REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL On the Implementation of the European Energy Programme for Recovery
Date: 2012-08-08
Institutions: European Commission
Subjects: EU programme, co-financing, economic recovery, economic support, electricity supply, gas supply, reduction of gas emissions, wind energy

EUROPEAN COMMISSION 

Brussels, 8.8.2012  
COM(2012) 445 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

On the Implementation of the European Energy Programme for Recovery 

{SWD(2012) 243 final} 

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REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

On the Implementation of the European Energy Programme for Recovery 

1. 

PROGRAMME IMPLEMENTATION IS PROGRESSING 
The European Energy Programme for Recovery (EEPR)1 provides financial support 
to  selected  highly  strategic  projects  in  the  energy  sector.  By  co-financing  these 
projects,  the  programme  helps  the  European  Union  to  progress  towards  its  energy 
and  climate  policy  objectives:  security  and  diversification  of  energy  supply; 
completion  and  smooth  operation  of  the  internal  energy  market;  and  reduction  of 
greenhouse gas emissions. At the same time, by sustaining capital expenditure in the 
real economy, the programme aims at stimulating economic activity and promoting 
growth and job creation.  

Since  last year's report,  the implementation of the EEPR has progressed. To recall, 
the year 2010 was devoted mainly to setting the EEPR in motion. Most of the budget 
available  was  allocated  to  59  projects  in  the  following  sub-programmes:  gas 
infrastructure  (€1363  million);  electricity   infrastructure  (€904  million);  offshore 
wind  energy  (€565  million);  and  carbon  capture  and  storage  (€1000  million). 
Overall, by the end of 2010, grant decisions and grant agreements had been made for 
a total amount of €3833 million i.e. 96.3%  of the total EEPR budget. An amount of 
€146 million that could not be committed to pr ojects in these sectors by the deadline 
of  31  December  2010  was  reallocated  to  a  new  financial  facility,  the  European 
Energy  Efficiency  Fund2,  focusing  on  energy  efficiency  and  renewable  energy 
investments. 

The EEPR was set up in the wider context of the global effort undertaken at EU level 
to face the financial crisis that erupted in 2008 and to stimulate economic recovery. 
Since then, an even more severe crisis is sweeping Europe and therefore policies to 
stimulate recovery remain highly necessary. Given the complexity and the magnitude 
of  the  crisis,  no  single  policy  initiative  or  spending  programme  can  be  expected  to 
deliver economic recovery on its own. However, in this difficult context, the EEPR 
has been and continues to be a useful tool that allows progress in a number of key 
investment  projects,  which  without  public  EU  funding  would  be  at  risk  of  being 
delayed, downsized or cancelled.  

This annual report focuses on the state of play of the programme implementation. A 
more  in-depth  analysis  of  the  impacts  of  the  EEPR  is  provided  by  an  independent 
mid-term evaluation3 carried out in 2011. According to this survey, it appears that the 
programme, by setting in motion construction works and procurements of equipment 
and intermediate manufactured goods, is already generating a meaningful impact on 
the  real  economy.  From  an  energy  policy  perspective  the  programme  concretely 
contributes to deploying low carbon technologies and improving the way the gas and 

1 

2 

3 

Regulation  (EC)  No  663/2009  of  the  European  Parliament  and  of  the  Council  of  13  July  2009 
establishing  a  programme  to  aid  economic  recovery  by  granting  Community  financial  assistance  to 
projects in the field of energy.  
Regulation (EC) No 1233/2010 of the European Parliament and of the Council of 15 December 2010 
amending Regulation (EC) No 663/2009. 
http://ec.europa.eu/energy/evaluations/doc/2011_eepr_mid_term_evaluation.pdf 

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the electricity internal markets work, by providing interconnections between western 
and eastern parts of the EU, in peripheral Member States and in Central and Eastern 
Europe,  by  improving  the  storage  capacities,  by  progressively  completing  a 
bidirectional gas pipeline network and by bringing "energy islands" closer.  

