Energy Efficiency Milan Covenant of Mayors

“Energy Efficiency Milan Covenant of Mayors” is a pilot project implemented by the Province of Milan in 2009 in order to improve the energy performance  of a group of public buildings in the province and to achieve significant primary energy use reductions based on the principle of Energy Performance Contracting (EPC). The programme is designed to facilitate and finance energy efficiency retrofits for mainly public school buildings located in selected small municipalities (<30.000 inhabitants) in the province of Milan and the Municipality of Milan participating in the Covenant of Mayors initiative.

The programme found its origin in a big scale energy audit programme, funded by Cariplo -a philanthropic banking foundation-,  carried out between 2006 and 2008 in the region of Lombardy with the purpose to stimulate the implementation of energy efficiency measures in smaller municipalities. The foundation concluded afterwards that the energy audits programme had not resulted in a significant uptake of investments in energy efficiency, basically due to constrained budgets, reduced or absence of borrowing capacity and the lack of technical capacity to develop projects.

As a Territorial Coordinator of the Covenant of Mayors, representing many small municipalities, the province of Milan’s ambition with this programme is to meet the energy reduction targets set out by the Covenant, i.e. by 2020 reach 20% reduction in greenhouse gas emissions relative to 1990 levels (reduction of 9.000 tonnes CO2),  20% share of renewable energy generation, and 20% reduction in primary energy use relative to projections.

Besides the significant reduction of final energy consumption of the building stock of small municipalities it wants to foster a mature ESCO (Energy Services Company) market able to offer EPC with guaranteed results and increase the know-how of the municipalities in governance matters related to energy efficiencies.

Based on a joint study with the EIB a potential investment of 90M € in energy efficiency measures was identified and could be realised and to that purpose a Project Implementation Unit (PIU) was set-up in 2009. From the 90M€ the EIB was willing to make 65M € available to the ESCOs in the form of loans through an intermediary commercial bank in the region.

The PIU manages the whole implementation process of the programme, from promotion of the programme and analysis and assessment of the projects to public tendering, contract negotiation, works implementation follow up and results reporting. It acts thus as programme marketer, assessor, aggregator, facilitator and financial advisor.

As of today a total amount of 13M € of investments in energy efficiency measures have been awarded covering 98 buildings in 16 municipalities.

Though the initial investment ambition of 90M€ has not been achieved this programme has had the merit of being the first in Italy covering investments in energy efficiency measures solely based on EPC contracting on regional level. The project has upscaled the dissemination and recognition of EPC models in Italy, providing guidance to other public administrations involved in other ESCO projects.