2008
INTELLIGENT ENERGY
20032006EUROPEAN COURT 
OF AUDITORS
Special Report  No 7
EN

INTELLIGENT ENERGY 
20032006Special Report  No 7   2008
EUROPEAN COURT OF AUDITORS(pursuant to Article 248(4), second subparagraph, EC)
2
EUROPEAN COURT OF AUDITORS
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Tel. (352) 43 98-45410
Fax (352) 43 98-46430
E-mail: euraud@eca.europa.eu
Internet: http://www.eca.europa.eu
Special Report  No 7   2008
More information on the European Union is available on the Internet (http://europa.eu).
Cataloguing data can be found at the end of this publication.
Luxembourg: Office for Official Publications of the European Communities, 2008
ISBN 978-92-9207-050-2
DOI 10.2865/12922
© European Communities, 2008
Reproduction is authorised provided the source is acknowledged.
Printed in Belgium
CONTENTS
Paragraph 
IV  SUMMARY
17 INTRODUCTION
89 AUDIT APPROACH AND SCOPE
1042  AUDIT FINDINGS
1018 PROGRAMMING AND ALLOCATION OF FUNDS
1518  STRENGTHS AND LIMITATIONS
1929 MONITORING AND PROGRAMME EVALUATION
2124 SUCCESSES AND LIMITATIONS
2529 EVALUATION OF LOCAL ENERGY AGENCIES: A CASE STUDY
3038  ADMINISTRATIVE COSTS: PREPARING PROPOSALS, REPORTING ON PROJECTS 
AND PROGRAMME MANAGEMENT
3233 COSTS BORNE BY PARTICIPANTS34 COSTS INCURRED BY THE EXECUTIVE AGENCY
3536 COSTS BORNE BY ENERGY AND TRANSPORT DG
3738 TOTAL ADMINISTRATIVE COSTS
3942 THE EXECUTIVE AGENCY: A BETTER MANAGER?
4354  CONCLUSIONS AND RECOMMENDATIONS
4345 PLANNING THE PROGRAMME
4651 MONITORING AND EVALUATION
5254 ADMINISTERING THE SCHEME
  ANNEX I
 REPLIES OF THE COMMISSION
I.
The Intelligent Energy for Europe Programme 
(IEE) seeks to promote energy efficiency, the 
use of renewable energy sources and energy  diversification. Its aim is to create a climate  
in which there is wide knowledge of relevant 
technologies and of their importance. 
II.
The IEE Programme for 2003-2006 had a  budget of 250 million euro. The money was  used to support nearly 450 projects. More  
than 1 700 bodies have participated in the pro-gramme (including local authorities, research institutes, regulators, industry associations,  chambers of craftsmen, consultancies and  manufacturers).
III.
The Court’s audit asked:
how the Commission allocated IEE funds; –
how the Commission monitored and evalu- –
ated the programme;
what were the administrative costs of the   –
programme;
what difference the executive agency made  –
to the management of the programme. SUMMARY
5
V.
The Court recommends a number of possible 
improvements in the design and implementa-
tion of successor programmes to IEE (and other comparable programmes):
programme proposals which are based on   –
an explicit policy model and reflect the  
expected link between expenditure, output  and impact;
monitoring which looks beyond individual   –
projects and assist in forming a view of a  
programme as a whole, and responds to the 
announced objective of the programme;
evaluation of programmes in a way which   –
maximises its usefulness as a source of “feed 
back” information, perhaps including more  
use of “longitudinal” evaluation – looking  
at the impact of key categories of projects  
through successive spending frameworks;
more systematic recording and analysis of   –
information on the administrative cost of  
programmes, taking account of costs borne 
by beneficiaries, and use of this information 
to compare programmes and to identify and spread best practice.IV.
The Court’s findings were as follows:
The Commission translated the objectives   –
of the IEE programme into a detailed work  
programme and made use of outside experts 
to appraise proposals. On the other hand  
the planning of the programme fell short of 
best practice, and the distribution of spend-ing over many areas of activities limited the 
potential to achieve significant and verifiable progress in any particular area. IEE was not a clearly focused expenditure programme.
The Commission monitored progress on   –
projects, but monitoring and evaluation did not make it possible to form a view of the  
overall quality and design of the programme. 
The Commission was not in a position to  
assess whether local and regional energy  
agencies made a significant impact, nor to  
assess whether they improved the coordina-
tion of promotion of energy-efficient tech-nology. Evaluation reports have not been  
available in time to influence legislative  
discussions.
The costs of preparing proposals, reporting  –
on projects and programme management  
(including such costs borne by successful  
applicants) are estimated to be equal to the 
amount disbursed over the period 2003-2006. 
Taking account of future disbursements  
the total costs of these activities can be  
expected to be more than one-sixth of the  sums disbursed.
The Executive Agency has had a positive   –
impact on client satisfaction.SUMMARY 
 1.  The European Union uses a range of instruments to pursue its energy policy 
objectives1. They include:
international agreements; –
support for Research and Development in energy efficiency and renew- –
able energy sources;
legislation to promote energy efficiency (such as the EU energy label); –
promotion of demonstration projects; –
structural funds spending on energy projects; –
emissions trading. –
 2.  The Intelligent Energy for Europe Programme (IEE) seeks to complement these 
instruments by promoting energy efficiency, the use of renewable energy  
sources and energy diversification. Its aim is to create a climate in which  
there is wide knowledge of relevant technologies and of their importance. 
Inter alia the programme promotes exchanges of experience and know how, 
and encourages the spread of best practices and best available technologies, 
thus seeking to contribute to security of energy supply, competitiveness and 
environmental protection. The programme does not support directly the  development of new technologies
2.1 The EU has defined its objectives as
– increasing security of supply;
–  ensuring the competitiveness 
of European economies and the 
availability of affordable energy;
–  promoting environmental 
sustainability and combating climate change.
Presidency conclusions, Brussels, 
March 2007 (Council Document 
7224/07).
2 Articles 1 and 2 of Decision 
No 1230/2003/EC of the European Parliament and of the Council (OJ L 176, 
15.7.2003, p. 29).INTRODUCTION
ENERGY INTELLIGENT EDUCATION FOR RETROFITTING OF SOCIAL HOUSES 
EIEDUCATION  A SAVE PROJECTBOX 1
Objective:
To give social housing companies knowledge and tools to perform energy-effi   cient retrofi  tting.
Duration:
01/2006 – 12/2006
Budget: 
457 291 euro (EU contribution: 50 %)
Th e project set up an education programme and published a guidebook for social housing companies, munici-
palities and other housing stock owners to help them perform “energy intelligent retrofi  tting” – meaning 
saving at least 30 % energy compared to the situation before the renovation.
7
IEE 20032006
 3.  The IEE Programme for 2003-2006 had a budget of 250 million euro in commit-
ment appropriations  over the four years concerned. The money was used to 
support nearly 450 projects, involving consortia (with, on average, between 
seven and eight participants) across the Union, in other members of the Euro-
pean Economic Area or in candidate countries. Participants included local authorities, research institutes, regulators, industry associations, chambers 
of craftsmen, consultancies and manufacturers. More than 1 700 bodies have 
participated in the programme. 
 4.  Intelligent Energy for Europe 2003-2006 comprised four “vertical” sub  
programmes:
SAVE: energy efficiency, notably in buildings and industry –3; 
Altener: new and renewable energy sources –3; 
STEER: energy aspects of transport; –
Coopener: co-operation with developing countries; –
  and five “horizontal” activities combining several of the sub programmes men-
tioned above and/or relating to Community priorities. 3 SAVE and Altener date from 1993 
and were previously funded through 
other programmes (see Special Report 
No 17/98 on support for renewable 
energy sources in the shared-cost actions of the Joule-Thermie 
Programme and the pilot actions 
of the Altener Programme (OJ C 356, 
20.11.1998)).
“GREENLODGES”  AN ALTENER PROJECTBOX 2
Objective:
To promote and facilitate renewable and micro-CHP heat and electricity applications in remote rural hotels 
(lodges).
Duration:
01/01/2005 – 31/01/2007
Budget:
849 652 euro (EU contribution: 50 %)
Th e project developed a guide that can be used by the owners/managers of rural hotels and similar accom-
modation for the implementation of renewable energy and micro co-generation systems, drawing on energy audits developed in “lodges” in diff  erent part of the EU. Information was also disseminated by means of 
regional and national workshops.
8
 5.  The outturn for expenditure committed under the sub programmes (reflecting 
signed grant agreements for each strand) and for other costs is shown in  
Table 1 . Payments have been made at a much slower rate than commitments: 
at the end of 2006 payments to participants totalled 46,8 million euro.