The  actual  implementation  of  the  projects  supported  by  the  programme  had  started 
already in 2010 but it is only in 2011 that it gained momentum and achieved cruising 
speed.  Several  projects  are  finalised  and  many  others  are  on  track,  as  illustrated  in 
the  following  chapters.  In  some  cases  project  implementation  is  challenging  and  is 
advancing  slower  than  initially  planned.  The  economic  and  regulatory  context  is 
particularly challenging for the Carbon Capture and Storage sub-programme, which 
is at a crossroad.  

A  problem  common  to  the  three  sub-programmes  lies  in  the  complex  and  lengthy 
permit granting procedures. The ensuing regulatory uncertainty has led to delays in 
the  final  investment  decisions.  Successful  implementation  of  the  EEPR  needs  a 
strong  commitment  from  all  stakeholders  including  the  Member  States,  in  order  to 
speed  up  the  regulatory  and  permitting  processes.  In  this  respect,  the  Commission 
proposal  on  the  energy  infrastructure  guidelines4  is  expected  to  bring  about  major 
improvements.  The  proposal  contains  provisions  to  accelerate  permit  granting 
procedures,  by  setting  up  single  national  authorities  to  manage  permit  granting 
process,  establishing  a  three  year  time  limit  for  the  permit  granting  decision  and 
increasing transparency and public participation.  

Furthermore, as a consequence of the credit crisis and the regulatory measures which 
followed  (Basel  III,  Solvency  II),  it  has  become  increasingly  difficult  for 
infrastructure  projects  to  access  long  term  financing.  This  coincides  with  the 
unprecedented 
investment  volumes  expected  as  many  Transmission  System 
Operators  (TSOs)  will  need  to  step  up  their  investment  plans  even  threefold.  The 
Commission  proposal  on  the  Connecting  Europe  Facility  (CEF)5,  a  cross-sector 
infrastructure fund, is designed to help projects put together the necessary financing 
package.  The  financial  instruments  under  CEF,  by  bringing  in  new  classes  of 
investors  (pension  and  insurance  funds)  and  mitigating  certain  risks,  should  help 
project promoters in accessing the necessary long-term financing for their projects.  

The Commission monitors closely the progress of all projects and the achievement of 
the  relevant  milestones.  The  Staff  Working  Document  accompanying  this  report 
provides the state of play of each project. In case of delays the Commission is taking 
action to facilitate implementation through intensified dialogue with the beneficiaries 
based  on  frequent  reporting  and  on-site  visits.  However,  when  a  viable  solution  to 
mitigate the delays is not found and progress in implementation cannot be achieved, 
the Commission may terminate its financial support to the project. 

The  European  Energy  Efficiency  Fund  is  in  an  early  stage  of  implementation  as  it 
has been operational only since July 2011. Very intense activities have been carried 
out during the first months of operations to launch it and to start to identify projects 
with a potential for being supported by the Fund. 

4 

5 

Proposal  for  a  regulation  of  the  European  Parliament  and  of  the  Council  on  guidelines  for  trans-
European energy infrastructure , COM(2011) 658 final 
Proposal for a Regulation of the European Parliament and of the Council establishing the "Connecting 
Europe Facility", COM(2011)665 

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2. 

GAS AND ELECTRICITY INFRASTRUCTURE 

2.1. 

Introduction 

The EEPR infrastructure sub-programme supports 44 projects in three major areas of 
activities:  

– 

– 

– 

Gas infrastructure and storage projects. The infrastructure for transporting and 
trading  gas  across  the  EU  needs  to  be  further  integrated  by  constructing  the 
missing  links  between  Member  States  and  removing  bottlenecks  within 
countries.  Security  of  supply  requires  integrated  energy  networks  within  the 
EU,  as  well  as  the  further  diversification  of  EU's  energy  sources  and  routes, 
including Liquid Natural Gas (LNG). 

