Financing the Energy Transition with Energy Performance Contracting, Blended Finance, or Energy Communities
Financing the Energy Transition with Energy Performance Contracting, Blended Finance, or Energy Communities
As public subsidies dwindle, cities and regions across Europe face the challenge of funding ambitious energy projects and achieving their climate goals. The second PROSPECT+ Replication Webinar showcased the three inspiring examples from experienced mentors who have successfully used innovative financing instruments, including energy performance contracting (working with ESCOs), soft loans, blended finance and citizen finance. With public subsidies shrinking, these case studies offer actionable pathways to fund energy transition and achieve climate goals.
The webinar highlighted that cities must adapt financing models to their unique contexts, whether through EPCs, blended finance, or renewable energy communities (RECs).
Read the recap below and watch the recording here.
Download all slides: click here
Energy Performance Contracting in Upper Austria
Upper Austria has built a strong legacy with Energy Performance Contracting (EPC), driving over €100 million in investments and completing more than 300 projects since the 1990s. Megan Gignac from the Energy Agency of Upper Austria explained how this model allows cities and companies to implement energy efficiency measures without upfront capital. Instead, costs are covered through guaranteed energy savings over time.
One standout example was the refurbishment of street lighting in Bachalaba, where 790 fixtures were upgraded to high-efficiency LEDs, cutting energy use by more than 50%. Remarkably, a local electrician stepped up as the ESCO (energy service company) for the project, demonstrating how small communities can foster local expertise while achieving impactful results.
Megan emphasised that thorough preparation and trust are key to EPC success. Cities must define their goals clearly, understand their energy data, and work transparently with their ESCO partners. “EPC isn’t just a contract—it’s a long-term partnership,” she explained. Starting small and scaling up, she added, can help cities gain confidence and lay the foundation for larger projects.
Blended Finance for energy transition of residential districts in Valladolid, Spain
Miguel Ángel García-Fuentes shared lessons from Valladolid’s ambitious REMOURBAN project, which transformed a 1960s residential district into a model of urban sustainability. The project combined EU grants, municipal funding, soft loans, and EPCs to finance retrofitting 24,000 m² of residential buildings.
The scope of the project included installing external insulation, upgrading the district heating system to biomass, and introducing solar photovoltaics. However, the real challenge was engaging 400 apartment owners to co-fund the upgrades. Miguel described how trust-building, transparent communication, and a tailored financing model were crucial for convincing residents to participate.
He stressed that blending funding sources is essential for large-scale retrofits. Soft loans negotiated with local banks helped bridge the financial gap for residents, while public funds de-risked private sector involvement. The project not only improved energy efficiency and comfort levels but also demonstrated how local authorities can lead the way in tackling complex urban challenges.
Renewable Energy Communities in San Lazzaro di Savena, Italy
Marco Costa explained the potential of renewable energy communities (RECs) to decentralise energy generation and foster collaboration between citizens and municipalities. Thanks to legislative changes and incentives, Italy has scaled its REC framework from small pilots to systems supporting up to 1 MW per installation.
In San Lazzaro di Savena, solar installations powered a community energy model, reducing grid dependency and promoting renewable energy use. Marco highlighted that RECs offer more than environmental benefits—they also strengthen social cohesion and stimulate local economies.
“Start small but think big,” Marco advised cities. Transparent communication, clear incentives, and local engagement are key to success. By leveraging EU and national schemes, municipalities can make RECs financially viable while delivering tangible benefits to their communities.
Key Takeaways for public authorities
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Tailor your approach: Learn from successful examples but consider your local conditions and regulations.
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Engage stakeholders early: Collaboration with residents, private partners, and financial institutions builds trust and ensures success.
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Start small, aim high: Pilot projects can pave the way for transformative change.
Join the PROSPECT+ Community
Want to dive deeper into these innovative financing approaches? Watch the webinar recording, explore the presentations and join our Community of Practice to connect with experts and peers across Europe.
Whether you’re retrofitting public buildings, exploring citizen finance, or planning your first renewable energy community, PROSPECT+ offers the tools, resources, and support to help you achieve your city’s climate goals.
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