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SUNShINE
Program Authority: 
Not applicable
Program Delivery Unit : 
LABEEF
Summary

The SUNShINE (Save your bUildiNg by SavINg Energy) project is a Horizon2020 funded project running from 1 March 2015 to 1 March 2018. The project builds upon an existing programme that is aimed at the deep retrofit of Multifamily Buildings (MFB) in Latvia.

Under the existing scheme, a private ESCO, called RenEsco, has renovated, over the last 5 years, 15 typical soviet era apartment buildings using Energy Performance Contracting. These buildings are very old, overcrowded and of poor quality. They are typically heated through district heating. The focus of the investment is building envelope, heat distribution pipes, heat control and energy management. Projects are eligible for ERDF (European Regional Development Fund) support of 40% which gives a simple payback time of 9 – 10 years.

RenEsco’s business model uses EPC as a tool for renovating the buildings, in combination with on-bill financing (i.e. the homeowner continues to pay the same amount, while the ESCO recovers the amount saved through the House Maintenance Company). EPC contracts are typically signed for 20 years. The homeowners get a modernized apartment, with an increased value by about 20% – 30% right after renovation and an extended life time of the building by 30 years.

Financing to RenEsco was provided by local commercial banks (60%) in combination with a third party guaranteed loan (40%) from the Dutch Housing Institute (guaranteed by the Dutch Housing Corporation) based on project cash flows. No other collateral was foreseen.

Homeowners have an extraordinary payment discipline, with 97% of payments on time and 0% non-payment during the 6 years of existence of the program.

One of the problems of the scheme is the fact that the balance sheet of the ESCO gets charged too much as the amount of projects increases.

This has lead to the creation of the SUNShINE project in which, a forfaiting fund, called LABEEF (Latvian Building Energy Efficiency Fund), has been created. After having shown the energy savings, typically after 1 to 2 years, this forfaiting fund purchases the future receivables from the ESCO, allowing the ESCO to take on new loans. This forfeiting scheme is key in growing the amount of investment in the buildings.

In addition, one aim of the project is to create an online platform with information on how to renovate a MFB, with several technical, economic and financial tools and with various templates and applications (e.g. contracts, protocols, reporting).

Documents
SUNShINE FR [1]
SUNShINE ES [2]
SUNShINE BG [3]
SUNShINE EN [4]
Overview
Ownership: 
Private [5]
Implementation Model: 
Energy Performance Contracting (EPC) [6]
Operating Services: 
Marketing [7]
Facilitation [8]
Financial Advisory [9]
Financing [10]
Assessment [11]
Type of Project: 
Energy Efficiency (building retrofits) [12]
Ambition/Targets: 
Up to 75% reduction of energy consumption [13]
Benificiaries: 
Residential Sector [14]
Funding Vehicle: 
Investment Funds [15]
Financial Instruments: 
Forfaiting [16]
On-bill financing [17]
Scalability of the Model: 
High [18]
Development Maturity: 
Growth [19]

Financing Model

Model Description
How does it work?

The project uses a combination of an operational scheme based on EPC and a financial scheme using the forfaiting fund.

The EPC scheme

  • The ESCO signs a 20 year EPC contract with the Home Owner Association (HOA)
  • The ESCO takes on a loan from a Financial Institution (FI)
  • The ESCO renovates the building to reach typically 45% – 65% savings, while subcontracting to construction companies and equipment providers
  • The House Maintenance Company (HMC) bills the same amount as before the renovation works, and pays the ESCO a percentage of those bills, based on the realized savings.
  • The HMC pays the lowered energy bill to the heat provider

The forfeiting scheme

  • Using the (Multisided) Sharing Platform, the owners and the service company would download the current version of the EPC+ agreement and the Forfaiting agreement. Upon review and approval of the combined documents (quality/comfort standards and savings must be the same), these documents would be signed. Upon meeting these conditions precedent within the required time frame, the funds would be released to the company or its bank.
  • Once the project is implemented and the savings are proved, an Assignment agreement is signed. The ESCO receives discounted cash for the future receivables, minus an amount for Operations & Maintenance (O&M) and guarantee.
  • The cash flow will then flow from the homeowners, via the HOA, to the Forfaiting facility, which will keep paying the ESCO for high-level O&M. A Fiduciary is in charge of assuring a transparent transaction.