Gas  reverse  flow  projects.  The  origins  of  this  strand  of  activities  were  in  the 
2009  gas  supply  crisis  that  followed  the  disruption  of  flows  coming  from 
Russia through Ukraine. Most of the Central and Eastern Member States were 
left without gas, not because of lack of gas in Europe, but because the existing 
infrastructures  lacked  the  technical  equipment  and  capabilities  to  reverse  the 
gas flows from East-West to West-East direction. 

Electricity infrastructure projects. The integration of increasing electricity from 
variable  renewable  sources,  high  standards  of  reliability  and  system  security 
and  affordable  energy  prices  require  huge  investments  in  new  infrastructure. 
Furthermore,  a  number  of  Members  States  are  still  "energy  islands"  because 
poorly connected to their neighbours and the internal energy market.  

The  projects  are  implemented  by  the  transmission  system  operators  (TSO)  in  each 
Member  States  or  by  project  promoters.  The  average  length  of  the  projects  is  3-5 
years.  An  amount  of  €2,268  billion  has  been  committed,  of  which  about  €586 
million,  i.e.25.9%,  have  already  been  disbursed  to  the  beneficiaries  by  the  end  of 
March 2012. It should be underlined that no payments can be made until the projects 
have secured the environmental permits. Furthermore, to safeguard the EU's financial 
interests,  payments  are  also  subject  to  the  firm  commitment  of  the  promoters  to 
implement the project through a final investment decision.  

2.2. 

Progress to date  

2.2.1.  Projects completed in 2011 

Out of the 44 projects co-financed by the programme, the following 13 (30%) were 
completed at the beginning of 2012:  

– 

– 

– 

– 

Two gas interconnections connecting Hungary for the first time to both Croatia 
and Romania fostering market integration and development in the region,  

The  reinforcement  of  the  Belgian  gas  pipelines  network  on  the  Germany-
the 
United-Kingdom  axis  enabling  also  reverse  flow  capacity  from 
Dutch/German border to Zeebrugge in Belgium and towards the UK,  

Seven gas reverse flow projects, of which four in Austria and two in Slovakia 
and  one  Czech  Republic.  The  projects  provide  better  access  to  the  Austrian 
storage facilities in Baumgarten to all the neighbouring countries. 

Two  electricity  interconnections  between  Portugal  and  Spain,  which  improve 
the  Iberian  electricity  market  functioning  and  the  integration  of  renewable 
energy sources;  

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– 

One electricity interconnection between Austria and Hungary, which provides 
considerable additional transfer capacity on the congested south-south direction 
and enables thus further market integration and trade.  

2.2.2.  Progress of the on-going projects 

Out  of  the  remaining  projects,  18  (10  for  gas  and  8  for  electricity)  are  progressing 
according  to  schedule  (40%).  They  have  engaged  in  tendering  procedures  and 
construction  works,  stimulating  growth  and  creating  jobs  through  the  purchase  of 
cables, pipes, compressor stations or other equipment. 

For  gas,  the  project  implementation  has  progressed  well  in  the  following  three 
European regions: 

– 

– 

– 

The five projects in the Baltic region (Poland, Denmark, Lithuania and Latvia)  

Two projects in Central Eastern Europe (Slovenia and Czech Republic) 

Three projects in Western Europe (Belgium, France and Spain)  

Regarding electricity, good progress has been made in implementing the projects in 
the following two regions: 

– 

– 

The three interconnection projects in the Baltic region (Estonia, Latvia, Finland 
and Sweden) 

Five projects in Western Europe (Germany, Ireland, United-Kingdom, France, 
Spain, Italy and Malta)  

Eventually,  only  13  projects  out  of  the  44  (30%)  are  progressing  slower  than 
originally  expected  because  of  technical,  regulatory  and  commercial  difficulties.  In 
this case, project promoters have requested, on average, 18 months extension of the 
implementation period. 