EUROPEAN CAMPAIGN ON IMPROVING DRIVING BEHAVIOUR, ENERGY EFFICIENCY 
AND TRAFFIC SAFETY ECODRIVEN: A STEER PROJECTBOX 3
Objective:
To promote an energy effi   cient and safer driving style-behaviour (Eco-Driving)
Duration:
01/2006 – 12/2008
Budget:
1 440 040 euro (EU contribution: 50 %)
Ecodriven was a European-wide ecodriving campaign aiming at drivers of passenger cars, delivery vans, 
lorries and buses in nine EU countries.
9
EUROPEAN PLATFORM FOR THE PROMOTION OF ENERGY PERFORMANCE 
CONTRACTING EUROCONTRACT: A “HORIZONTAL PROJECT” BOX 4
Objective:
To improve specifi  cation of energy use in contracts
Duration:
01/2005 – 12/2007
Budget:
2 302 036 euro (EU contribution: 50 %) 
Under this project, model contracts, tender documents and quality standards for energy services were devel-
oped, leading to the production of guidebooks for use by municipalities, housing associations, and others 
involved in providing housing services.EXPENDITURE COMMITTED 20032006TABLE 1
Projects by grantsNo of grant 
agreements 
signedMio EUR
Altener (Renewables) 118 61,6
SAVE (Energy Eﬃ   ciency) 106 56,2
STEER (Transport) 28 19,7
Horizontal actions 80 44,5
Speciﬁ  c support for events 77 2,7
Coopener 38 14,5
TOTAL grant-funded projects 447 199,2
Projects by public tender128
Project by concerted action22,2
Communication and support costs Energy and Transport DG 2,5Running costs of the Executive Agency 8,9
TOTAL
3240,81 Public tender: contracts (mostly 
studies or IT services) initiated by the 
Commission.
2 Concerted actions: A Concerted 
action was launched on the 
transposition and implementation of 
the directive related to the Energy 
Performance of BuilDings (EPBD).
3 This total includes the EFTA 
contribution to IEE.
10
BEFORE IEE 20032006...
 6.  SAVE and Altener, and some of the activities brought under Coopener in 2003, 
were previously funded under the 1998-2002 Energy Framework Programme. Key changes for the 2003-2006 programme were:
the creation of an Executive Agency to run the programme; –
grouping community support for those energy fields that contribute to  –
sustainable development in a single programme;the creation of a specific sub programme to fund activities related to   –
transport.
... AND AFTER
 7.  The follow-up programme, IEE2, covering the period 2007-2013, incorporates 
the following changes:
ending specific support for small “stand alone” events; –
moving Coopener out of the programme; –
allowing market replication projects (promotion of innovatory techniques,  –
processes or products which have been successfully demonstrated but have not penetrated the market); and
increasing the maximum EU contribution to 75 % of costs and to   –
250 000 euro for the creation of new local and regional energy agencies, 
and allowing proposals for the creation of energy agencies to be submit-
ted singly rather than as part of a consortium.
 8.  The Court considered whether the Commission took reasonable steps to ensure 
that the Intelligent Energy for Europe programme was designed and imple-
mented in an effective manner which added value at the European level. The 
audit asked:
how the Commission allocated funds; –
how the Commission monitored and evaluated the programme; –
what were the administrative costs of the programme; –
what difference the executive agency made to the management of the  –
programme.
 9.  The audit involved:
analysis of the legal basis of the programme, documents related to the a) 
decision process, and evaluations of IEE and of previous and successor 
programmes;analysis of reporting and monitoring documents of the Executive  b) 
Agency;
interviews with staff from Directorate-General for Energy and Transport c) 
(Energy and Transport DG) and the Executive Agency;
analysis of calls for proposals; d) 
review of 65 project files; e) 
a survey which obtained data from 736 participants in the programme f) 
4; 
analysis of the project database. g) 4 The survey questionnaire was sent 
in draft to the Commission services 
in November 2006. The survey was 
sent to all parties who had applied for funding by 7 November 2006. In total 
736 replies were received. The overall 
response rate to the survey was 29 %. 
Most of those who responded had 
participated in more than one project, thus providing a wide experience of 
the operation of the programme. For 
example half of the respondents were 
able to compare the experience of 
working with DG Energy and Transport 
and the Agency. The survey invited 
applicants to specify the costs of preparing their proposals and, in the 
case of successful applicants, the cost 
of reporting to Brussels. AUDIT APPROACH AND SCOPE
PROGRAMMING AND ALLOCATION OF FUNDS
 10.  Effective planning of public interventions requires a clear definition of objec-
tives, an understanding of the way the instrument is expected to achieve  these objectives; and clear criteria against which proposals are selected.
 11.  Community legislation provided that funding from IEE 2003-2006 should be 
available for projects which:
promote sustainable development, security of energy supply, competi- a) 
tiveness or environmental protection;create or develop structures and instruments for developing sustainable b) 
energy;
promote sustainable energy systems and equipment; c) 
provide information, education and training; d) 
monitor the implementation and impact of Community initiatives; e) 
evaluate the impact of measures funded under the programme f) 
5.
  Financial assistance was to depend on the Community added value, benefit and 
impact of the action proposed6.
 12.  The Commission put these principles into effect through:
a global work programme for 2003-2006 which established 17 “key   –
actions”, subdivided into 63 “target areas” (listed in Annex I );
annual work programmes setting out guidelines for the sub programmes  –
and for “key actions” and selection criteria7;
calls for proposals which set out eligibility and selection criteria leading  –
to grant agreements, following negotiation between the Commission and 
the consortium concerned;
calls for tender, leading to service contracts. –5 Decision No 1230/2003/EC, 
Article 4(1).
6 Decision No 1230/2003/EC, 
Article 4(2).
7 These work programmes were 
elaborated in consultation with 
representatives of all the participating countries.AUDIT FINDINGS
13
 13.  Panels of experts were set up for key actions for each call for proposals (see 
Annex I ). Members of the panels evaluated proposals under five headings:
quality of action/agency/event; –
quality of approach; –
Community added value; –
costs and benefits; –
organisation of the team. –
 14.  On the basis of the panel reports, an evaluation committee established a ranking 
list for approval. A proposal was only accepted if it had an overall score, and a score for the fifth heading (organisation of the team), of 70 % or higher  of available marks, with no scores on individual headings lower than 50 %. 
Around 33 % of proposals received were accepted.
STRENGTHS AND LIMITATIONS
 15.  The Commission translated the objectives of the programme into specific actions. 
It set up a system for the objective evaluation of proposals, and award of  
contracts. The experts evaluating and scoring proposals adequately justified 
and documented their evaluation and scoring of proposals.
 16.  The activities supported under this programme were largely inherited from pre-
vious programmes. Target areas eligible for support included raising aware-
ness of issues such as fuel efficiency in commercial vehicles and insulation 
of buildings where independent expert opinion suggests that there is sig-
nificant potential for cost-effective adoption of greenhouse gas-efficient  technologies
8.
 17.  On the other hand the designation of as many as 63 target areas for a relatively 
small expenditure programme reduced the likelihood of the programme  
achieving a significant impact in any individual area. IEE was not a clearly 
focused expenditure programme.8 See for example the recent analysis 
“A Cost curve for Greenhouse Gas 
Reduction”, McKinsey Quarterly, 2007.
14
 18.  The conclusions of a report funded by the programme9 provide a benchmark for 
the assessment of the arrangements for implementing the programme.The 
Commission’s work programme did not:
“make the policy model explicit” (i.e. explain how the provision of EU   –
grants would assist in removing specific obstacles to the adoption of  
energy efficient technology);
set specific measurable and time-related objectives for the programme; –
provide an analysis of the most important market actors. (An analysis of  –
market actors is provided in the Work Programme for the successor pro-
gramme, but this lists 41 “target groups” which are often broadly defined (“education system”, “craftsmen”, “media”, etc.)).
MONITORING AND PROGRAMME EVALUATION
 19.  The Financial Regulation10 requires the Commission to set specific, measurable, 
achievable, relevant and timed objectives for all sectors of the budget and 
to monitor their achievement through performance indicators. 