Organization and Partnerships

The program includes following partners:

RIGAS TEHNISKA UNIVERSITATE

EKU SAGLABASANAS UN ENERGOTAUPIBAS BIROJS

FUNDING FOR FUTURE BV

EKODOMA

SIA SALASPILS SILTUMS

ECO.NRG SIA

RenEsco SIA

Beneficiaries
Beneficiaries: 

Residential Multifamily Buildings (MFB).

Operational Support: 
Implementation of EPC projects.
Financial Support: 
On bill financing of EPC projects, supplemented by a forfeiting facility.
Program Delivery Unit
Program Delivery Unit

The scheme essentially involves a financial (forfaiting) fund and ESCOs that work under market conditions. There is no separate program delivery unit.

Program Delivery Unit Box
Legal Structure: 
N/A
Shareholders: 
N/A
Staff Requirements: 
Not Applicable [20]
Operational Costs: 
Less than 10 million EUR [21]
Impact on Public Balance Sheet: 
High [22]
Financial Details
Funding Mechanism
Delivery Unit Funding: 
Not applicable
Projects Funding: 
Projects are funded through bank loans, which are then refinanced as discounted cash flows through the forfeiting facility
Fund Size: 
30 000 000.00€
Fund Type: 
Public fund
Fund Sources: 
Unknown
Results
Results

The initial program with RenEsco has allowed for the deep renovation of 15 multifamily buildings for a total Capital Expenditure (CAPEX) or investment of 4 M€. Energy savings ranged from 45% to 65%. The simple payback time (including ERDF grants) is typically 9 - 10 years.

Contacts
Contacts
SUNShINE

Contacts : Marika Rosa, Claudio Rochas, Nicholas Stancioff
marika.rosa@rtu.lv [23]
claudio@fcubed.eu [24]
nicholas@fcubed.eu [25]

E-Mail: 
claudio@fcubed.eu [24]
Sources
  • https://www.youtube.com/watch?v=5bbXKYUdPTM    [26]
  • http://www.renesco.lv   [27]
  • Eric Berman, Experiences with ESPC business models in Latvia’s Residential Building Sector, 23 March 2015
  • Eric Berman, RenEsco A residential private ESCO and social enterprise, Financing housing modernization through energy conservation, Milan, October 2014
  • Marika Rosa, Claudio Rochas & Nicholas Stancioff, Save your bUildiNg by SavINg Energy, Towards 202020 m2 of deeply renovated multifamily residential buildings, Brussels, 28-29 April 2015

Source URL (modified on 26/10/2016 - 10:26): http://citynvest.eu/content/sunshine-3

Links
[1] http://citynvest.eu/content/sunshine-2
[2] http://citynvest.eu/content/sunshine-0
[3] http://citynvest.eu/content/sunshine-1
[4] http://citynvest.eu/content/sunshine
[5] http://citynvest.eu/matrix/private
[6] http://citynvest.eu/matrix-implementation-model/energy-performance-contracting-epc
[7] http://citynvest.eu/matrix-operating-services/marketing
[8] http://citynvest.eu/matrix-operating-services/facilitation
[9] http://citynvest.eu/matrix-operating-services/financial-advisory
[10] http://citynvest.eu/matrix-operating-services/financing
[11] http://citynvest.eu/matrix-operating-services/assessment
[12] http://citynvest.eu/matrix-type-project-financed/energy-efficiency-building-retrofits
[13] http://citynvest.eu/matrix-ambitionperimeter/factor-4
[14] http://citynvest.eu/matrix-end-customer-categories/commercial-buildings
[15] http://citynvest.eu/matrix-funding-vehicle/investment-funds
[16] http://citynvest.eu/matrix-financial-instruments/forfaiting
[17] http://citynvest.eu/matrix-financial-instruments/bill-financing
[18] http://citynvest.eu/matrix-time-market/high
[19] http://citynvest.eu/matrix-level-establishment/growth
[20] http://citynvest.eu/matrix-staff-requirements/not-applicable
[21] http://citynvest.eu/matrix-set-costs/medium
[22] http://citynvest.eu/matrix-impact-public-balance-sheet/high
[23] mailto:marika.rosa@rtu.lv
[24] mailto:claudio@fcubed.eu
[25] mailto:nicholas@fcubed.eu
[26] https://www.youtube.com/watch?v=5bbXKYUdPTM   
[27] http://www.renesco.lv