Difficulties in the finalisation of agreements for gas supply are at the origin of delays 
in  three  important  projects  aiming  at  diversifying  EU's  gas  imports  through  new 
routes and new sources: Galsi  from Algeria to Italy, Poseidon from Greece to Italy 
and  Nabucco  from  Turkey  to  Austria  bringing  new  Caspian  gas  and  new 
counterparties  (Azerbaijan,  Turkmenistan)  and  possibly  Iraqi  gas.  The  support 
offered  by  the  EEPR  to  these  projects  has  been  essential  to  bring  them  closer  to  a 
final  investment  decision  which  ultimately  depends  on  a  decision  by  the  gas 
producers to ship gas through these pipelines. Negotiations in view of such decisions 
are on-going6 and could hopefully be taken in the course of this year. Any sign of a 
weakening  EU  support  to  these  projects  would  send  the  wrong  signal  to  the  gas 
producers at this time of intensive commercial negotiations. 

In  other  cases,  tendering  procedures  have  turned  out  to  be  more  complex  than 
initially  expected  for  technical  reasons,  in  particular  for  three  projects:  the 
interconnection  between  Bulgaria  and  Romania,  the  interconnection  between  Italy 
and  Malta  and  the  reverse  flow  project  in  Portugal.  Granting  of  administrative 
authorisations  is  another  major  factor  delaying  the  implementation  of  several 
projects,  in  particular  the  reverse  flow  projects  in  Poland  and  the  Czech  Republic. 
Some  projects  were  delayed  because  of  regulatory  aspects  or  decrease  of  market 
interest  because  of  the  economic  slowdown,  as  it  appears  to  be  the  case  for  the 

6 

In the case of the Poseidon project, the negotiations with the developer of the Shah Deniz 2 field have 
recently  been  discontinued  and  the  project  sponsors  consider  other  sources  of  supply  available  in  the 
Caspian or Middle East. 

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reverse flow projects in Romania and Hungary, for the expansion of one gas storage 
in  the  Czech  Republic  located  in  Tvrdonice  and  for  the  interconnection  between 
Hungary  and  Slovakia.  Finally  the  interconnection  between  Bulgaria  and  Greece, 
highly  important  for  the  security  of  supply  of  the  region,  has  been  delayed  due  to 
legislative changes in Bulgaria. 

2.3. 

Conclusion 

During the second year of implementation, good progress has been demonstrated for 
electricity and gas infrastructure projects, notably for the reverse flow gas projects, 
with 13 projects completed and in operation. A large majority of the projects, 31 out 
of 44 or 70 %, are either completed or progressing according to plan. 

Overall,  the  EEPR  is  concretely  improving  the  way  the  internal  market  works,  by 
providing  interconnections  between  western  and  eastern  parts  of  the  EU,  and 
increasing the security of supply of the country and regions concerned7. The EEPR is 
giving the gas infrastructure a truly European dimension, allowing quicker and more 
efficient implementation of the third internal market package and of the Regulation 
on  security  of  gas  supply8.  Some  remarkable  steps  forward  are  being  taken:  the 
reverse flow gas projects are up and running and avoided a gas supply crisis in the 
recent  February  2012  cold  spell.  The  strong  EEPR  support  to  the  Southern  Gas 
Corridor  projects  has  been  instrumental  in  the  negotiations  with  supply  countries, 
which are intensifying. The electricity projects supported are lending strong impetus 
to  completion  of  the  internal  market  with  the  full  participation  of  all  parts  of  the 
European  Union  and  bringing  major  improvements  to  the  security  of  supply  of  the 
countries and regions concerned. The electricity network projects will contribute to 
absorb the electricity produced from renewable  sources.  The completion of  an  EU-
wide energy infrastructure system is progressing thanks to the clearing of bottlenecks 
and the progressive integration of "energy islands" such as the three Baltic States, the 
Iberian Peninsula, Ireland, Sicily and Malta. Moreover, the programme has sped up 
implementation  of  projects  by  financing  specific  action  and  construction  works, 
helped project promoters to secure additional funding from financial institutions and 
helped  a  great  number  of  project  that  were  facing  serious  environmental  permit 
problems to receive priority from the national administrations. 

To  date,  it  is  foreseen  that  the  majority  of  the  31  on-going  projects  should  be 
completed  during  the  years  2012-13  whilst  only  a  few  projects  will  run  until  2017 
given the technical, regulatory and commercial challenges they face. 

