The EIP-SCC Matchmaking initiative as a tool to accelerate investments in the Smart City Panorama

18 October 2018 by Rebecca Anastagi

Summary

The European Innovation Partnership on Smart Cities and Communities (EIP-SCC) launched an onsite matchmaking programme. Matchmaking aims at giving participants a chance to create long-term relationships that can ultimately lead to actual financial support to the project. Investor Confidence Project (ICP) is addressing the lack of standardisation and linked uncertainty about returns by providing protocols to standardise the project development process. The ICP is also addressing the. lack of standardised protocols covering buildings and buildings. It enables the creation of relationships between project promoters and financial institutions that can accompany the development of the project

it is clear that the range of opportunities is indeed very vast. and most importantly, the matchmaking enables. the creation. of projects that are currently being designed can be unveiled to several financiers and investors and. that can accompany development of projects until its actual implementation, ensuring successful financial support. investment. problems identified.

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The EIP-SCC Matchmaking initiative as a tool to accelerate investments in the Smart City Panorama

Project Initiatives presentation at the 'Explore' zone at the Sofia EIP-SCC Matchmaking on 27-28 June 2018

As urban population increases but budgets are tight, the pressure for cities is now high. They need to turn quickly into smart cities, which means improving services and infrastructures for a better quality of urban life. Smart cities have featured in the European policy landscape since 2012, when the European Commission launched the European Innovation Partnership on Smart Cities and Communities (EIP-SCC). This Partnership is now becoming a major market-changing undertaking bringing together cities, industries, SMEs, investors, researchers and other smart city actors. To better promote social and economic sustainability in cities across the European Union, during the General Assembly of June 2018, the EIP-SCC launched a new initiative: an onsite matchmaking programme to stimulate civic improvements by bringing together cities, industry representatives and motivated investors.

What is the Matchmaking?

The matchmaking is designed to facilitate interactions between urban developers of smart initiatives on one side and the financial sector on the other, through one-to-one discussions. In this programme, smart city project promoters are at the core of smart urban development plans and often are the players that bear the costs of such projects. Through the matchmaking process, promoters can learn from the beginning about the opportunities to receive financial support and they become aware of all the conditions that financial institutions apply. Additionally, promoters can obtain productive feedback on their projects and can be supported in the identification and management of key risks. In other words, the matchmaking aims at giving participants a chance to create long-term relationships that can ultimately lead to actual financial support to the project. On the financiers’ side, this programme is a great occasion to expand investment opportunities and a way to get in touch with relevant players in the smart city project panorama. It allows investors to support projects from their very beginning and enables them to choose the ones that fully meet the standards set by those investors.

Joost Declerck from Belfius, participating

in the EIP-SCC Matchmaking on 27-28 June 2018

What is the challenge being faced by project promoters?

At the current stage, two main problems are constraining the realisations of new projects in Europe. Firstly, projects are frequantly developedwithout sufficient consideration to the financial aspects from the early design phase which often leads to failure and public authorities can rarely intervene. This is due to financial constraints that usually make it either not possible or less efficient for public entities to sustain the investment cost of smart city projects with public debt only. Investments usually require high upfront capital expenditures, which would require diverting resources from other expenditures that municipalities have to sustain.

Secondly, despite the availability of EU funds being quite high now, a rather limited number of projects are eligible for funding. That is mainly due to three reasons: lack of standardisation in project presentation, uncertainty about returns on investment and mismatch between projects’ size (usually very small) and available funds.

In this regard, the matchmaking becomes the right place where projects that are currently being designed can be unveiled to several financiers and eventually meet the right investor. Financial institutions involved can play a key role for several reasons. They can anticipate economic resources in exchange for a long-term repayment schedule. They may be aware of schemes and opportunities to have private capital sustaining entirely or in part such cost (i.e. a pension fund involved in the matchmaking has just applied this business case for smart lighting in even small municipalities). In some cases, financiers can also choose to make a direct investment in the project (i.e. equity or quasi-equity), therefore bearing some of the costs themselves and not simply anticipating them.

It is clear that the range of opportunities is indeed very vast, and, most importantly, the matchmaking enables the creation of relationships between project promoters and financial institutions that can accompany the development of the project until its actual implementation, ensuring successful financial support.

Lada Strelnikova

from European Energy Efficiency Fund / Deutsche Asset Management,

participating in the EIP-SCC Matchmaking on 27-28 June 2018

An answer to the challenge – ICP

To further improve the matchmaking and to support project promoters and investors to solve the challenges identified, the EIP-SCC has started to collaborate with the Investor Confidence Project (ICP).

The ICP is addressing the lack of standardisation and linked uncertainty about returns by providing protocols to standardise the project development process. These protocols, covering buildings, street lighting, energy supply and industry, are developed by European experts and equip project promoters with a best practice-based process alongside the entire project. From baselining to measurement and verification. Finally, a vetted 3rd party certifies correct application providing the IREETM (Investor Ready Energy Efficiency) Certification.

There are two key benefits for project promoters to use the ICP protocols:

Access to the ICP investor network representing 1,4 billion EURO
Trust amongst their clients, the cities, that projects will deliver against promises

And there is free training and even free certification available until mid-2019 (ICP is an EU funded project under the H2020 programme. Representatives from ICP will join EIP-SCC for the entire three days in Barcelona to explain the concept in more detail and to support EIP-SCCs matchmaking programme.

More investment in urban projects in Europe

The 2018 General Assembly provided a unique opportunity for smart city actors to meet, network, learn, shape views, develop plans, exchange best practices, present projects, find partners, and stimulate discussions to help achieve the ambitious goal of reaching €1 billion worth of smart city project investments in 300 European cities by 2020.

We are confident that our next event will result in an even greater success. It will take place during the Smart City Expo World Congress (SCEWC) of Barcelona in November 2018. The SCEWC is the perfect occasion to facilitate business interaction among smart city project developers and investors because it always succeeds in attracting thousands of smart city actors over the course of a few days' conference.