EU subsidies forenergy efficient lighting
How Energy Efficiency providers, like ESCOs,
Energy Performance Contractors and service companies
can obtain the subsidized funds

Lighting is thequickest path to agreener, smarter,
more prosperous EU

23

Introduction
The steady march towards more sustainable energy solutions,combined with the impact of Covid-19 continues to change
the way we live and work. In order to both accelerate thetransition and provide needed economic support, the EU isproviding funding for all those looking to invest in an inclusive,
digitally connected and environmentally friendly future. This
white paper provides you with an overview of which subsidies
are available and how to obtain them.

NextGenerationEU750€billion€390 bln. Grants€360 bln. Loans

In an effort to support member states, whose
economies were badly impacted by Covid-19, theEuropean Council agreed to a massive EU recovery
fund, branded NextGenerationEU (NGEU). Createdon 21 July 2020, the 750 billion Euro fund runs
from 2021 to 2023 and will be tied to the regular2021–2027 EU budget (MFF). The comprehensive
packages of NGEU and MFF will reach the size of€1824.3 billion* – all aimed at boosting hard-hit
sectors, inciting business investment, and modernizing EU facilities.
Aside from pandemic-related aspects, other factors
driving the fund are meeting future environmental
goals, improving health and resilience and further
advancing digitalization’s reach.
As a fundamental part of the current and postpandemic economy, energy efficiency providers
like ESCOs, Energy Performance Contractors andservice companies can benefit from a wide rangeof subsidies and incentive packages.

4*S pecial European Council, 17-21 July 2020 - Main results; Retrieved 15 November 2020.

5The European Green DealAs the world’s most comprehensive climate action initiative, The European Green Deal has beencalled ‘Europe’s man on the moon moment’. The
program’s goals are equally ambitious, namely, toachieve a carbon-neutral continent by 2050, advancing economic growth, reevaluating resource
consumption and ensuring that everyone benefits
from the transition.

75 % of today’s buildings
are energy inefficientSignify proudly markets the best lighting brands in the world:

Lighting offers possibilities to make a difference inall of the Green Deal’s flagship policy areas: CleanEnergy, Sustainable Industry, Building and Renovation, Farm to Fork, Eliminating Pollution, SustainableMobility and Biodiversity.

Opportunities in Building and Renovation
Buildings are the largest single energy consumer inEurope, accounting for 40 % of energy consumption and 36 % of GHG emissions, while lighting forthe built environment is responsible for around
50 % of a city’s total electricity use. Doubling thebuilding renovation rate from 1.5 % to 3 % per year,
along with energy-efficient lighting retrofits, areindispensable for reaching the Green Deal’s goals
for carbon neutrality, energy efficiency, and renewables.
Switching to connected LEDs in buildings and onstreets can quickly reduce the built environment’s
lighting-related energy consumption by up to 80 %.
Altogether, switching to LED and connected lighting can save the EU up to €40 billion and decreasecarbon emissions by around 100 million tons per year.

Switching to connected andLED lighting can save up to
80 %* on lighting-related energy
consumption

Philips LED lighting
80 % of these buildings
will still be in use in 2050

The Philips brand stands for quality and energyefficiency in light. For over 125 years, Philips
products have been at the forefront of innovation.
Today Philips is recognized as the leading brand inlighting. Our Philips portfolio includes innovative
professional lighting products for energy-efficient
lighting solutions in all areas – from public spaces,
to office, industry, retail and hospitality applications.
Philips Interact Ready lamps, luminaires and components work seamlessly with the Interact connected
lighting system.

Buildings consume 40 % ofEurope’s annual energy budget

Connected lighting helps to build the digital infrastructure that is so crucial for the adaptability,
optimal operation, and efficient maintenance ofbuildings and street lighting. With UV-C lighting andconnected apps, buildings can also become safer,
healthier, and better able to respond to futurechallenges.

For outdoor lighting, a range of solar-operated
luminaires can illuminate off-grid areas in a sustainable way. At home, consumers can enhance theirhomes with Philips Hue, or pick from a choice ofclassic LED bulbs without compromising on quality
or eye comfort.
Find more information about the conversion to LED,useful tools and the full Philips LED portolio at
www.philips.com/ledconversion

Interact connected lighting systems for the Internetof Things (IoT) offer centralized lighting monitoringand management as well as the ability to collectdata from the lighting system and the illuminatedenvironment via sensors.
Scalable and secure, Interact can be used in a wide
range of professional application areas, from individual offices to entire cities. Collected data isstored in the Interact IoT platform running in thecloud. Interact dashboards and apps analyze andvisualize this data to offer new, actionable insights
into how buildings, businesses, or cities operate,delivering the knowledge required to improve
operational efficiency, reduce energy consumption, and enhance the experience of people inilluminated spaces.
Interact publishes a set of secure, well-definedAPIs that business partners, software developers,
and system integrators can use to share datacollected via Interact with other connected
systems to create further efficiencies and new
data-enabled innovations.
Together, Interact connected lighting systems for
the IoT and Philips energy-efficient LED luminaires
can significantly reduce lighting-related energy
consumption, contributing to a smarter, moresustainable future.

