municipalities (out of 60 in Lithuania) participate
in new model:
1.
1st stage: selection of inefficient multiapartment buildings (already selected approx.
1500 buildings consuming more than 150
kWh/m²) – 840 buildings + 600 buildings
2.
2nd stage: selection of multi-apartment
buildings – 1680 buildings
3.
Preparation of energy efficiency / technical
audits
(includes “nominal heating season” [NHS]
consumption calculation)
4.
Formulation of standardised upgrading
package which guarantees repayment of
investment based on saved energy
5.
Preparation of Energy Efficiency
Programmes, approval in City Councils
6.
Appointment of Programme Administrators
Renovation of multi-apartment buildings renovation works of 1st stage will reach the
peak starting from spring of 2014
2nd financial product
Renovation of student dormitories
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Renovation of Student Dormitories:
Background and Key Data
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Over 27 thousand students reside in student
dormitories of Public Higher Educational
Institutions, Vocational Education and Training
Institutions, for which renovation is pending
Evaluation study completed by external
consultants in January 2010
JHF Investment Committee approval for 3rd
Call obtained in October 2011
Programme for Renovation of Student
Dormitories of Public Higher Education
Institutions, Vocational Education and Training
Institutions approved in December 2011
EIB launched the Call in January 2012
JHF will channel funds (EUR 20m) through the
financial intermediary, acting as UDF, to
finance EE measures in around 46 student
dormitories. Non-energy efficiency measures,
of around EUR 10m, will be financed from the
resources of the Structural Funds co-financing
framework loan of EIB to Lithuania
Signature of operational agreement with Public
Investment Development Agency (PIDA) and
Central Project Management Agency (CPMA)
planned in July 2013 (EUR 20m)
European Investment Bank – JESSICA and Investment Funds
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Demand for renovation in student dormitories in Lithuania
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Student
dormitories
No
EE measures
Other measures
Total
value of
projects
EURm
%
EURm
%
EURm
46
23
52
21
48
44
Universities
39
21.5
52
19.7
48
41.2
Colleges
6
1.1
52
1.1
48
2.2
Vocational
training
institutions
1
0.5
73
0.2
27
0.7
Total
European Investment Bank – JESSICA and Investment Funds
Benefits of JESSICA in Lithuania
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
Recycling ability via repayable investment - 24,000 multi-apartment blocks need to be
renovated by 2020 as a part of the energy efficiency efforts (huge financial resources
needed)
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Energy efficiency programme designed with the support of both grants and financial
engineering instruments – excellent scheme to be replicated by Lithuania (and possibly
other countries) in future programming period
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Large scale national programme with a potential to become an important stimulus for the
economy
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Implementation of the programme for the improvement of energy efficiency will ensure
lower heating bills for residents and reduce the demand for natural gas acquisition.
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Mobilisation of the country’s financial and construction sectors - recently, many new
companies specialising in renovation have been set up and they are offering reduced
prices, which adds to the competition; in Q1 2013 construction in Lithuania shrank by
another 4.6%.
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Tackles youth unemployment and emigration issues - construction business
representatives are optimistic about finding new workers among recent graduates.
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Residents are showing increasing activity – awareness raising on energy efficiency
European Investment Bank – JESSICA and Investment Funds
Contact
JESSICA and Investment Funds
European Investment Bank
98-100 Bvd Konrad Adenauer, L-2950 Luxembourg
www.eib.org/jessica
Junona BUMELYTĖ
Local Officer,
JESSICA Holding Fund Lithuania
Tel: +370 5 2690050
[email protected]
DISCLAIMER: The views expressed are purely those of the presenters and may
not fully coincide with an official position of the European Investment Bank
European Investment Bank – JESSICA and Investment Funds
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