Financing models for energy-efficient street lighting

Panel: 3. Local action

This is a peer-reviewed paper.

Authors:
Aleksandra Novikova, Institute for Climate Protection, Energy and Mobility/ Ernst-Moritz-Arndt-Universität Greifswald, Germany
Matthias Hessling, SWARCO V.S.M. GmbH, Germany
Kateryna Stelmakh, Institute for Climate Protection, Energy and Mobility (IKEM), Germany

Abstract

Investment in the upgrade of street lighting infrastructure may offer energy savings up to 80%. It is also very cost-efficient and has a short payback period. In spite of these arguments, a large share of the infrastructure in many European countries requires refurbishment. The budgetary constraint of its owners, who are often municipalities, is a common reason. To overcome it, creative business models are required to attract other investors and overcome the barrier of high up-front investment costs.

The paper summarizes the results of a piece of research, which aims to find suitable models to finance urban street lighting infrastructure. The geographical focus is on the countries of Central Europe, namely Austria, Croatia, the Czech Republic, Germany, Hungary, Italy, Poland, Slovakia, and Slovenia. The research represents one of the tasks of Dynamic Light project, which aims to promote dynamic, intelligent and energy efficient urban lighting. The project is supported by the Interreg Central Europe platform.

The paper provides a review of existing financing models, including self-financing, debt-financing, third party financing, and project finance. The paper further analyses these models using a common framework. In particular, it provides the overview of each model, identifies the projects to which it could be applied, specifies its advantages and disadvantages, and provides a case study. The paper concludes with recommendations for decision-makers on finding a suitable financing model.