Project financing

Ilustrační obrázek

„Personally, I believe that the foundation of a successful climate protection policy at the municipal level is the financial contribution of the very entity that is supposed to promote such actions. On the other hand, it is logical that we will strive to participate in all subsidy and other programmes that Prague can join. We consider the inclusion of our city in the Modernisation Fund to be a great success and are taking all steps possible to ensure that projects proceed quickly and without unnecessary setbacks. At the same time, we want to ensure that projects are organised with maximum effect in terms of reducing operating costs and CO2 emissions.“
FotoPetr Hlubuček, Deputy Mayor for the Environment

Given the scale of the planned projects, it is clear that they will have a considerable financial impact. Nevertheless, we believe that this is an investment into our shared future that will pay us back many times over in better quality of urban life for current and future generations. For the implementation to be successful, we intend to use multi-source financing, both from the funds of the Prague City Council's budget and available state-level financial support, as well as through involvement in international projects. It should be noted that a significant part of the proposed projects, especially in the field of energy, possess good economic parameters if suitable external sources are involved.

Graph: Expected progress in the implementation of the Climate Plan in terms of investment costs and their coverage Infografika 1 Infografika 1

Grant schemes

At the same time, the Climate Plan is designed for as much of the initial costs as possible to be co-financed with the help of national and European support programmes which have been identified to be available over the next 10 years. These are mainly the following:

The objectives of the Prague Climate Plan are fully in line with the proclaimed policy of the current European Commission led by Ursula von der Leyen and her Green Deal for Europe programme. Within this framework, the current administration aims to create a carbon neutral continent, which includes the possibility of using new financial instruments. The most promising opportunities for Prague's climate efforts are those offered by the Modernisation Fund.

The Modernisation Fund is a financial instrument set up in 10 EU Member States. Each of the countries should contribute 2% of its proceeds from the total amount of emission and other allowances towards the fund. At an allowance price of €30 per tonne of emissions, the budget of the Modernisation Fund could reach up to 150 billion CZK by 2030. Within the framework of the Fund, Prague should participate in 8 sub-programmes, namely Modernisation of Thermal Energy Supply Systems, New Renewable Energy Sources in the Energy Sector, Improvement of Energy Efficiency in Business, Modernisation of Transport in the Business Sector, Modernisation of Public Transport, Energy Efficiency in Public Buildings and Infrastructure, Community Energy, and Modernisation of Public Lighting Systems.

Other European instruments from which Prague plans to draw on to meet its climate commitment include the European Commission's Innovation Fund, which can be used to finance up to 60% of the costs of large projects involving breakthrough innovations in low-carbon technologies. Similarly, the European Investment Bank's ELENA programme, which provides up to 90% non-repayable funding for the preparatory stages of energy saving projects and the installation of renewable energy sources. Other potential resource programmes include the CEF - Connecting Europe Facility - or the Recovery and Resilience Fund, where the Czech Republic currently possesses a total of 182.1 billion CZK in grants. An additional loan from the European Union of up to 400 billion CZK is also possible. Furthermore, Prague is newly involved in projects funded by the prestigious European HORIZON 2020 programme, specifically the SCORE project focused on the development of energy communities, one of the priority projects of the Climate Plan.

Other resources will come from programmes administered at the national level - for example, resources drawn from the Operational Programme Environment (OP Environment), the Integrated Regional Operational Programme (IROP 2), the Operational Programme Transport (OP Transport), or the New Green Savings Programme.

Estimated revenue and costs

From the above-mentioned subsidy and grant programmes, it will be possible to obtain 40-60 billion CZK for the implementation of the measures proposed by the Climate Plan on the property of the city and city companies in the 2021-2030 period.

The total cost of the Climate Plan is calculated at approx. 230 billion CZK, of which the funding required from the PCH budget and city companies is calculated at approx. 55 billion CZK, i.e. approx. 5.5 billion /year.

In contrast, the Climate Plan proposes measures that have the potential to save approximately CZK 2.2 billion/year on the assets of the city and its companies for the next 15-20 years. In total, the net costs of the Climate Plan (costs adjusted for the reduction of operating expenses) required from the PCH budget amount to 11-22 billion CZK, i.e. 1.1-2.2 billion/year (it should be noted that the expenses specified in this way are not only new expenses, but include measures that would be implemented by 2030 in any case - e.g. renovation and modernisation of property and buildings under the administration of the city, for which the city spends 7.5%-15% of annual capital expenditure each year).

Taking the current economic situation into account, the Climate Plan proposes to focus in its first phase (until 31 December 2022) consistently on those measures that can be supported from the above-mentioned grant programmes (so-called priority projects), and which combine the use of renewable sources, energy savings, and adaptation measures to the maximum extent possible, including third-party financing.

Graph: Percentage breakdown of benefits in the form of CO2 savings Infografika 2 Infografika 2 Graph: Average annual cost of implementation of the Climate Plan by the city, city organizations and selected subsidy titles Infografika 3 Infografika 3

City Climate Fund

As one of the important implementation measures, the formation of a "city climate fund" is also proposed, the purpose of which will be to aggregate resources that can be used to finance the measures of the Climate Plan.

Its purpose will also be to transparently inform the public how much of the city's resources have been, or will be, spent each year on the implementation of the Climate Plan. A more defined concept of the fund will be clarified during the preparation of the plan, which will then be submitted to the city authorities for approval. The fund may be part of the budget (again, based on established synthetic accounting) or it may take the form of a separate financial instrument to which third parties may contribute by way of donations. At the same time, the savings generated from the implementation of some of the measures of the Climate Plan should also contribute an income for the fund in the future years.

Priority projects and their financing

  1. Introducing a system of energy management
    • PCH’s own resources
    • Grant programmes co-financing the installation of meters capable of remote readings
    • Future savings in operating costs
    • Large-scale introduction of smart meters
  2. Constructing a biogas station aiming to utilise sorted and biodegradable waste for the manufacture of biomethane
    • OPE Programme 2021-2027
    • Bonuses for manufactured biomethane
    • Bank loan
  3. Utilising the low-temperature potential of waste heat from ÚČOV (Central Wastewater Treatment Plant)
    • Modernisation Fund and its Programme 1 (HEAT)
    • European Commission's Innovation Fund.
    • Bank loan
  4. Founding the Prague Renewable Energy Community, including investments into installations of hundreds of MWp of power through PV
    • Modernisation Fund and its Programme 2 (RES+)
    • OPE Programme 2014-2020 and its 146th open call
    • Bank loan
  5. Realisation of complex energy savings in buildings of the public sector and infrastructure which are in ownership of the city.
    • Modernisation Fund and its Programme 7 (Energy Efficiency in Public Buildings and Infrastructure)
    • Future savings on operations
    • OPE Programme 2014-2020 and its 146th open call
  6. Modernisation of street lights and inclusion of public infrastructure of electric vehicle charging stations in new light systems
    • Modernisation Fund and its Programme 9 (modernisation of public lighting systems)
  7. Substituting diesel-powered vehicles with electric buses or battery-powered trolleybuses
    • IROP 2021-2027
    • Modernisation Fund
    • Renewal Fund
  8. Purchase low or zero emission lorries for the Prague services fleet for the purposes of waste transport and sorted secondary waste, together with setting up charging stations.
    • Modernisation Fund
    • Renewal Fund