Creating an innovative financial mechanism based on public-private partnership (PPP) in the Nord Pas-de-Calais Region (France)

Eliane Métreau and José Lopez, International Consulting on Energy

Keywords

financing, energy efficiency, local communities, roof insulation, public-private partnership, investment fund, soft loans

Abstract

The Regional Government of Nord Pas de Calais (France) is developing innovative financial mechanisms based on public-private partnerships (PPP) which is likely to significantly increase the volume of investment in the fields of energy efficiency and renewable energy. Two types of mechanism are being developed.

The first is based on the granting of soft loans to households wishing to carry out loft or complete insulation work or to build their housing in accordance with high quality environment norms (HQE). Financing of the interest rate subsidy is shared between the Regional Government and the financial institution that proposes this product to its clients.

The second instrument is a Public-Private Regional Investment Fund in which the public capital commitments will have a relative majority. The Fund will invest exclusively in energy efficiency and renewable energy projects in the public and tertiary sectors that are located in the Nord Pas de Calais Region. The public participation ensures a mitigation of risks for private investors and makes the Fund more attractive. It is expected that the Fund will be able to provide various forms of financing: equity for the setting up of Special Purpose Vehicles (such as ESCOs), loans with preferential conditions, convertible debts, etc.

The article will present the setting-up, in process, of the two mechanisms and the institutional, market, cultural, technical and economic conditions needed to guarantee the success of such instruments.

The authors wish to debate the conditions and opportunities of and the obstacles to the development of new market-based instruments.