 20.  The Commission only established monitoring arrangements at the level of indi-
vidual projects, as folllows:
the grant agreement described the content of the project and its imme- –
diate products (deliverables) as well as the performance indicators  
agreed;
the grant agreement also covered reporting frequency and resulted in  –
three to four reports depending on the project duration (small events  
were reported once only);
each project was assigned to a project officer who monitored the delivery  –
of reports and progress against the contract project description;
within the executive agency each unit monitored its project officers; –
an overview of this follow-up was reported to Energy and Transport   –
DG.9 Under IEE, ECOFYS produced 
a report evaluating 20 energy 
efficiency instruments, of which 
17 were run within the Member States (“From Theory Based Policy 
Evaluation to SMART Policy Design” 
ECOFYS, april 2007 – http://
www.aid-ee.org/documents/
SummaryreportFinal.PDF?bcsi_
scan_522CC38ADEA72627=0&bcsi_
scan_filename=SummaryreportFinal.PDF – 10th June 2008). This report 
provides a benchmark for good 
practice in designing and monitoring 
programmes in the energy efficiency 
area. Inter alia, the consultant’s report advised that an energy efficiency 
programm should:
–  involve an explicit policy model, 
(showing the expected link between 
expenditure, output and impact);
–  set specific targets to be achieved 
within specific time frames, and identify measurable indicators to be 
monitored;
–  estimate the possible impact 
of a possible package of policy 
instruments to achieve the targets set;
–  analyse relevant markets and sectors, 
identifying key market actors, 
disincentives, barriers and obstacles 
to energy efficiency and the likely effectiveness of policy instruments in 
overcoming these problems.
10 Article 27 of Council Regulation 
(EC, Euratom) No 1605/2002 
(OJ L 248, 16.9.2002, p. 1).
15
SUCCESSES AND LIMITATIONS
 21.  These arrangements were similar to those of other EU programmes and allowed 
the Commission to monitor activities undertaken within individual projects. On the other hand, the monitoring information requested and provided was 
not placed in the framework of a set of indicators to measure the success of 
the programme as a whole. The information was thus of limited use to the 
Commission in forming a view on the extent to which the programme was a 
success, and on whether it, or project requirements, should be amended
11. 
There were no amendments to the criteria against which proposed projects 
were assessed over the course of Intelligent Energy for Europe (and for the SAVE and Altener components, these criteria were unchanged from previous programmes).
 22.  Useful evaluation of IEE was also handicapped by the rate of disbursement of 
funds12. The mid-term evaluation of IEE was completed towards the end of the 
programme, in January 2006. However at this stage disbursements amounted 
to less than 5 % of total expenditure foreseen for the programme. The study 
team concluded that “it is still too early for evaluations to identify [projects’] 
long-term impacts”. By the end of 2006, total payments had risen to just  
46,8 million euro – indicating that 80 % of funds payable under the programme 
would be disbursed after  the programme period. 
 23.  The Intelligent Energy for Europe programme assumed that imperfect information 
was a significant barrier to the uptake of energy efficient products, processes 
and practices and to the use of renewable energy sources. “Good practice” 
programme monitoring would have incorporated measures of the extent  
to which decision-makers had become aware of relevant information, as a  result of the programme. The Commission did not obtain such information 
at programme level.
 24.  A key weakness of programme evaluation has been that evaluation reports have 
not been available in time to influence legislative discussions, and have not 
provided meaningful analysis of the impact of the programme. Evaluation  
reports on the SAVE and Altener sub programmes were not available before IEE was adopted. The ex-ante evaluation of IEE2, which succeeded IEE, was 
produced before any information from IEE was available (the report
13 was  
issued in September 2004: the deadline for the first call for proposals for IEE 
was April 2004, and grant agreements under IEE 2003-2006 were only signed 
in the autumn of that year).11 The consultant employed to perform 
an ex-ante evaluation for IEE2 reported that “The indicator system of the 
current IEE programme at this stage of 
development is restricted to the project 
level, where proposers are required to 
suggest indicators against which their project’s progress can be measured. 
However, there are no means of 
harmonising these indicators at the 
programme level. Consultations have 
revealed concern about this system. It 
is potentially confusing and prevents 
a meaningful impact monitoring as it encourages projects to measure 
different outputs, results and impacts. 
Under this arrangement it will be very 
difficult for any evaluation to measure 
the impact, and thus draw conclusions, 
on the success of the programme.” 
(Ex-ante evaluation of a renewed multiannual Community programme in 
the field of energy (2007-2013) ECOTEC 
Research and Consulting Limited, p. 38.
12 Mid Term Evaluation of the Multi-
annual Programme for Action in the 
field of Energy “Intelligent energy – 
Europe, 2003-2006”, ECOTEC Research 
& Consulting Limited, United Kingdom. 
http://ec.europa.eu/dgs/energy_
transport/evaluation/activites/doc/
reports/energie/no52_eie_midterm_final_report.pdf
13 One factor in this was the timing of 
approval of the programme (see p. 2 of 
the report).
16
EVALUATION OF LOCAL ENERGY AGENCIES: A CASE STUDY
 25.  The EU has, under a series of programmes, co-financed the establishment of 
local energy agencies (Box 5) in the Member States over the last 15 years. Over this period, around 300 such agencies have been set up with EU support 
(with a maximum EU contribution of 200 000 euro). The Commission argues 
that agencies are “promoters and implementers” of EU energy policy at local 
level, and act as “energy experts” for other local or regional activities. 
 26.  Under IEE, any public authority or other body proposing the creation of a local/
regional energy agency must present an initial work programme. This work programme must contain a combination of local/regional activities and activi-ties with an EU dimension. It should also demonstrate that local/regional  
activities will benefit from inputs to the new agency coming from other parts 
of the EU. 
 27.  The Global Work Programme for 2003-2006 promised a selective approach to 
supporting the creation of new agencies (where they were “necessary and 
convenient, and there is a clear commitment by the local authorities to sup-
port such infrastructure in the long run”). Priority was to be given to estab-
lishing agencies in the (then) candidate countries. In practice, this was not 
achieved: the greatest number of agencies was created in existing Member 
States, and was concentrated in those Member States which already had the greatest number of local energy agencies.
LOCAL ENERGY AGENCIES BOX 5
Agencies are typically small bodies (from two to ten staff  ) set up at the initiative of local authorities. Th  ey are 
headed by a Director who reports to a management committee which may include private sector representa-
tives, but will have a majority drawn from the public sector.
Th e most commonly reported activity is the provision of advice (either to local decision-makers, or to 
consumers).
17
 28.  The Commission has not obtained an independent assessment of the impact of 
local energy agencies. It did obtain a study14 on the outputs, performance 
and future perspective of SAVE’s energy agencies, based on the work of  
experts drawn from energy agencies in the Czech Republic, France, Italy and the United Kingdom. This paid particular attention to the support provided 
to local energy agencies by the Commission, but also raised concerns about 
the monitoring of agencies and their coordination with private sector and 
public sector bodies in the field of energy efficiency.
 29.  Despite this IEE2 provides more support for the creation of new energy agencies: 
the maximum amount of funding rising to 250 000 euro (from 200 000 euro) and to 75 % of eligible costs (previously 50 %).
ENERGY AGENCIES SET UP UNDER SAVE II 1998200414 “Study of outputs, performance and 
future perspectives of SAVE energy 
agencies” Final Report ECUBA srl 2005.

18
ADMINISTRATIVE COSTS: PREPARING PROPOSALS, 
REPORTING ON PROJECTS AND PROGRAMME MANAGEMENT
 30.  Administrative costs related to the Intelligent Energy for Europe programme are 
incurred by:
participants in the programme (and sometimes by their sponsors);  –
since 2006 by the Executive Agency set up to run the programme,   –
and by the responsible Commission services (principally Energy and  Transport DG). 
  Administrative costs both for the Commission and participants should be com-
mensurate with the scale of the programme and no higher than needed for 
effective implementation of the programme.
 31.  The Commission does not have guidance or benchmarks, based for example on 
comparable programmes, on the cost of administration and does not collect 
comprehensive information on these costs.
COSTS BORNE BY PARTICIPANTS
 32.  The Court used a survey to obtain participants’ estimates of the cost of preparing 
proposals and project reporting. The average cost of submitting and nego-
tiating a proposal reported by respondents is around 10 % of the amount  
requested. Reporting costs are estimated as amounting to at least a further 
6 % of EU funding (these costs are eligible for EU support). Applied to the 
programme as a whole this suggests a cost of a magnitude of 22 million euro incurred by successful applicants
15.15 The figure of 22 million euro 
represents 10 % of total grant 
applications awarded (199,2 million 
euro – see Table 1 ) plus 6 % of total 
payments made to beneficiaries in the 
period 2003-2006 (43,6 million euro). However, proposal costs will have 
also been incurred for unsuccessful 
proposals, and reporting costs will 
eventually relate to the whole amount 
paid to projects (likely to be close to 
200 million euro).
