The financial facility (the facility) shall be used for the development of energy saving, energy efficiency and renewable energy projects and shall facilitate the financing of investments in those areas by local, regional and, in duly justified cases, national public authorities. The facility shall be implemented in accordance with the provisions on the delegation of budgetary execution tasks laid down in the Financial Regulation and its implementing rules.

The facility shall be used for sustainable energy projects, in particular in urban settings. This shall include, in particular, projects concerning:

1. (a)

   public and private buildings incorporating energy efficiency and/or renewable energy solutions including those based on the usage of Information and Communication Technologies (ICT);

2. (b)

   investments in high energy efficient combined heat and power (CHP), including micro-cogeneration, and district heating/cooling networks, in particular from renewable energy sources;

3. (c)

   decentralised renewable energy sources embedded in local settings and their integration in electricity grids;

4. (d)

   microgeneration from renewable energy sources;

5. (e)

   clean urban transport to support increased energy efficiency and integration of renewable energy sources, with an emphasis on public transport, electric and hydrogen vehicles and reduced greenhouse gas emissions;

6. (f)

   local infrastructure, including efficient lighting of outdoor public infrastructure such as street lighting, electricity storage solutions, smart metering, and smart grids, that make full usage of ICT;

7. (g)

   energy efficiency and renewable energy technologies with innovation and economic potential using the best available procedures.

The facility may be also used to provide incentives and technical assistance as well as to raise the awareness of local, regional and national authorities so as to ensure optimal use of the Structural and Cohesion Funds, in particular in the areas of energy efficiency and renewable energy improvements in housing and other types of buildings. The facility shall sustain investment projects demonstrating an economic and financial viability, in order to refund the investments allocated by the facility and to attract public and private investments. Thus, the facility may, inter alia, include provisioning and capital allocation for loans, guarantees, equity and other financial products. Furthermore, up to 15 % of the funding referred to in Article 21a may be used to provide technical assistance to local, regional or national, authorities on the setting up of, and on the initial deployment phase of technology related to, energy efficiency and renewable energy projects.

When granting financial or technical assistance, attention shall also be paid to synergies with other financial resources available in the Member States, such as the Structural and Cohesion Funds and the ELENA Facility, in order to avoid overlaps with other instruments.

The beneficiaries of the facility shall be public authorities, preferably at local and regional level, and public or private entities acting on behalf of those public authorities.

The facility shall be set up in cooperation with one or more financial intermediaries, and shall be open to participation by appropriate investors. The selection of the financial intermediaries shall take place on the basis of their demonstrated ability to use the funding in the most efficient and effective way, in accordance with the rules and criteria set out in this Annex.

The Commission shall ensure that the total amount of overhead costs related to the establishment and implementation of the facility, including management fees and other eligible costs invoiced by the financial intermediaries, remains as limited as possible, in line with best practice for similar instruments and whilst safeguarding the required quality of the facility.

The Union contribution to the facility shall be implemented by the Commission in accordance with the provisions set out in Articles 53 and 54 of the Financial Regulation.

The financial intermediaries shall comply with the relevant requirements on the delegation of budgetary execution tasks set out in the Financial Regulation and its implementing rules, in particular as regards procurement rules, internal control, accounting and external audit. No funding other than management fees or costs related to the establishment and implementation of the facility shall be made available to those financial intermediaries.

The detailed terms and conditions of the establishment and the framework conditions of the facility, including monitoring and control, shall be laid down in one or more agreements between the Commission and the financial intermediaries.

The facility shall make available online all information on programme management that is relevant for interested parties. This shall include, notably, application procedures, information on best practices and an overview of projects and reports.

In accordance with this Annex, the facility shall be limited to the financing of:

1. (a)

   investment projects that have a rapid, measurable and substantial impact on economic recovery within the Union, increased energy security and the reduction in greenhouse gas emissions; and

2. (b)

   technical assistance for energy efficiency and renewable energy projects.

As regards the selection of projects, particular attention shall be paid to the geographical balance.

As regards the financing of investment projects, due attention shall be paid to reaching a significant leverage factor between the total investment and the Union funding in order to raise significant investments in the Union. However, the leverage factor for individual investment projects may vary, depending on a number of factors such as the actual size and type of a project and on local conditions including the size and financial capabilities of the beneficiary.

Public authorities requesting financing for investment projects or technical assistance for energy efficiency and renewable energy projects shall comply with the following conditions:

1. (a)

   they have made, or are in the process of making, a political commitment to mitigate climate change, where appropriate including concrete objectives, for example relating to increasing energy efficiency and/or the use of energy from renewable sources;

2. (b)

   they are either working towards developing multi-annual strategies to mitigate climate change and, where appropriate, to attain their objectives, or are participating in a multi-annual strategy at local, regional or national level to mitigate climate change;

3. (c)

   they agree to be publicly accountable for the progress in their overall strategy.

Investment projects financed under the facility shall comply with the following eligibility and selection criteria:

1. (a)

   the soundness and technical adequacy of the approach;

2. (b)

   the soundness and cost effectiveness of the funding for the full investment phase of the action;

3. (c)

   the geographical balance of all projects covered by this Regulation;

4. (d)

   maturity, defined as reaching the investment stage, and incurring substantial capital expenditure as soon as possible;

5. (e)

   the extent to which lack of access to finance is delaying the implementation of the action;

6. (f)

   the extent to which funding from the facility will stimulate public and private finance;

7. (g)

   quantified socioeconomic impacts;

8. (h)

   quantified environmental impacts.

Technical assistance projects financed under the facility shall comply with the eligibility and selection criteria referred to in point 4(a), (c), (e), (f) and (g).