Private Financing Opportunities to Support the Realisation of the SET Plan IP8
This report by CIRCE summarises information related to existing private financing mechanisms that can be of interest to support the development of the projects defined in the Implementation Plan of IP8, releated to bioenergy and renewable fuels. It aims at being a guide for project developers who are looking for private funds to finance their project.
Several instruments and/or facilities have been launched in the EU in the past years to support investments in the field of energy (mainly in the form of loans, equity, and guarantees).An analysis of the existing European financial instruments related to energy investments and their applicability for First-Of-A-Kind SET Plan demonstration projects was carried out by the JRC in their “Report on Innovative Financial Instruments for the Implementation of the SET Plan, First Of-A-Kind Projects” , and updated in the report on “Innovative Financial Instruments for First-of a-Kind, Commercial-Scale Demonstration Projects in the Field of Energy”. Since then, other instruments have been created, or are in the process of being launched, which might be interesting to support private investments into renewable based fuels and other technologies covered by IWG8.
Several portals have also been launched in order to support companies that are looking for funds to invest in their growth. One of particular interest is the European Investment Project Portal (EIPP), which allows project promoters in the EU to give visibility to their projects to a large network of international investors.
One of the main issues for small players is how to promote their projects towards private equity investment funds. Advisory Hubs and Accelerators can provide this role. A couple of online tools are also available to look for suitable investors: A list of investors in the clean technologies, energy and environment sector is accessible on the websites www.euroquity.com and www.investeurope.eu.
The report subsequently provides a list of private funding instruments that can be relevant to the development of projects in the area of renewable fuels and bioenergy:
- Private Equity Investments: Private equity makes long-term investments into small, medium and large companies with the aim of making them bigger, stronger and more profitable. Private equity investments in the energy and environment sector amounted to 3,3% of the overall private equity investments in 2019, according to InvestEurope4. The report analyzes in details three private equity investments: The 2020 European Fund for Energy, Climate Change & Infrastructure (Marguerite II), The European Circular Bioeconomy Fund (ECBF) and Breakthrough Energy Ventures Europe.
- InvestEU Fund: The InvestEU Fund will target economically viable projects in areas where there are market failures or investment gaps by providing an EU budget guarantee of 38 billion € to allow the European Investment Bank Group and other implementing partners to invest in more and higher-risk projects, crowding in private investors.
- European Investment Bank (EIB): The European Investment Bank is the lending arm of the European Union, and the biggest multilateral financial institution in the world and one of the largest providers of climate finance. The EIB provides several types of support to investors in the area of clean Energy: Decarbonising Energy Supply, Innovation and New Types of Energy Infrastructure.
- EU Innovation Fund: The first Call of the Innovation Fund was officially launched on 2 July 2020. This specific call is focused on ‘large-scale’ projects, having a capital expenditure above EUR 7.5 million. The scope is to fund clean energy and clean industry innovative investments to contribute to the green recovery of the European economy, with an outlook to reaching climate neutrality in the shortest possible time.
- Modernisation Fund: The Modernisation Fund is a dedicated funding programme to support 10 lower-income EU Member States in their transition to climate neutrality by helping to modernise their energy systems and improve energy efficiency.
- EIC Fund: The EIC Fund allows the European Commission to make direct equity investments in companies, with ownership stakes expected to be in general from 10% to 25% in start-up companies.
- European Bank for Reconstruction and Development: The EBRD offers financial products for private sector ranging from $5 million to $250 million, in the form of loans or equity.
- Crowdfunding Platforms: More recently, crowdfunding is being explored as an additional investment source for the development of renewable energy projects. Crowdfunding raises funds through dedicated web platforms.
- Advisory Hubs and Accelerators: InvestEU Advisory Hub, InvestHorizon, Get.Invest Finance Catalyst.
- Energy Communities: Energy community refers to a wide range of collective energy actions that involve citizens’ participation in the energy system. . Energy communities can be understood as a way to ‘organise’ collective energy actions around open, democratic participation and governance and the provision of benefits for the members or the local community.
- Best cases from Member States: Best cases referred to Member States which are involved in IWG8 will be developed at the end of February 2021.
The report provides at a Summary Table of the main instruments presented above and their applicability to IWG8 projects.