Finance guidance tool
This tool has been designed to help you find the right funding for your projects. It is based on a questionnaire that will help you define your financing needs and filter the types of funding that are appropriate.
Please select one or more sectors which apply for your project or portfolio
Built Environment
Will the upcoming investments have an impact on the buildings sector? Will the investments drive a positive transformation of the buildings sector?
Green Infrastructure and nature based solutions
Will the investment fund infrastructure measures with a positive impact on CO2 reduction in their city/municipality?
Waste and circular Economy
Does the investment produce a discernible improvement in the city's waste management? Will the investment reduce the city's waste generation?
Transportation
Does the investment relate to the passenger transportation sector or other transportation modes? Can significant savings be achieved because of the investment?
Energy systems
Does the investment result in more sustainable energy generation? Does the transformation create any apparent savings in emissions due to the use of renewable energy?
By this selection, only the questions relevant to your financing project will be displayed.
There is further information provided by moving the mouse pointer over the Sectors and questions. Multiple selection is possible.
Pros
Cons
Type of project financed
Related Products
Municipal budget spendingResource
- Own and design the project
- Pay no interest on capital
- Must finance all upfront costs
- Bear all investment risks
- May lack the capacity
- May lack the transparency
- Any type given the budget availability and expertise
Revolving FundResource
- The fund can reuse the capital
- Can design a self-sustaining fund with a long-term orientation
- May attract private investment
- Face high transaction costs for the fund setup
- Must allocate manpower for the duration of the whole project
- May experience tensions if private and public capital is merged
- Long-term projects with multiple objectives in medium to large size municipalities
- For smaller municipalities, they can merge their funds
- Internal revolving fund and outsource project implementation to service providers and ESCOs
- External revolving fund with multiple financiers, service providers, and ESCOs
Revolving fund (Intracting)Resource
- Can reuse capital
- Do not need external capital
- Cooperate within their units
- Pay no interest on capital
- Must finance all upfront costs
- Bear all project risks
- May be less efficient than a private actor in project implementation
- Any project, including small-scale and not attractive to private investors
TaxesResource
- Interest free capital
- Tax burden on future beneficiaries of the project
- Risk of not achieving projected tax revenues
- Meet with local resistence against higher taxes
- Medium and long term urban development projects
- Tax Increment Financing (TIF)
- Land value Capture (LVC)
Technical AssistanceResource
- Skilled and dedicated technical experts for designing and managing the projects
- Training of local staff through experts
- No cost of technical experts
- Medium and long-term urban development projects
GrantResource
- No need to repay capital
- Pay no interest on capital
- High competition for limited resources
- Can change with political priorities
- Design project to suit eligibility criteria
- Depends on the grant
- EU grants
- National grants
- Regional grants
Partial Grant plus Partial Self-financeResource
- No need to repay capital
- Pay no interest on capital
- High competition for limited resources
- Can change with political priorities
- Design project to suit eligibility criteria
- Medium to large-scale project
- EU grants
- National grants
- Regional grants
Blended Finance - Partial grant plus partial self-finance plus partial debt financeResource
- Need to repay debt capital only
- Need to pay interest on debt capital only
- High competition for limited resources
- Can change with political priorities
- Design project to suit eligibility criteria
- Still pay interest on capital borrowed
- Large projects
Concessional loanResource
- Pay low-interest rates
- Can access capital
- Can combine this model with others (e.g., a revolving fund)
- Still pay interest on capital
- Particularly accessible for public energy efficiency projects
- Development banks such as EIB, KfW, etc.