Learn more about the Green Deal atwww.signify.com/global/sustainability/green-switch

Lighting accounts for up to 50 %of a city’s electricity use
6Interact IoT lighting softwareand systems

Learn more at www.interact-lighting.com*Source: Building Energy Exchange 20177

Financing mechanisms
The Recovery and Resilience facility, accompanied
by other subsidy funding from the EU and theMember States budgets, will generate a massive,
once-in-a-generation investment wave. It seems
that any project that contributes to a more green,
digital, and resilient Europe will find its subsidizedfunding. But what does it mean in practice? What
does it mean in particular that the funding will besubsided?
Many tools will distribute such substantial financing
in a variety of programs. Firstly such programs willvary country by country and over time. Parties
interested in such support should remain alert andobserve the development of the situation. The
funding will be a moving target thus, and one recipe
to obtain financing will not work.
Historically the EU has been using grants as thefinancial mechanism to deploy their funding. Grants
are, however, inflexible and do not respond to themarket needs.
Building on its experience, the European Commission
has introduced Financial Instruments (FI) as analternative to traditional grant-based support.
It’s the Commission’s ambition to create a sustainable Energy Efficiency (EE) market that, in thelong run, do not require subsidies. Using Financial
Instruments supports this ambition, as they allowfor stimulating the market in a much more practicaland efficient way.

8FI cover a wide range of financial tools, includingloans, equity contributions, guarantees, or moresophisticated schemes, including on-bill and on-tax
mechanism. They are an open-ended set of tools,
allowing for a flexible decision on its ultimate shapeby the institutions closest to the end users. Unlike
grants, FIs are typically deployed via financial intermediaries, like banks. These institutions will give thefinal shape of the conditions that such financing
will carry. This seems a positive message for thepotential beneficiaries, the Next Generation EU will
be actively reacting to local market needs.
The local financial intermediaries open the opportunity to blend financing from different sources.
The need to crowd in private funding has been expressed by the European Commissions. As long as
the EU’s 2030 and 2050 ambitions are concerned,
there is a funding gap that private insitutons will fill.
For example, doubling the building renovation raterequires a staggering €275 billion investment annually, out of which €90 billion will come from privateinvestors.

2021–2023
will see a massive,
once-in-a-generation
investment wave
for any project that
contributes to agreener, more digitaland resilient Europe

9What next
The easiest way to get to know more on grants
available locally are the regional Managing Authorities appointed by the European Commission.
The European Commission recommends relying on
existing funding distribution structures. It would bechallenging to develop an entirely new deployment
system under the tight calendar. Although it is anearly stage to identify the exact local programs, wecan draw some reasonable conclusions on that base.
Grants will still be the primary tool to deploy theNext Generation EU funding. It is expected that theultimate country specific deployment procedures
will be inspired by the initiatives and schemes used
to deploy the Cohesion funds in the past horizons
and used by the European Investment Bank.
The decisive role in the Cohesion funds structure
was given to so called Managing Authorities (MA).
Such Managing Authority is responsible for an
efficient management and implementation of an
operational programme.

This may be a national ministry, a regional authority,a local council, or another public or private bodythat has been nominated and approved by a Member State.

Simply speaking, we may expect two sources of funding programs with embedded Financial Instruments:

1. European Investment Bank (EIB)

2. Local banks

The EC publishes the list of nominated Managing
Authorities on its web page*. Following the institutions listed there seems the fastest way to identify
local programs’ development. The selected local
authorities will be the ones to give details on theregional agenda.

The European Union bank participates substantiallyin the funding distribution. The most prominent EIB
program is InvestEU. The program brings together
the European Fund for Strategic Investments and13 other EU financial instruments. Triggering morethan €372 billion in additional investment over2021 – 2027, the InvestEU Programme aims to givean extra boost to sustainable investment, innovation and job creation in Europe.

The local banks and financial institutions may also
be incorporated into the Next Generation EU funding distribution directly, without EIB in-between.
In such a case, selecting and managing the funding
will be done via the Managing Authorities.

Financial instruments are expected to be usedbroader in the current investment horizon than in
the past. Such tools require immense local preparation; however, they bring more benefits, as wasmentioned earlier in this text. Financial institutions
nominated by the EC prepare the ultimate shape of
the Financial Instrument.

The most typical way of working, especially foroff the shelf financing, is cooperation with local
commercial banks. Probably, the most up to date
information on available funding in each country
will be via the local banks that work with EIB. The
local intermediaries banks in a given country canbe found on EIB’s web page:

The EU Commission local bodies determine theMAs, often local or national authorities, responsible
for the efficient management and implementationof operational programmes. Managing authorities
are expected to conduct their work in line withthe principles of sound financial management.
Like EIB, the MAs in a given country, after electing
the financing partners, announce their list on their
web pages.

www.eib.org

Although the MFF 2021-27 and NextGenEU funding has not yet started, the institutions behind the funding
distribution, i.e. EIB, the country’s MAs, and local financial institutions, have experience and should soon
begin giving exact conditions to the available programs.

Bold climate action is needed, and it’s needed now –seize the opportunity to obtain funding for your sustainable
lighting project and switch to LED now.
For more information on our energy efficient lighting
products, systems and services go towww.signify.com*10https://ec.europa.eu/regional_policy/en/atlas/managing-authorities/11© 2021 Signify Holding. All rights reserved. The information provided herein is subjectto change, without notice. Signify does not give any representation or warranty as tothe accuracy or completeness of the information included herein and shall not be liable
for any action in reliance thereon. The information presented in this document is notintended as any commercial offer and does not form part of any quotation or contract,unless otherwise agreed by Signify.
All trademarks are owned by Signify Holding or their respective owners.