France’s energy transition has received another boost from the Juncker Plan’s investment fund, its third so far. EURACTIV France reports.
French efforts to gain funding from the Juncker Plan were once again rewarded on Thursday 23 July, with the signing of a new multi-million euro energy investment agreement.
The European Investment Bank (EIB) will provide a €50 million capital injection to Omnes Capital, a private equity fund, for the launch of its third renewable energy fund, Capenergie 3. The company hopes this will raise €200 million of investment capital by mid-2016.
In the long term, Omnes Capital believes the fund will mobilise a total of one billion euros, mainly for use in renewable energy production and heating networks. With an average of one job created for every megawatt of increased energy capacity, the project could also create up to 500 new jobs.
Omnes Capital specialises in financing SMEs, and is a shareholder in lift-sharing website BlablaCar.
“With €100 million of capital, we will be able to invest one billion. That is the magic of the European Investment Bank. And this money will not only be used for big projects, but also for smaller ones,” said Serge Savasta, a representative of Omnes Capital.
Juncker plan to act like ‘vulture fund’
The agreement signed on Thursday is an original one becuase it is the first time the European Fund for Strategic Investments (EFSI) has agreed to invest in another fund. A welcome development, according to the French Minister for the Economy, Emmanuel Macron.
“It would be much more efficient to continue in this direction rather than through direct investments. We have no ‘vulture capital’ in Europe, and that is what is lacking,” the former Rothschild banker said. So-called “vulture funds” make high risk investments in return for high returns. The French minister believes the Junker Plan should do just this, rather than financing low risk, mature projects.
But so far the EFSI has been known for its caution. The EIB tends to avoid any investment that may jeopardise its AAA status.
France first in line
Carlos Moedas, the European Commissioner for Research, Science and Innovation, commended France for its record in innovation. “France is an example for other countries to follow. French scientific publications are among the top 10% of the most consulted in the world,” he said.
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France has long been among the most vocal advocates of the investment plan, even before the arrival of the new European Commission.
The Omnes Capital project is the third French investment by the EFSI. The previous two were also related to the energy transition. So far, 14 European projects have received Juncker Plan funding.
Under the previous Commission’s investment plan, France received funding for ten projects, around one third of the total.
Innovative SMEs and privileged sectors
Together, the Juncker Plan and the Horizon 2020 research programme plan to invest €30 billion in the EU’s innovative SMEs. More than a third of these funds were already available under the Horizon 2020 framework, but Brussels technocrats insist that the backing of the European Investment Bank gives the Juncker Plan a competitive edge. The reassurance an EIB signature offers to other investors can add a significant multiplier effect.
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Some sectors, including water, energy, health and food, would be given privileged access to funding, according to Commissioner Moedas. “These sectors have been living purely in the physical world, they must adapt to the digital era,” he said.
The Commission has so far privileged investments in the energy and digital sectors.
On 25 November 2014, the Commission revealed the details of its 315 billion euro investment plan.
The idea is to create a new European Fund for Strategic Investments (EFSI), with €5 billion coming from the European Investment Bank and an €8 billion guarantee from existing EU funds designed to secure a contribution of €16 billion in total from the institutions.
The €8 billion guarantee will come over a three-year period from the Connecting Europe Facility (€3.3 billion); Europe’s research programme Horizon 2020 (€2.7 billion) and so-called “budget margin”, or unused funds, worth €2 billion.
The resulting EFSI fund totalling €21 billion is expected to generate €240 billion for long-term investments and €75 billion for SMEs and mid-cap firms over the period 2015-2017.
The plan drew questions over the lack of new cash, with some Members of the European Parliament calling it "recycling and re-labelling" of existing programmes.