Green loansResource
- Reduced interest rates
- Can access capital
- Can combine this model with others (e.g., a revolving fund)
- Should fit the eligibility criteria of green projects
- Small to medium-sized green projects
- Green investment loans
- Green mortgage
Commercial loanResource
- Can access capital
- Can combine this model with others (e.g., a revolving fund)
- Obtain conventional debt based on their credit record
- Pay interest at market rates
- Do not have access to special conditions for energy-saving projects
- Financially sustainable infrastructure projects of various sizes
- Commecial banks
- Green development banks
GuaranteeResource
- Project security from third party
- Improves the credit quality/credit rating
- Guarantee fees
- Financially sustainable infrastructure projects of various sizes
Municipal BondsResource
- Can access capital at a lower cost than that available from commercial bank loans
- Carry costs of extensive preparation
- Needs either a good credit rating or access to a bond agency
- Medium to large-scale financially sustainable projects
- Municipal Bonds
- General Obligation Bonds
- Revenue Bonds
- Green Bonds
- Sustainability Bonds
- Sustainability-linked Bonds
- Mini Bonds
Institutional investorsResource
- Enjoy a low-cost of capital because institutional investors are long-term oriented and risk-averse
- May need to deal with a lack of experience of institutional investors in sustainable projects
- Carry high transaction costs
- Large projects are competitive as compared to financial risks and returns
- Pension funds
- Mutual funds
- Hedge funds
- Insurance funds
Simple private contracting modelResource
- Can use off-balance sheet financing
- Can select specialised companies through a tendering process
- May incur higher financing costs than those charged for concessional loans
- May have limited access to public support
- Medium to large-scale projects
Model with forfaiting and waiver of defenceResource
- Can use off-balance sheet financing
- Can select specialised companies through a tendering process
- Pay lower interest rates than those incurred under the simple contracting model
- Face higher interest rates than in concessional loans
- Must contend with highly complex financing arrangements
- Must provide a guarantee for a bank
- Medium to large-scale projects
Private equity/Green equityResource
- Can finance innovative, high-risk, niche projects
- Raise huge capital
- Risk losing control over the project
- High dependency on one investor
- Medium to large-scale projects
- Venture Capital
- Green Equity
Energy Efficiency Obligation Scheme (EEOS)Resource
- Benefit from the pressure created by a EEOS on utilities to meet targets through financial penalties
- Do not bear high upfront investment costs
- Need a strong regulatory framework
- Need strong governance
- Possible in countries that have implemented EEOS
On-bill financingResource
- Repay investments through bills
- Enjoy a relatively simple implementation process
- May encounter challenges arising from a lack of experience because the model is rarely implemented in Europe
- Small to medium-sized projects
EPC – Guaranteed savingsResource
- Obtain new infrastructure without peaks in their spending
- Outsource risks to contractors
- Pay constant bills during the contract, possibly lower than before
- Enjoy low operating costs once the contract expires
- May face a problem to attract private partners if a project is too small
- May face low financial performance in case energy prices are low
- Face a lack of motivation by private partner to reduce energy demand more than guaranteed in the contract
- Projects with the potential to accrue high energy cost savings
- Municipalities should have sufficient financial resources to pay the fees specified in the contract
EPC - Immediate savingsResource
- Obtain new infrastructure without peaks in their spending
- Outsource risks to contractors
- Realise maximum energy savings immediately
- May face a problem to attract private partners if a project is too small
- May face low financial performance in case energy prices are low
- Have relatively old infrastructure by the end of the contract
- Projects with the potential to accrue high energy cost savings
- Municipalities should have sufficient financial resources to pay the fees specified in the contract
- Projects with very old and inefficient infrastructure
EPC - Staggered savingsResource
- Obtain new infrastructure without peaks in their spending
- Outsource risks to contractors
- Enjoy relatively modern infrastructure for the length of the contract
- May face a problem to attract private partners if a project is too small
- May face low financial performance in case energy prices are low
- Obtain access to all energy savings at a later stage
- Projects with the potential to accrue high energy cost savings
- Municipalities should have sufficient financial resources to pay the fees specified in the contract
- Projects in which age and technology vary among existing luminaires
Sell to a private partner and leasebackResource
- Spread financial risks and costs over time
- Outsource technical risks to the private sector
- Enjoy new infrastructure without increasing their debt
- May pay higher costs to lease than to self-finance in the long term
- May have less control over assets
- Projects with high upfront costs
Concession to a private partnerResource
- Spread financial risks and costs over time
- Outsource technical risks to the private sector
- Enjoy new infrastructure without increasing their debt
- Can set standards in the concession agreement
- Must contend with complex setup and administration
- Must provide adequate project oversight
- Projects with high upfront costs
Philanthrophic FundsResource
- Help integrate the social component
- Facilitate capacity building
- Finance structured around its own targets
- Small to medium-scale projects depending on the capacity of the philanthrophy
SponsorshipResource
- Can take over the O&M costs
- Advertisements
- Small projects
CrowdfundingResource
- Can attract substantial private investment from a large pool of backers
- Lacks a guarantee that sufficient funding will be raised
- May encounter problems resulting from investor experience
- May encounter investors who wish to exit
- Must contend with a lack of regulation
- May find it challenging to fulfil responsibilities to a multitude of small investors
- Small to medium-sized projects
Project finance (Special Purpose Vehicle)Resource
- Isolate project risks within a special purpose vehicle
- May deduct or withhold a certain amount from payments or impose penalties if private partners fail to deliver agreed services
- Encounter high transaction costs for the preparation and implementation of the special purpose vehicle
- Large projects (>€20m)
- A consortium of several municipalities and investors/financiers