3. 

OFFSHORE WIND ENERGY (OWE) 

3.1. 

Introduction  

The  EEPR  Offshore  Wind  Energy  sub-programme  consists  of  nine  projects  in  two 
main areas of activities: 

– 

Support to the large scale testing, manufacturing and deployment of innovative 
turbines and offshore foundation structures,  

7 

8 

An in-depth analysis of the Danube Region Gas Market Model carried out by the Regional Centre for 
Energy Policy Research demonstrates the benefits of interconnections and their impact on the reduction 
of gas prices in the region, which may reach up to 6%. (The projects examined for instance are the HU-
SK  interconnection,  the  BG-EL  interconnection  and  the  PL  LNG  project.)  For  more  information: 
http://www.rekk.eu/images/stories/letoltheto/kaderjak_drgmm_ep_20120620_v2.pdf 
Regulation EU n°994/2010 of 10 October 2010. OJEU L295 of 12.11.2010 

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– 

Support to the development of module-based solutions for the grid integration 
of large amounts of wind electricity generation.  

The beneficiaries of the grants include project development companies, engineering 
companies,  renewable  energy  producers  and  TSOs.  The  full  available  EEPR 
envelope  of  €565  million  has  been  committed  and  payments  to  all  nine  project 
totalled €189 million at the end of March 2012.  

3.2. 

State of play of the OWE projects 

The state of implementation of the projects shows a diverse picture, with one project 
already completed; others well on track, but some facing major delays.  

3.2.1.  Offshore turbines and structures (six projects) 

Through the EEPR grants, the installation of the first large size (400 MW) offshore 
wind farms far from shore (more than 100 km) and in deep waters (more than 40 m) 
is now secured. Indeed, EEPR money has been instrumental for the selected projects 
to obtain the necessary loans from banking consortiums in order to achieve financial 
close.  The  EEPR  action  on  the  Thornton  Bank  in  Belgium  has  been  completed  in 
September 2011.  

The  four  German  wind  farm  projects  are  all  already  in  the  manufacturing  and/or 
installation phase. Furthermore, the first offshore wind electricity generated through 
infrastructure co-financed by the EEPR has already been fed into the German grid in 
Autumn  2010.  While  these  projects  are  overall  advancing  very  well,  they  do  show 
some  delays  as  compared  to  the  original  planning.  These  are  due  to  three  main 
reasons: delays of the guaranteed grid connection; delays in the permitting process; 
and  delays  for  technical  reasons  (quality  deficiencies  in  production  and  adverse 
weather  conditions).  As  a  consequence,  one  project  (Bard  I)  has  already  been 
formally  rescheduled  through  amending  the  grant  agreement  and  the  others  are 
expected to request an extension of the grant agreement duration of one to two years. 

The  project  aiming  at  installing  an  offshore  wind  energy  technology  test  centre  off 
Aberdeen  (UK)  faces  more  important  delays.  An  appropriate  company  structure, 
with  involvement  of  multiple  beneficiaries,  had  to  be  put  in  place  to  allow  for  the 
combination  of  a  commercial  wind  farm  with  a  testing  facility.  In  addition,  the 
permitting process takes longer than expected. 

3.2.2.  Offshore wind-grid (three projects) 

The  three  offshore  wind-grid  projects,  aiming  to  install  innovative  technologies  for 
the integration of offshore wind electricity (High Voltage Direct Current – Voltage 
Source  Controlled),  are  less  mature.  The  major  objective  of  these  projects  is  to 
provide  the  first  fundamental  building  blocks  for  a  European  offshore  grid.  They 
have  a  high  level  of  complexity  not  only  from  a  technological  but  also  from  a 
regulatory and commercial point of view. Delays in decisions on the co-financing by 
national  regulatory  authorities  mean  the  timeline  of  these  projects  should  be 
rescheduled,  requiring  an  extension  of  project  duration  until  2016-2018.  However, 
despite these difficulties, wind-grid integration projects took significant step forward 
in 2011, by refining their business cases and by defining the optimal routes for cables 
and the technical specification of the interconnection modules.  