19
 33.  Figures 1 and 2 present the applicants’ estimates of the cost of making a proposal 
as a percentage of the funding requested. Figure 3 presents applicants’ esti-
mates of the cost of reporting as a percentage of funding16. More than half 
of participants thought the time required to fill in an application was fair, 
but this figure fell to 40 % for project coordinators. Similar concerns over the cost of preparing a proposal, and of negotiating with the Commission were reflected in the findings of the mid-term evaluation: “the contract negotia-tion process was highlighted as taking up more and more time, with the  
applicant having to supply a large number of documents. The effort required 
pre-contracting can be very draining on resources for some organisations”
17. 
The mid-term evaluation made use of a similar survey approach to the Court, but with a smaller number of participants contacted, and a lower response rate (736 replies and a 29 % response rate for the Court’s survey; 82 replies 
and a 22 % response rate for the evaluators).16 The Court surveyed applicants to 
the Intelligent Energy for Europe 
on the conduct of the programme. 736 applicants replied to the 
questionnaire.
17 Mid Term Evaluation of the Multi-
annual Programme for Action in the 
field of Energy “Intelligent Energy – 
Europe, 2003-2006”, ECOTEC Research & Consulting Limited, United Kingdom. 
(p. 42). (http://ec.europa.eu/dgs/
energy_transport/evaluation/activites/
doc/reports/energie/no52_eie_
midterm_final_report.pdf)
DISTRIBUTION OF REPLIES ON THE ESTIMATED COST OF MAKING A PROPOSAL 
AS A PERCENTAGE OF FUNDING REQUESTED 689 RESPONDENTSFIGURE 1
11-15 %16-20 %above 20 %
below 5 %
6-10 %
20
DISTRIBUTION OF REPLIES ON REPORTING COSTS AS A PERCENTAGE 
OF FUNDING RECEIVED 529 RESPONDENTSFIGURE 3DISTRIBUTION OF REPLIES ON THE ESTIMATED COST FOR COORDINATORS 
OF MAKING A PROPOSAL AS A PERCENTAGE OF FUNDING REQUESTED 121 COORDINATORS RESPONDING TO THE SURVEYFIGURE 2
11-15 %16-20 %above 20 %
below 5 %
6-10 %
11-15 %16-20 %above 20 %
below 5 %
6-10 %
21
COSTS INCURRED BY THE EXECUTIVE AGENCY
 34.  An innovation of Intelligent Energy for Europe was the creation of an Executive 
Agency (see Box 6) to handle the administration of the Programme18. The  
Commission charged 8,5 million euro to the IEE budget lines to fund the  
Executive Agency in 2005 and 2006. In 2006, the Agency’s financial state-ments show expenditure (on an accruals basis) of 4 million euro
19 with an  
accumulated surplus at 31 December 2006 of 0,9 million euro. The cost of  
running the agency is thus assessed at 7,6 million euro for 2005 and 2006. 
At the end of 2006, the agency had 41 staff, of whom five were permanent officials seconded by the Commission, 11 temporary staff transferred from 
the Commission, and 25 contractual staff.18 The Agency was solely involved in 
administering the Intelligent Energy 
for Europe programme, and was not 
involved in administering activities 
financed under previous programmes. 
From 2007, the replacement to IEE 
forms a part of the Competitiveness 
and Innovation Framework Programme. The Agency now manages other 
CIP activities as well as continuing 
activities under IEE.
19 Economic outturn account 2006. 
Report on the annual accounts of the 
Intelligent Energy Executive Agency for the financial year 2006 together 
with the Agency’s replies (OJ C 309, 
19.12.2007, p. 18). Staff expenses form 
66 % of the total. A significant share 
of other administrative expenses consisted of expenditure on experts 
and studies, and refunds to the 
Commission for the provision of 
accommodation and other services.
CREATION OF THE INTELLIGENT ENERGY EXECUTIVE AGENCYBOX 6
Th e Intelligent Energy Executive Agency is the fi  rst Community executive agency and started operations 
in 2005. Its mission was to implement the main part of the Intelligent Energy for Europe (2003-2006) 
 programme. Practically this includes the following tasks:
Project cycle:
launching the annual calls for proposals, selecting, the proposals and contracting, –
monitoring the projects (progress and fi  nancial),  –
monitoring the actual eff  ects of projects on the targetted area,  –
paying out the EU contibution following the contractual conditions, –
communication and promotion of the programme and its projects. –
Reporting back to the Commission:
reporting on the execution of the programme, –
feedback of information for future programme development and on national initiatives, –
reporting on the running of the agency and its operational budget, –
running and managing the agency (human ressources, fi  nance …).  –
The agency has now been given additional tasks (CIP), its name changed to “Executive Agency for 
 Competitiveness and Innovation” and its duration extended to the end of 2015.
22
COSTS BORNE BY ENERGY AND TRANSPORT DG
 35.  Staff costs relevant to IEE borne by Energy and Transport DG are not separately 
disclosed in the Commission’s financial statements but costs can be estimated 
on the basis of staff numbers. The Commission has reported that 38 staff  
were involved in administering the programme in 2003 [COM(2002) 162]. This figure fell to 20 after the agency became fully operational in 2006 (by which time 16 staff, had been seconded to the agency). Using the assumptions set 
out in the cost effectiveness assessment performed to justify setting up the 
Executive Agency
20, this indicates a staff cost of around 16 million euro for 
the period 2003 to 2006.
 36.  Expenditure on administrative management (essentially covering expenditure 
on studies, meetings information and publicity) amounted to 2 million euro 
for the period 2003-2006. 20 Externalisation arrangements 
for “Intelligent Energy for Europe” 
Programme. A cost-effectiveness 
assessment, Eureval-C3E, 2002.
23
TOTAL ADMINISTRATIVE COSTS
 37.  The administrative costs of IEE borne by the European Union (including the cost 
of running the Executive Agency) thus amount to around 25 million euro  
over the period 2003 to 2006. A survey of participants suggests a cost of  
around 22 million euro for preparing proposals and reporting on projects. Total payments to participants amounted to 46,8 million euro by the end of 2006. This suggests that during this period the Intelligent Energy for Europe 
programme’s costs for administration, for preparing proposals and for report-
ing on projects was of the same order as was paid out to beneficiaries for operational purposes.
 38.  Many of these costs in a programme such as IEE are front-end loaded. Costs such 
as those involved in preparing calls for proposals are necessarily concen-
trated in the early period of the programme, and the relationship between 
the cost of administration and operations will change over the course of  
the programme. However administrative costs plus the costs of preparing  proposals and reporting on projects already incurred are estimated to be  
equal to more than a sixth of total commitments and further administrative 
costs will be incurred in the future, as the Executive Agency will continue to 
monitor contracts, and will be increasingly involved in checking claims for 
reimbursement, while beneficiaries will continue to incur reporting costs, and will devote increased resources to preparing cost statements and obtaining 
audit certificates.
24
THE EXECUTIVE AGENCY: A BETTER MANAGER?
 39.  The Court’s audit found that the Executive Agency had:
improved programme communication (through its website, streaming   –
broadcasting and newsletter);improved application documents; –
reduced some of the administrative burdens on participants; –
six monthly progress and financial reporting reduced to a nine months  –
reporting with a single progress and financial report.
 40.  Changes to administrative procedures are reflected in the attitudes of benefi-
ciaries to the programme. On the criteria “assistance during the application 
procedure” and “duration of the procedure” ( Figure 4 ), 10 % more applicants 
rated the service provided by the Executive Agency as “good or excellent”, 
than rated the Commission in these categories. Differences were particularly 
marked in the “excellent” category . 
 41.  While participants as a group showed a preference for dealing with the Execu-
tive Agency, around half saw little difference in the level of service provided. 
Project coordinators (who have more contact with Brussels than do other  
participants) expressed a higher level of satisfaction with the agency and a lower level of satisfaction with the Commission ( Figures 5 and 6 ).
 42.  It is too soon to draw definitive conclusions on the performance of the agency, but 
the perception of programme participants is that it has made a good start.
THE DURATION OF THE APPLICATION PROCESSFIGURE 4
Excellent
Good
Satisfactory
Poor
No serviceViews of respondents to survey on dealing with the…
… Executive Agency
0 % 20 % 40 % 60 % 80 % 100 %… Commission
25
FIGURE 5
VIEW OF ALL BENEFICIARIES ON DIFFERENCES IN QUALITY OF SERVICES PROVIDED 
BY THE COMMISSION AND THE EXECUTIVE AGENCY
FIGURE 6
VIEW OF COORDINATORS ON DIFFERENCES IN QUALITY OF SERVICES PROVIDED 
BY THE COMMISSION AND THE EXECUTIVE AGENCYCOMequal
Agency
COMequal
Agency
COMequal
Agency
COMequalAgency
COMequal Agency
COMequalAgencyThe availability 
of information 
is better underThe application 
process goes 
faster underThe reporting 
process of ongoing 
projects is easier 
under
The availability 
of information 
is better underThe application 
process goes 
faster underThe reporting process 
of ongoing projects 
is easier under020406080100120140160180
051015202530354045
PLANNING THE PROGRAMME
 43.  The Commission translated the objectives of the IEE programme into a detailed 
Work Programme and made use of outside experts to appraise proposals. In 
some target areas for IEE action there appears to be a significant potential 
for cost-effective adoption of greenhouse gas-efficient technologies.
