“Energiefonds Den Haag (ED) C.V”. is a revolving fund under the form of a limited partnership under Dutch law (C.V. or Commanditaire Vennootschap) incorporated by the Municipality of The Hague in 2013 and aims at providing revolving finance to urban development projects concerning renewable energy and energy efficiency.
ED has been created in the light of the European Commission’s wish to have an alternative use of the available ERDF (European Regional Development Fund) funds which were mainly used as a grant instrument by the regions. An alternative use is for example the European Commission’s policy initiative JESSICA (Joint European Support for Sustainable Investment in City Areas), designed to help Member States in using financial engineering mechanisms to support investment in sustainable urban development in the programming period 2007-2013. JESSICA’s mechanism enables public funds to be invested in a repayable way, thus to be recovered and become available for further reinvestment in other urban development projects.
The municipality of The Hague wanted to have a leadership role in the development of this kind of financial instruments and decided to create a Holding Fund ‘Holdingfonds Economische Investeringen Den Haag” (HEID) to support integrated sustainable urban development within the framework of JESSICA. Based on a study in 2011 by the The Hague steering group of framework “Opportunities for West' (the programme framework being the beneficiary of ERDF funds) indicating that there was space and need for a fund for energy efficiency investments and a fund for spatial economic development, and in close cooperation with 'Opportunities for West" and under guidance of the EIB, it started in 2012 a pilot for implementation of the JESSICA financial instrument. It created two JESSICA Urban Development Funds: JESSICA ‘Energiefonds Den Haag’ (ED) focused on renewable energy and JESSICA ‘Fonds Ruimte en Economie Den Haag’ (FRED) focused on the development of small scale business premises and retail, both under the umbrella of the Holding Fund HEID. The three funds went operational on October 1st 2013.
The municipality aims at creating a multiplier effect in investments, through the revolving character of the funds, but also by attracting complementary financing at both the funds and projects level.
Energy Fund ED deploys financial instruments such as provision of equity, (subordinated) loans and guarantees at sub-commercial terms (below market conditions due to market failure) to private or public investors that carry out sustainable urban development projects. Its beneficiaries are, for example, urban development projects aiming at the enlargement of the district-heating network, geothermic drillings, and comprehensive energy supply for clusters of buildings and sustainable power stations feeding the district heating- and cooling network.
ED has received 4M € funding from the Holding Fund and has the obligation to pay out all funds to urban development projects by 31 December 2015.
An evaluation of the pilot project published in April 2015 based on results through the end of December 2014 revealed that, though no assurance could be given, the Energy Fund was on its way to achieve its loan granting target by the end of 2015. Though only one project of 72K € had materialised, there were 4 other projects for a total loan amount of 3,8M € that were in the process of being granted. In July 2015 it was announced that a second project, Green Well Westland, of 2M € had been granted a loan of 0,6M € and that the Holding Fund HEID had requested additional funding from its funding partners in order to assure the availability of necessary additional funding in the ED and FRED funds as a result of their success.