An action plan for SEAP and SUMP cannot be implemented without financial resources.
The identification of key financial resources is necessary to finance the defined actions. Most local authorities will face the problem of scarce available funds, so it is paramount to be open to use the available resources of the local authority in a targeted plan and to be creative and cooperative to gather additional funds at a national or European level.
The financing mechanisms typically used by local authorities can be broadly grouped into four categories. These categories describe an increasing transition from public sources of funding to commercial ones:
Budget financing. Direct financing from local authority’s budgets, the use of external grants, and the use of budget capture mechanisms.
- Budget financing. Direct financing from local authority’s budgets, the use of external grants, and the use of budget capture mechanisms.
- Funds developed specifically to address energy efficiency. Revolving funds are funds which are initially established from e. g. from a general budget or donor funds, and become self-sustaining by returning backpayments into the fund.
- Public support to leverage commercial financing. Public sector financing mechanisms, provided by donors and/or national or regional governments to local authorities, to help support or leverage commercial financing.
- Commercial financing. Commercial loans can be raised from banks of funds securing them by issuing municipal bonds.
The advantages and limitations of various financing mechanisms are summarized in Table 6.