3.3. 

Conclusions  

The  EEPR  support  to  "turbines  and  structures"  projects  will  result  directly  in  an 
additional 1500 MW of carbon-free electricity production capacity and some projects 

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are  already  delivering  part  of  this  result.  The  EEPR  projects  are  also  generating 
important  learning  effects,  for  instance  shortening  of  production  time  of  offshore 
foundations and decreases in the installation time of foundations. 

In some cases project implementation is challenging and is advancing slowly. Timely 
implementation of the EEPR actions depends heavily on swift progress in permitting 
procedures.  Other  framework  conditions  are  also  crucial  such  as  the  guarantees  for 
offshore wind farms to obtain a grid connection.  

For  the  wind-grid  integration  projects,  the  licensing  of  the  wind  farms  to  be 
connected  as  well  as  the  co-financing  to  be  obtained  through  the  regulatory 
authorities  are  the  crucial  hurdles  to  be  addressed  before  the  final  investment 
decisions can be taken. 

4. 

CARBON CAPTURE AND STORAGE (CCS) 

4.1. 

Introduction 

Achieving the  ambitious  EU energy  and climate policy objectives, in particular the 
decarbonisation  of  the  energy  system  by  2050,  requires  the  deployment  of  low 
carbon technologies, including carbon capture and storage (CCS). The EEPR, in line 
with  the  Strategic  Energy  Technology  (SET)  Plan,  targets  the  demonstration  of 
integrated CCS projects with a view to making this technology commercially viable 
by the end of the decade. The programme provides financial support of €1 billion to 
six projects in the power generation sector, out of which €392 million have already 
been  paid  to  the  beneficiaries  as  of  March  2012.  The  selected  projects  cover  three 
different  CO2  capture  technologies  as  well  as  different  onshore  and  offshore  CO2 
storage  concepts:  hydrocarbon  fields  (with  and  without  enhanced  oil  recovery)  and 
saline  aquifers.  This  approach  recognises  that  integrated  CCS  projects  are  a  novel 
technology challenge and their demonstration needs to address the range of technical, 
economical and regulatory challenges. The coordinators of the projects are utilities or 
energy  companies.  Other  beneficiaries  include  energy  transmission  companies, 
equipment suppliers and research institutes. 

4.2. 

State of play of the CCS projects  

The EEPR enabled a fast start of all six projects (in Germany, the United Kingdom, 
Italy,  the  Netherlands,  Poland  and  Spain).  For  one  of  these  the  EEPR  was 
instrumental in leveraging national funding. In the area of permitting, the EEPR has 
triggered a targeted dialogue and cooperation with authorities and local populations. 
Some  projects  may  have  also  helped  in  speeding  up  the  actual  implementation  at 
Member  State  level  of  the  legal  framework.  Furthermore,  the  detailed  engineering 
studies  performed  so  far  have  allowed  utilities  to  gain  insight  know-how  on  the 
future operation of an integrated CCS facility. The characterisation work on specific 
geological storage locations has also led to the identification of suitable sites for the 
permanent and safe storage of CO2. 

The CCS sub-programme includes an obligation for projects to exchange experiences 
and  best  practices,  which  was  made  operational  by  the  establishment  of  the  CCS 
Project Network. As in 2010, the Network published in 2011 public summaries of the 
lessons learned by projects on CO2 storage, public engagement and permitting. 

In 2011 most projects concluded the Front End Engineering Design (FEED) studies 
for  the  capture  unit,  including  pre-selection  of  the  equipment  supplier  which  is  the 
last  technical  step  before  commissioning.  Characterisation  work  on  the  selected 

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storage  sites  has  continued  alongside  development  of  the  optimal  CO2  transport 
routes. 

