LIFE-REFINEE Regional-based financing schemes to pool private investments in SMEs energy efficiency plans

Today, companies are facing the challenge of aligning their business models with the goals of a climate-neutral economy. Many SMEs, embedded within supply chains with large corporations as clients, are already required to disclose sustainability data without having the knowledge or resources to do so. At the same time, the global energy crisis of 2022 has made them more aware of the 'E' component of ESG.
In most European regions, industry is responsible for a significant share of primary energy demand and GHG emissions, as recognized also by the Energy Efficiency Directive (EED) and the Renewable Energy Directive (RED). However, most SMEs have not tackled yet the clean transition challenge, mainly due to the lack of internal technical capacity and financial resources to implement ambitious energy efficiency plans tailored on their productive sites’ specificities. On the other hand, private investors are reluctant and still view this type of investments as risky, complex or insufficiently profitable.

In Friuli Venezia Giulia the consortium will set up and test a basket-type debt instrument to respond to the financial needs of SMEs.
The basket bond/loan structure in FVG will target SMEs with particular focus onto those included in value chains identified as strategic in the Regional Innovation Strategy (RIS3). Energy efficiency projects will have a minimum size of 800.000 Euro per company. Between 25 and 40 SMEs will be targeted, with a total financial dimension of about 50 million Euro.
In Istria, the consortium will create a hybrid financial scheme to support SMEs sustainable energy investment and will promote the establishment of Industrial Energy Communities.
The financing scheme will be developed in a form of a hybrid financial instrument which consists partly of a grant related to finance the technical design for the establishment of “Industrial Energy Communities (IEC)” and a loan with a lower interested rate, partly covered by the Istrian Region and local authorities. The private investments leverage will be at least three times of the public funds, with a potential size of 3/3.5 million Euro.
At the beginning, the consortium will focus on designing financing schemes aligned with EU, national, and regional energy policies. Agreements with investors and governance structures will support long-term financing options.
Later, SMEs will be engaged, especially in strategic regional sectors, to boost awareness of the benefits of clean transition investments. Partnerships with industry associations and clusters aim to increase project ambition and sustainability.
Once SMEs have been targeted, technical assistance and financial advisory services will be rolled out before the effective launch of the financing schemes.
In conclusion, a replicability and sustainability mechanism will assess the scalability across Slovenia, Italy, and Croatia and the potential application to other EU regions.