 44.  On the other hand the planning of the programme fell short of best practice. The 
Commission did not:
make its policy model explicit; –
set specific and time related objectives; –
provide an analysis of key market actors. –
 45.  The distribution of spending over so many areas of activities necessarily limited 
the potential to achieve significant and verifiable progress in any particular 
area. IEE was not a clearly focused expenditure programme.
RECOMMENDATION 1  PLANNING
The Commission should ensure that programme proposals are based on an 
explicit policy model and reflect the expected link between expenditure, 
output and impact. CONCLUSIONS 
AND RECOMMENDATIONS
27
MONITORING AND EVALUATION
 46.  Monitoring and evaluation procedures did not provide an effective feedback 
mechanism. The Commission monitored projects but did not seek to monitor 
the performance of the programme as a whole. Evaluation of the previous 
programme took place too late to influence the design of the Intelligent  Energy for Europe, and the successor programme was agreed before Intel-ligent Energy for Europe was evaluated. The programme was evaluated at  
“mid term” but evaluation was hampered because only 5 % of payments had 
been made at this point.
 47.  The monitoring and evaluation arrangements thus did not enable the Commis-
sion to form a view of the overall quality and design of the programme  
and judge whether, for example, a standard project-based approach was an 
appropriate response to the policy aims21; or, if so, whether a much more  
focused programme would be more likely to achieve IEE’s objectives. In the 
case of Intelligent Energy for Europe, one premise of the programme was  that imperfect knowledge was preventing decision makers from adopting  
appropriate technology. Effective monitoring would asses whether decision 
makers were becoming better informed.
 48.  The Commission was not in a position to assess whether energy agencies made 
a significant impact, nor to assess whether they improved the coordination 
of promotion of energy-efficient technology. However changes made in the 
2007-2013 programme increased financial support for these bodies.
 49.  IEE was small in relation to the market (for energy) which it was intended to influ-
ence. IEE projects provided intermediate outputs (often taking the form of 
advice to policy makers, of participants in events, or of publicity material). It is difficult to determine whether these outputs lead to changed behaviour.21 It is notable, for example, that, using 
a different approach, policymakers 
in Member States have often focused 
upon utility companies as a suitable 
channel for providing advice on 
energy-saving technology. Such 
arrangements provide the advantage 
that utility companies have an established contact with energy users, 
and that they have the potential 
to measure impacts on energy 
consumption. It has the drawback that 
utilities have evident interest in the 
business, and this may not be optimal 
for fair and transparent advice.
28
 50.  Likewise, there is an intrinsic problem in deciding when and how to evaluate 
multi-annual programmes which start slowly (or late) and whose expenditure 
consequences extend beyond the formal programme period. As the Court  pointed out in its report on the structural funds “medium-term processes” 
(Special Report No 1/2007), evaluation which takes place early enough in a 
programming period for its results to influence the design of a successor pro-
gramme will be based on evidence drawn from only a small part of planned 
spending. Evaluations based on a significant amount of expenditure on the 
other hand are likely to be carried out too late to affect the design of any 
successor programmes.
 51.  These intrinsic difficulties make it more important for the Commission to imple-
ment a robust and comprehensive set of performance indicators, and to  
ensure evaluation was optimally scheduled.
RECOMMENDATION 2  MONITORING
The Commission should ensure that programmes are monitored in a way 
that provides it, so far as possible, with useful information on their effects. 
Such information should look beyond individual projects and assist in  forming a view of a programme as a whole in a way which takes account 
of its announced objectives.
RECOMMENDATION 3  EVALUATION
Evaluation of programmes should take place in a way which maximises  
its usefulness as a source of “feedback” information which makes it pos-
sible to improve spending programmes. The Commission should consider 
making more use of “longitudinal” evaluation – looking at the impact of key categories of projects through successive spending frameworks. The 
reports that the Commission has obtained on Member State programmes 
might form an appropriate framework for this.
29
ADMINISTERING THE SCHEME
 52.  The Court’s work suggests that total costs of preparing proposals, reporting on 
projects and of administration were equivalent to the total funds transferred 
to projects over the period 2003-2006. Taking account of future disburse-
ments and administrative costs, the total of these three types of cost can be 
expected to be more than one-sixth of the sums disbursed.
 53.  Although the European Commission runs many schemes with a similar design to 
IEE, it does not have a framework for assessing their administrative costs. It is not therefore possible readily to compare the administrative costs of IEE 
with those of other schemes. 
RECOMMENDATION 4  MANAGING COSTS
The Commission should more systematically record and analyse informa-
tion on the administrative cost of programmes (considering indicators  
such as cost/euro disbursed, and cost/proposal appraised). “Cost” should 
include costs borne by beneficiaries, not just those borne by the Commis-
sion. The Commission should use this information to compare programmes and identify and spread best practice.
 54.  The Executive Agency has had a positive impact on client satisfaction: partici-
pants (and particularly, project coordinators) prefer dealing with the Agency 
to dealing with the Commission.
  This report was adopted by the Court of auditors in Luxembourg at its meeting 
of 4 September 2008.
  For the Court of Auditors
  Vítor Manuel da Silva Caldeira
President

30
OVERVIEW OF THE VERTICAL KEY ACTIONS AND RELATED TARGET AREAS 
OF SAVE, ALTENER AND STEERANNEX I
FIELDVERTICAL KEY ACTIONS TARGET AREAS
TITLE TITLESAVEMULTIPLYING SUCCESS 
IN BUILDINGSTools for the take-oﬀ   of the Buildings Directive
Schemes for implementation of energy services in 
buildings
Public buildings as shining examplesPromotion of best practice examples of high energy 
performance buildings
RETROFITTING OF SOCIAL HOUSESAwareness raising, education and training
Tailored ﬁ  nancing schemes
Advanced integrated retroﬁ  tting solutions
Legal and institutional changes
INNOVATIVE APPROACHES 
IN INDUSTRY(Instruments for) Energy management
Energy services in SMEsPolygeneration
ENERGY EFFICIENT EQUIPMENT 
AND PRODUCTSEnforcing the application and enhancing the 
awareness of EU labels and minimum energy eﬃ   ciency 
standards
Technology procurement, buyer-initiatives and other 
approaches to accelerate the transformation of the market
Monitoring market transformation and preparing the 
ground for new policy initiativesALTENERRES-ELECTRICITYNational indicative targets
Support schemes
Grid system issuesGreen electricityDistributed electricity generation
RES-HEATLegislation, fuel standards and normsSupply chain and market structuresSpeciﬁ  c applications and building integration
SMALL SCALE RES APPLICATIONSSolar water and space heating and cooling
PV electricity generationBiomass for domestic heating
Small scale CHP and heat pumps
ALTERNATIVE VEHICLE PROPULSIONLegislation, ﬁ  scal regimes and fuels standards and 
norms
Supply chain and market structures for biofuelsSTEERSupply chain and market structures for alternative fuels 
requiring separate supply chains
Market demand for alternatively propelled vehiclesAccompanying measures
POLICY MEASUREMENT 
FOR AN EFFICIENT USE OF ENERGY 
IN TRANSPORTReducing demand for transport
Enhancing energy eﬃ   ciency in a transport mode
Encouraging transfer to less energy intense modesEconomic instruments and incentives
Information and awareness and education
STRENGTHENING THE KNOWLEDGE 
OF LOCAL MANAGEMENT AGENCIES 
IN THE TRANSPORT FIELDTraining and education of local agencies in the eﬃ   cient 
use of energy and use of alternative fuels in transport
Fostering collaboration and partnership: Supporting 
local actors in programme and project participation
Source: Intelligent Energy – Europe 2003-2006 – Global Work Programme for the years 2003-2006.