Despite  these  positive  steps,  the  CCS  sub-programme  as  a  whole  is  facing  some 
major  regulatory  and  economic  uncertainties  that  risk  undermining  its  successful 
implementation.  The  fact  that  none  of  the  projects  have  yet  adopted  the  final 
investment  decision  (FID)  illustrates  the  on-going  difficulties.  The  first  project 
expected to be ready to adopt the FID – by October 2012 – is in the Netherlands. For 
all  others,  FID  is  not  expected  before  2013.  This  milestone  has  been  delayed  for  a 
variety of reasons, including: all permits have not yet been secured; characterisation 
of the storage sites has not been finalised; financial structure has yet to be completed. 
Furthermore,  the  low  carbon  price  under  the  Emissions  Trading  System  (ETS) 
renders the short and medium-term business cases for CCS unattractive and has also 
increased  the  estimated  operating  costs  of  the  plants.  Finally,  due  to  the  current 
economic context, projects are facing increasing difficulties to access to financing. 

In  early  2012  the  EEPR  project  in  Germany,  Jaenschwalde,  was  terminated.  In 
addition to facing public opposition in the potential storage locations, the promoters 
concluded  that  the  substantial  delays  in  the  German  transposition  of  the  CCS 
Directive would not allow the necessary CO2 storage permits to be obtained within 
the project timeframe. 

Given this difficult context, it appears that the future of CCS is at a crossroad. The 
Commission is closely discussing with the CCS stakeholders and project promoters 
the most appropriate follow-up to the EU support to this strategic sector, as well as 
options that could enable EEPR funds to be used to best effect by projects taking a 
positive FID. 

4.3. 

Conclusions 

Good progress was achieved in finalising detailed technical studies for capture units 
and, to a lesser extent, validation of storage sites.  

However,  after  its  second  year  of  implementation  the  CCS  sub-programme  is  at  a 
crossroads: one project has been cancelled and none of the remaining five have yet 
adopted  the  final  investment  decision.  There  are  several  reasons  for  the  delays:  all 
permits have not yet been secured; characterisation of the storage sites has not been 
finalised; financial structure has yet to be completed. 

As  a  result,  most  plants  are  likely  to  postpone  operation  to  2016/2017.  CCS  is  a 
novel activity that, in addition to validating technical and economic aspects, needs to 
comply  with  new  regulatory  frameworks  (e.g.  for  CO2  storage).  Industry  and 
Member States will need to intensify their efforts if the delays relating to regulatory 
and financial aspects are to be mitigated for these projects. 

5. 

THE EUROPEAN ENERGY EFFICIENCY FUND (EEE F)  

5.1. 

Characteristics and objectives of the Fund 

Regulation  (EU)  No  1233/2010  provides  for  the  creation  of  a  financial  facility  to 
support  energy  efficiency  and  decentralised  renewable  energy  investments.  The 
Regulation  allocates  to  the  new  facility  the  amount  of  about  €146.3  million, 
corresponding to the EEPR appropriations for commitments not used at the date of 
31 December 2010. 

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Following  the  entry  into  force  of  the  EEPR  amended  regulation,  the  Commission 
entrusted the European Investment Bank (EIB) with the task to create an investment 
fund  and  launch  its  operation.  A  Delegation  Agreement  between  the  Commission 
and the EIB was signed for this purpose in March 2011. The "facility" takes the form 
of  an  investment  fund  called  the  European  Energy  Efficiency  Fund  (EEE  F)9,  a 
technical assistance (TA) and awareness raising activities. The Fund is endowed with 
a capital of €265 million, of which the  EU conferred €125 million. Other founding 
partners contributed as follow: the EIB €75 million, Cassa Depositi e Prestiti (CDP) 
addition  to  providing  capital  to  the 
€60  million  and  Deutsche  Bank  €  5  million.  In 
Fund, the EU contributes €20 million for technical assistance (TA) grants and €1.3 
million  for  awareness  raising  activities.  Participation  in  the  Fund  is  open  to  other 
financial institutions that may be interested in joining 

In line with the Europe 2020 strategy for smart, sustainable and inclusive growth, the 
EEE  F  complements  and  contributes  to  the  current  energy  efficiency  policy 
framework, in particular the Energy Efficiency Plan 201110, and the proposal for an 
Energy Efficiency Directive11. 

The  Fund  invests  in  energy-saving/energy-efficiency  measures  (70%),  renewable 
energy projects (20%), and clean urban transport (10%), with a focus on investments 
in  urban  settings.  The  beneficiaries  of  the  facility  are  local,  regional  and,  where 
justified, national public authorities; and public or private entities acting on behalf of 
public authorities.  
The  Fund  offers  different  types  of  debt  and  equity  instruments12  adapted  to  the 
project  structure  and  needs.  In  particular,  it  may  provide  the  following  types  of 
financial services: medium and long-term senior loan, subordinated loans, mezzanine 
debt  investments,  guarantees,  equity  and  quasi-equity  investments,  or  forfeiting13. 
The  technical  assistance  component  provides  project  promoters  with  financial 
support in form of grant to help structuring projects and preparing applications to the 
Fund. 

The  EEE  F  was  established  to  address  energy  efficiency  main  market  barriers:  the 
lack  of  adapted  financing,  low  market  confidence  for  these  investments  and  high 
capital  cost  for  project  development.  The  Fund  thus  aims  at  financing  concrete 
replicable  "lighthouse  projects"  to  demonstrate  the  bankability  of  energy  efficiency 
investments  by  providing  tailored  financing,  currently  not  offered  by  the  market, 
especially  supporting  Energy  Service  Companies  (ESCOs)  development  and  attract 
private additional financing.  

5.2. 

Progress to date 

Following  the  signature  of  the  Delegation  Agreement,  the  EIB  undertook 
expeditiously all the necessary legal steps necessary to have the Fund up and running 
and operations started on 1 July 2011. Deutsche Bank, selected as fund manager, first 
undertook a series of communication and marketing actions to advertise the Fund in 

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The EEE F SA is a structured finance vehicle (SICAV-FIS under Luxemburg law) 
COM(2011) 109 of 8.3.2011 
COM(2011) 370 of 22.6.2011 
The EEE F does not provide grants or subsidised interest rates (soft loans). These financial incentives 
are not considered the appropriate incentive for projects generating sufficient revenue to be financially 
viable 
A forfeiting scheme consists of selling future receivables (energy savings) at a discount rate. Forfeiting 
schemes under EEE F are additionally secured though energy performance contracts as collateral. 

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order  to  establish  a  deal  pipeline  and  build  valuable  contacts  with  municipalities, 
local  authorities  and  also  potential  investors  to  enlarge  the  size  of  the  Fund  in  the 
future. In this context, the website www.eeef.eu was created and a web based project 
submission tool was activated to facilitate the interaction between the fund manager 
and applicants. As regards the technical assistance component, its management was 
sub-delegated  to  the  fund  manager  by  the  EIB  and  the  first  requests  are  being 
examined. 

During  the  first  months  of  activity  of  the  Fund,  municipalities,  ESCOs  and  other 
entities  acting  on  behalf  of  public  authorities  have  already  submitted  to  the  fund 
manager a large number of proposals for projects in the fields of cogeneration, public 
lighting,  district  heating  and  building  upgrade.  Several  promising  projects  are 
undergoing  in-depth  assessment  and  the  first  deals  are  underway.  As  with  other 
financial  instruments,  many  pre-selected  projects  require  long  public  procurement 
procedures  and  complex  deal  structuring.  The  first  projects  will  serve  as  pilot 
experience  to  foster  in  particular  ESCOs  structures.  In  this  context,  a  standard 
forfeiting contract for energy performance based services was elaborated, which will 
facilitate the development and replication of innovative deals with ESCOs.  

After  the  typical  fund  ramp-up  period,  it  is  expected  that  further  projects  will 
materialize.  By  June  2013,  as  required  by  the  Regulation  1233/2010,  the 
Commission  will  report  to  the  Parliament  and  Council  on  progress  and  possible 
future development of the Fund.  

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