31
OVERVIEW OF THE VERTICAL KEY ACTIONS AND THE RELATED TARGET AREAS 
OF COOPENER
FIELDVERTICAL KEY ACTIONS TARGET AREAS
TITLE TITLECOOPENERENERGY POLICIES, LEGISLATION 
AND MARKET CONDITIONS 
FOR ENABLING POVERTY 
ALLEVIATION IN DEVELOPING 
COUNTRIESThe energy policy chain, from development to promotion 
and implementation
Pro-poor energy regulations, addressing sustainability, 
targets, and decentralised generation
Energy planning for urban, peri-urban and rural areas
Financing, investments and support schemes for energy 
sector programmes and projects, with particular emphasis on SMEs
Promoting best practise in energy services to meet the 
needs of the poor
STRENGTHENING LOCAL ENERGY 
EXPERTISE IN DEVELOPING 
COUNTRIESTraining and networking for energy policy makers, 
regulators, and planners
Training, networking, mobility an study tours for energy 
professionals
Strengthening existing Energy Centres, Agencies and 
Industry Associations
Source: Intelligent Energy – Europe 2003-2006 – Global Work Programme for the years 2003-2006.
OVERVIEW OF THE HORIZONTAL KEY ACTIONS AND RELATED TARGET AREAS
FIELDHORIZONTAL KEY ACTIONS TARGET AREAS
TITLE TITLEALLSUSTAINABLE ENERGY 
COMMUNITIESPromoting energy citizenship and mobilising local energy 
actors
Local community planning for the eﬃ   cient use of RES 
and conventional energy, demand side management and associated mobility
Establish favourable conditions for local energy markets and 
services to reach a critical mass
THINK GLOBALLY ACT LOCALLYManagEnergy: the facilitating instrument for local energy activities
Support for the creation of local and regional energy 
management agencies and for the operation of national associations of agencies
Think globally: Community added value (Reﬂ  ection group)
FINANCIAL MECHANISMS & 
INCENTIVESCross-country analysis of diﬀ  erent ﬁ  nancing mechanisms
Development and promotion of innovative ﬁ  nancing 
mechanisms for RES & RUE investments
The right to a fair competition
Platform/Forum for exchange of experience on ﬁ  nancial 
mechanisms & incentives
MONITORING & EVALUATIONMonitoring and evaluation of diﬀ  erent RES/RUE policies and 
measures
Methods, indicators and modelling of future trends ad 
policy impacts
Platform for exchange of experience on monitoring & 
evaluation
DISSEMINATION & PROMOTIONDissemination of project results
Dissemination of sector best practice
Dissemination of the programme and its achievements
Public Awareness Campaign for an Energy Sustainable 
Europe
Source:  Intelligent Energy – Europe 2003-2006 – Global Work Programme for the years 2003-2006.
REPLY 
OF THE COMMISSION TO THE SPECIAL REPORT OF THE COURT OF AUDITORS ON INTELLIGENT ENERGY 20032006
33
SUMMARY
I.
IEE is intended to support the European Union’s 
policies in the field of energy as laid down in the Green Paper on Security of Energy Supply, the White Paper on Transport and other related Community legislation making a balanced con-tribution to achieving the general objectives of security of energy supply, competitiveness, and environmental protection (Art. 1 of the  programme Decision).
IV.
First indent
The IEE programme’s function is essentially  
a catalytic one, where comparatively small  amounts of funding are provided to trigger  
much larger investments in the future. 
The selection of priority areas is inevitable  
when dealing with a sector as wide as energy. 
The scope and objectives of the IEE1 Pro-
gramme were defined by the Parliament and  the Council and structured on the basis of four 
specific fields. The decision on IEE1 refers to a 
number of specific communications relevant to 
each of the four programme fields, and each of 
these documents contains a list of important areas of action
1. The Commission considers  
that the planning of the programme, which was designed to address the policy areas defined in the legislation, represents an acceptably high 
standard given the inherent constraints of a  
policy instrument of this nature.
1  For example, the White paper for a Community Strategy and Action 
Plan [COM(1997) 599 final of 26/11/1997] contains four activity areas and 22 specific actions for the field renewable energies alone; the Com-munication from the Commission, entitled: “Action Plan to improve energy efficiency in the European Community” [COM(2000) 247 of 26/04/2000] puts forward actions in all sectors and in 15 main areas. In 2006, this approach was confirmed by the European Parliament’s Opinion on the Green Paper on Energy Efficiency which sets forth over 100 recommendations (European Parliament Report P6_A(2006)0160 of 03.05.2006 and Commission’s communication of 19 October 2006 on an Action Plan for Energy Efficiency which defines six areas, ten priori-ties and 75 cost-effective actions chosen on the basis of an impact assessment).Second indent
IEE1 is a programme with a wide scope for  
addressing sustainable energy in all sectors  of society as defined in the decision of the  Parliament and the Council. Monitoring of the programme is done on a project basis, allowing impacts to be determined with regard to the projects’ objectives. The Commission considers that the monitoring scheme was appropriate.
It is hardly feasible to introduce monitoring at 
a higher aggregated level given the difficulty 
to isolate causal links between the programme 
results as catalyst and macro-economic trends 
such as the EU’s energy dependency. The Com-mission considers that this does not compro-
mise the overall quality and design of the IEE 
programme.
The growth in demand for energy agencies and 
their long term financing by public authorities 
are strong indicators that such agencies make a significant impact. 
Concerning the timing of programme evalu-
ations, the IEE is a rolling programme, with  
experience from the past programmes feed-ing into subsequent ones. As such, evaluation results are used systematically in the design  and drafting of the legislative proposals for  
subsequent programmes.
34
Third indent
The Court adds costs incurred by the Commis-
sion and the Executive Agency together with additional costs estimated by beneficiaries.  
These last costs are of a very different nature and therefore should be considered sepa-rately: Preparing a proposal is an investment in planning a sound and competitive project. Project reporting is a co-financed contractual 
obligation which provides the basis for dis-seminating the results to stakeholders. Pro-
gramme management is carried out only by  
the Commission and Executive Agency. In the 
IEE case, programme management costs also  
include investment in the establishment of an Executive Agency which will bring benefits and cost-savings in the future. With regard to the disbursement of the programme grants, the  
Court correctly states in paragraph 38 that in 
a programme such as IEE the costs of preparing 
proposals are front-end loaded. In contrast,  
the pay-out to beneficiaries is largely back-end loaded. The participants’ costs of prepar-
ing proposals are estimated on the basis of an 
extrapolation from a survey. The Court’s survey 
did not define the nature of the costs to be  
taken into account, nor a method for determin-
ing them The 29 % of those approached who  
replied were not asked to provide account-ing data, and their replies were not audited.  
The replies will therefore necessarily be very approximate and extrapolations from them  unreliable. V.
First indent
The Commission considers that the IEE pro-
gramme clearly focuses on the main priority  objectives of EU energy policy, namely (1)  managing demand (decoupling consumption  from growth), and (2) increasing the share  of renewable energy in the EU final energy  consumption.
The work programme was designed to address 
the policy areas defined in the legislation. It 
is up to the proposers to convincingly predict 
their expected results, and up to the Commis-
sion to decide on the basis of the fully costed project proposal if the proposed approach and expected results fit in a cost effective manner with the Community’s policy objectives.
Second indent
Monitoring of the programme is done on a  project basis, allowing their impacts to be  determined with regard to their objectives. 
Monitoring costs should remain proportionate 
and not add significantly to the costs of run-
ning the programme.
Third indent
The Commission intends to implement the  recommendation regarding the evaluation of programmes. A new study is being launched as 
a Tender under the 2008 IEE Work Programme, 
and this will be carried out on a longitudinal basis.
35
Fourth indent
Working documents to the preliminary draft  
budget each year provide breakdowns of  administrative costs of the Directorate Gen-
eral’s activities and of each executive agency
2. 
Since the 2008 procedure, this document also includes at the request of the European Par-liament the percentage of the programmes’  budget used by the executive agency to  operate.
For those executive agencies using the Com-
mission’s IT accounting system, ABAC, to  
support their own accounting systems, the  
Commission will offer a facility for allocating the agency’s expenditure to each of its activi-ties. They will then be in a better position to report on costs, including those for administra-
tion. It is planned to offer this facility to certain 
agencies as from the 2009 financial year, and 
to subsequently extend it to others.
The Commission does not consider that costs 
borne by participants can be assimilated to  
administrative costs of programmes. The extra 
burden on both beneficiary and Commission  
of collecting and checking information on the 
costs to the beneficiary of preparing proposals 
is currently not justified.
2 Working documents II, III and IV to the Preliminary Draft Budget.AUDIT FINDINGS
17.
The programme’s function is essentially a cata-
lytic one, where comparatively small amounts of funding are provided to trigger much  
larger investments in the future. The scope  and objectives of the IEE 1 Programme were  defined by the Parliament and the Council and structured on the basis of four specific fields. The decision on IEE 1 is referring to a number 
of specific communications relevant to each of the four programme fields, and each of these 
documents contains a list of important areas 
of action.
3
The Commission considers that the IEE pro-
gramme clearly focuses on the main priority  objectives of EU energy policy, namely (1)  
managing demand (decoupling consumption  
from growth), and (2) increasing the share  
of renewable energy in the EU final energy  
consumption.
18.
First indent
The work programme was designed to address 
the policy areas defined in the legislation.
It is up to the proposers to convincingly predict 
their expected results, and up to the Commis-sion to decide on the basis of the fully costed 
project proposal if the proposed approach and expected results fit in a cost effective manner with the Community’s policy objectives. The  selection procedure provides assurance that  the supported projects will contribute most  effectively to the policy objectives.
3 For example, the White paper for a Community Strategy and Action 
Plan [COM(1997) 599 final of 26/11/1997] contains four activity areas and 22 specific actions for the field renewable energies alone; the Com-munication from the Commission, entitled: “Action Plan to improve energy efficiency in the European Community” [COM(2000) 247 of 26/04/2000] puts forward actions in all sectors and in 15 main areas. In 2006, this approach was confirmed by the European Parliament’s Opinion on the Green Paper on Energy Efficiency which sets forth over 100 recommendations (European Parliament Report P6_A(2006)0160 of 03.05.2006 and Commission’s communication of 19 October 2006 on an Action Plan for Energy Efficiency which defines six areas, ten priori-ties and 75 cost-effective actions chosen on the basis of an impact assessment).
36
Second indent
Specific measurable and time-related objec-
tives for the Union as a whole are set in the  decisions of the Council and the Parliament,  
for example in the renewable energy directives and in the Communications of the Commission, for example in the White Paper on Transport  and in the Action Plan on energy efficiency.  The objectives of each project must be related 
to the relevant Community objectives on a  case-by-case basis. 
Third indent
For IEE 1, target groups were indicated in a  separate document. The IEE is a programme for 
professionals, and they are required to present their own analyses of the market actors that  
their projects are designed to address. 
21.
Regarding the monitoring and indicators to  measure the success of the programme as a  whole, IEE1 is a programme with a wide scope 
for addressing sustainable energy in all sectors 
of society as defined in the decision of the  
Parliament and the Council. In this context, the 
Commission remains of the opinion that the  
monitoring scheme was appropriate.
Project monitoring has provided valuable  
inputs to the Commission and to the Execu-tive Agency in relation to future project  requirements. 22. 
The programme began once the Council and  
Parliament Decision came into force in August 2003. Furthermore, regarding the implementa-
tion schedule, one and a half years elapsed  between the adoption of the legal basis (Coun-cil and Parliament Decision in June 2003) and the signature of the first grant agreements in late 2004. This is considered as normal taking 
into account the lead time for adoption of the work programme, launching of call for propos-
als, selection and contracting.
All commitments were made during the pro-
gramme period. The duration of the payment schedule is linked to the duration of the  individual projects, most of which continue  after 2006.
23. 
The Commission did both request and obtain information on the removal of barriers to the up-take of energy efficiency, notably in rela-
tion to imperfect information. This was spe-
cifically requested and provided as part of  
each proposer’s assessment of the “state of  
the art” in project proposals. Later, during  
and in the reports from supported projects,  
updated information on such barriers and the extent to which they were removed, were both 
requested and provided. The Commission does also collect feedback on information needs,  for example, in the public consultation on the Green Paper on Energy Efficiency which closed on 31/03/2006.
37
24. 
Concerning the timing of programme evalu-
ations, the IEE is a rolling programme, with  experience from the past programmes feed-
ing into subsequent ones. As such, evaluation results are used systematically in the design  and drafting of the legislative proposals for  subsequent programmes.
25. 
An independent study of local energy agencies will be carried out under a tender funded by 
the IEE 2008 work programme. 
27. 
The creation of agencies depends mainly on  the availability of local and regional struc-tures for co-financing and their committing to 
their agency in the long-run. Acknowledging 
this diversity, the Commission encouraged in 
particular new MS to take up the concept of  
energy agencies (e.g. call 2004 gave priority  to the creation of agencies in new MS). This  
helped to build momentum and influence the 
decision making process at local level. As a  
result, after a slow start, 16 new energy agen-
cies were established in the new Member States 
from 2005 to 2007. 
28. 
The ECUBA study, which was performed by  
experts closely involved with the work of the agencies (but independent of the European  Commission), provided useful insights into the challenges associated with the management on energy agencies at local and regional level. A new study is being launched as a Tender under the 2008 IEE Work Programme, and this will be carried out by a consortium which has not been associated with local energy agencies before. Regular feedback to the Commission on the  
activities of the agencies is collected via Mana-genergy and its Reflection Group (MERG), which 
meets 2-3 times per year to discuss the needs, priorities and activities of local actors, notably the energy agencies. The Managenergy con-sortium is keeping the agencies section of the Managenergy web site and the related agencies 
booklet up to date by checking on an annual basis that the agencies are still active. 
29. 
The Commission supports the energy agencies only in the start-up phase. The fact that most of 
the new agencies, which have been established with Community support, are still operating  
demonstrates both a demand and sufficient  
public use across Europe to justify the invest-
ment of public funds. 
31. 
The Commission has information on the costs 
incurred by the Commission and the Agency  
in programme management and does not nor-
mally include costs incurred by the partici-
pants for preparing proposals as administrative costs.
38
32. 
The present legal base does not define  
“costs” incurred by all applicants’ while fill-ing in their project proposals as eligible for  
reimbursement. 
In the Commission’s view such costs are  
incurred for a necessary step of the project’s operations and cannot be defined as adminis-trative nor can reporting costs be considered as purely administrative. It is the price partici-pants have to pay in any kind of competitive procedure (According to the Court’s survey,  almost 60 % of the respondents judged these costs as “fair”). 
Preparing a proposal is an investment in   –
planning a sound and competitive project, 
and reporting is both a contractual and an 
operational  obligation which provides the 
basis for the Executive agency and Com-
mission to disseminate the projects results to stakeholders. Such publications gener-
ate positive spill over effects and increase 
interest in the programme, thus maximis-
ing the value of Community funding, and 
give credibility to the project owner.
The costs estimates of the respondents’   –
are, by nature, difficult to quantify in a  systematic manner. The Commission notes that the Court’s survey did not define in its questionnaire the nature of the costs to  be taken into account, nor a methodology for evaluating them. Survey participants  were not asked to provide accounting data, and their replies were not audited. The  replies of the 29 % of those approached  who participated in the survey will there-fore necessarily be a subjective perception by respondents and diverging in terms of content and extrapolations from them  unreliable.33.
Some stakeholders commented that the  application process had become easier and  that there was improved clarity surrounding  the procedure and the evaluation criteria.  The Commission understands therefore that  the respondents to the external evaluation  assessed positively the application process,  which is related with the costs of preparing  proposals mentioned by the Court. The “con-tract negotiation process” that the Court men-tions is not part of the proposal phase but very distinct from it. It applies only to proposals  selected for funding and is designed to prepare the grant agreement between the beneficiar-ies’ consortium and the Commission. There-fore, resources used for “contract negotiation” should be considered separately from the costs of writing a proposal.
37-38.
The Court adds costs incurred by the Commis-sion and the Executive Agency together with “costs” estimated by beneficiaries. These last costs are of a very different nature and there-fore should be considered separately. Prepar-ing a proposal is an investment in planning a 
sound and competitive project. Project report-
ing is a co-financed contractual obligation  which provides the basis for disseminating the 
results to stakeholders. Programme manage-ment is carried out only by the Commission and Executive Agency. In the IEE case, programme management costs also include investment  in the establishment of an Executive Agency  which will bring benefits and cost-savings in the future.
39
As for the participants’ estimated costs of pre-
paring proposals, and reporting on projects  (22 million euro on the basis of a survey con-
ducted by the Court), and as replied to in par-agraph 32, the Commission notes that these  are of a different nature and incurred for a  necessary step of the project’s operations. Fur-thermore, the Court’s survey did not define in 
its questionnaire the nature of the mentioned costs to be taken into account, nor a methodol-
ogy for evaluating them. Survey participants  
were not asked to provide accounting data,  
and their replies were not audited. The replies 
from the 29 % of those approached who replied will therefore necessarily be very approximate and extrapolations from them unreliable. 
The Commission does not consider that the  
costs estimates relating to preparing propos-
als and reporting borne by the participants  
can be assimilated, added or compared to the administration costs incurred by the Commis-
sion and the Agency to manage the programme 
as they are of different nature. With regard  
to the pay-out of the programme grants, the 
Court correctly states in paragraph 38 that in a 
programme such as IEE the costs of preparing 
proposals are front-end loaded. At the same  time, the pay-out to beneficiaries is typically 
back-end loaded.CONCLUSIONS 
AND RECOMMENDATIONS
44.
The Commission considers that the planning  
of the programme represents an acceptably  high standard given the inherent constraints 
of a policy instrument of this nature. The work programme was designed to address the policy areas defined in the legislation.
See reply to paragraph 18.
45.
The programme’s function is essentially a cata-
lytic one, where comparatively small amounts 
of funding are provided to trigger much  
larger investments in the future. The scope  and objectives of the IEE1 Programme were  defined by the Parliament and the Council and structured on the basis of four specific fields. 
The decision on IEE 1 is referring to a number 
of specific communications relevant to each of 
the four programme fields, and each of these 
documents contains a list of important areas of action
4. 
4 For example, the White paper for a Community Strategy and Action 
Plan [COM(1997) 599 final of 26/11/1997] contains four activity areas and 22 specific actions for the field renewable energies alone; the Com-munication from the Commission, entitled: “Action Plan to improve energy efficiency in the European Community” [COM(2000) 247 of 26/04/2000] puts forward actions in all sectors and in 15 main areas. In 2006, this approach was confirmed by the European Parliament’s Opinion on the Green Paper on Energy Efficiency which sets forth over 100 recommendations (European Parliament Report P6_A(2006)0160 of 03.05.2006 and Commission’s communication of 19 October 2006 on an Action Plan for Energy Efficiency which defines six areas, ten priori-ties and 75 cost-effective actions chosen on the basis of an impact assessment).
40
RECOMMENDATION 1 – PLANNING
See replies to paragraphs 17 & 18.
The Commission is already implementing the 
Court’s recommendation on planning. The  Commission has established an explicit policy model for IEE which reflects the expected link between expenditure, output and impact on  the level of each intervention area and this is monitored concretely on a project by project basis. 
46.
IEE1 is a programme with a wide scope for  addressing sustainable energy in all sectors  of society as defined in the decision of the  Parliament and the Council. In this context, the Commission remains of the opinion that the  monitoring scheme was appropriate.
Project monitoring has provided valuable  
inputs to the Commission and to the Execu-
tive Agency in relation to future project  
requirements.
The IEE is a rolling programme, with experi-
ence from the past programmes feeding into subsequent ones. As such, evaluation results are used systematically in the design and draft-ing of the legislative proposals for subsequent programmes. 47. 
Monitoring of the programme is done on a  project basis, allowing the impacts of the pro-gramme to be determined with regard to its  
objectives. It is hardly feasible to introduce  monitoring at a higher aggregated level given the difficulty to isolate causal links between  the programme results as catalyst and macro-economic trends such as the EU’s energy  
dependency. The Commission considers that  this does not compromise the overall quality 
and design of the IEE programme.
See also reply to paragraph 23.
48. 
Feedback from public authorities across the EU, 
as witnessed by the recent growth in demand 
for such agencies from public authorities,  
confirms that they believe a local or regional 
agency makes a significant impact. The fact  
that each public authority must not only co-finance during the first 3 years of IEE support 
but must also ensure the continuation of the 
agency for a further 5 years afterwards confirms 
that local authorities are convinced about the 
value of having such an agency. See also reply 
to paragraph 28.
49. 
Change in behavior can only be estimated over 
the long term, using consolidated data such as those provided by EUROSTAT. Nevertheless the programme has had a positive impact on the development of EU policy.
41
50. 
Concerning the use of evaluation in the design 
of successor programmes, existing evaluation findings (mid-term/final evaluation of an on-
going programme and ex post evaluation of  the previous programme) are a key input to  the ex ante evaluation/Impact Assessment of the successor programme. 
IEE is a rolling programme with experience  
from the past programmes feeding into sub-sequent ones. As such, evaluation results are used systematically in the design and draft-ing of the legislative proposals for subsequent programmes. 
51. 
Regarding performance indicators, delegation of programme management to a full-time team of dedicated professionals in an executive  agency results in a more efficient process of  continuous feedback, which permits the direc-tion of the programme and its priorities to be adjusted / refocused annually in response to changes in the market as well as to the evolu-tion of EU policy.
RECOMMENDATION 2 – MONITORING
Monitoring of the programme is done on a  project basis, allowing their impacts to be  determined with regard to their objectives. 
Monitoring costs should remain proportionate 
and not add significantly to the costs of run-
ning the programme.
RECOMMENDATION 3 – EVALUATION
The Commission intends to implement the  
recommendation regarding the evaluation of 
programmes. A new study is being launched as 
a Tender under the 2008 IEE Work Programme, 
and this will be carried out on a longitudinal basis. 52. 
The Court adds costs incurred by the Commis-sion and the Executive Agency together with “costs” estimated by beneficiaries. These costs 
are of a very different nature and therefore  should be considered separately. Preparing a proposal is an investment in planning a sound and competitive project. Project reporting is a co-financed contractual obligation which pro-
vides the basis for disseminating the results to stakeholders. Programme management costs  
are incurred only by the Commission and Exec-
utive Agency and, for the period in question, 
include investments in the establishment of  
an Executive Agency which will bring benefits and cost-savings in the future.
42
The Court’s survey did not define the nature of 
the costs to be taken into account, nor a method 
for determining them. Survey participants were not asked to provide accounting data, and the 
replies were not audited. The replies are there-fore necessarily very approximate. 
With regard to the disbursement of the pro-
gramme grants, the Court correctly states in  
paragraph 38 that in a programme such as IEE the costs of preparing proposals are front-end 
loaded. In contrast, the pay-out to beneficiar-
ies is largely back-end loaded.
53. 
Working documents to the preliminary draft  budget each year provide breakdowns of  administrative costs of the Directorate Gen-
eral’s activities and of each executive agency
5. 
Since the 2008 procedure, this document also 
includes at the request of the European Par-
liament the percentage of the programmes’  budget used by the executive agency to  
operate.
For those agencies using the Commission’s IT 
accounting system, ABAC, to support their own 
accounting systems, the Commission will offer 
a facility for allocating the agency’s expendi-ture to each of its activities. They will then be 
in a better position to report on costs, includ-ing those for administration. It is planned to offer this facility to certain agencies as from  the 2009 financial year, and to subsequently  extend it to others.
5 Working documents II, III and IV to the Preliminary Draft Budget.RECOMMENDATION 4 – 
MANAGING COSTS
The Agencies using Commission’s IT accounting 
system will be offered a facility for allocating the agency’s expenditure to each of its activi-ties. The extra control burden on both benefici-ary and Commission of collecting information on the costs to the beneficiary of preparing  
proposals is not currently justified. The Com-mission maintains records and analysis of its 
programme management costs.
43
ANNEX 1 
Extract of the: Mid Term Evaluation of the Multi-annual Programme for Action in the Field 
of Energy “Intelligent Energy for Europe, 2003-2006”,
ECOTEC Research & Consulting Limited, UK
Programme Added Value (page 58)
In the view of the evaluators an important  
aspect of added value that the IEE programme brings is the strength of the synergy between the fields. This can have the effect of bringing together actors in renewables, energy efficiency and transport. Evaluations of predecessor pro-grammes and our consultations have pointed out that the projects funded have inspired mem-ber state policy changes and interventions. It is 
too early to say that this will occur as a result of the projects being currently funded. However, in the view of the evaluators as the projects  are of the same nature as in the predecessor programmes it is reasonable to assume that this will occur. This aspect should be covered in the ex-post evaluation of the IEE programme.



European Court of Auditors
Special Report No 7/2008
Intelligent Energy 2003-2006
Luxembourg: Office for Official Publications of the European Communities2008 — 43 pp. — 21 × 29.7 cmISBN 978-92-9207-050-2DOI 10.2865/12922

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SPECIAL REPORT “INTELLIGENT ENERGY 20032006”  
EXAMINES, IN TURN, THE USE MADE OF EU FUNDS, THE SUCCESSES AND LIMITATION OF MONITORING AND EVALUATION, AND THE OVERHEAD COSTS FOR BOTH THE COMMISSION AND FOR PARTICIPANTS OF AN EU SCHEME AIMED AT PROMOTING ENERGY EFFICIENCY AND THE USE OF RENEWABLE ENERGY. THE REPORT MAKES A SERIES OF RECOMMENDATIONS AIMED AT IMPROVING THE DESIGN OF SIMILAR PROGRAMMES IN THE FUTURE, MAXIMISING THE VALUE OF MONITORING AND EVALUATION, AND CONTAINING OVERHEAD COSTS.
EUROPEAN COURT OF AUDITORSQJ-AB-08-003-EN-C
ISBN 978-92-9207-050-2