Mobilising private investment in energy efficiency is crucial for achieving the 2030 energy efficiency targets and ensuring climate neutrality by 2050 in a cost-effective manner.
It supports the transition to an integrated energy system that provides affordable and clean energy, reduces demand pressure and energy prices, enhances EU competitiveness, and decreases dependency on energy imports. By leveraging the economic benefits of energy efficiency improvements, particularly cost savings, it reinforces the business case for such investments, stimulating market growth and innovation.
Investment challenges
Attracting investments to energy efficiency faces a number of barriers, including market fragmentation, high upfront costs and a lack of attractive financing options tailored to specific needs. In addition, there can be uncertainties over the investment payback period for some segments, insufficient standardisation and aggregation of investment demand, complex decision-making processes, and split incentives. Limited knowledge and data on the economic co-benefits of energy efficiency improvements and the related uncertainties are also important obstacles.
To help address these challenges, the European Commission adopted in March 2026 a Recommendation on unlocking private investment in energy efficiency (C/2026/1526). The Recommendation focuses on 12 key areas of intervention structured around two interconnected drivers:
1. Activating and aggregating demand for energy efficiency investments
2. Improving supply of financing offers for energy efficiency, de-risking investments and re-financing opportunities
Attracting private investments
Attracting private investment in energy efficiency remains challenging due to a combination of informational and financial barriers. For households and businesses, high upfront costs and long payback periods often deter investment, even when projects are economically viable over their lifetime.
Energy efficiency investments may also be perceived as too risky by financial markets and consumers. For example, most loans for energy renovations and energy efficiency or renewable investments are not labelled as such, but rather as personal loans or general credit lines for companies.
In parallel, challenges in measuring and verifying energy savings further increase uncertainty around projects performances, although there is increasing availability of recognised tools such as energy performance certificates and energy audits. Improving data availability, including through national databases on the energy performance of buildings, as well as labelling, standardisation and risk assessment practices, is therefore essential.
Innovative approaches to financing energy efficiency investments are central to EU energy efficiency policy, legislation, and funding. Many EU projects support innovative financing schemes for energy efficiency to address the shortcomings of traditional finance products available on the market.
Energy Efficiency as a Service
Energy Efficiency as a Service (EEaaS ) enables households and businesses to implement energy efficiency measures without having to cover the upfront investment.
Under this model, energy service companies (ESCOs) finance and manage projects, while users pay performance-based service fees linked to the energy savings achieved or to the provision of energy services. By removing upfront costs and lifting management barriers, the EEaaS model provides practical and scalable solutions to accelerate energy efficiency improvements in buildings and enterprises.
Energy performance contracts
Energy performance contracting is also a form of innovative financing for energy efficiency investments, in which the energy savings are contractually guaranteed. It is often used in the public sector and provides a practical way to improve the energy efficiency of public infrastructure. An energy service company carries out the works and guarantees a certain level of energy savings. The investment is financed upfront by the service provider or a private partner and repaid through achieved energy savings.
The Energy Efficiency Directive supports the uptake of energy performance contracts (EPCs), in particular through energy services, the exemplary role of the public sector, and energy savings obligations, which together stimulate demand for EPCs. To facilitate market uptake, Eurostat and the EIB have issued guidance on the statistical treatment of EPCs in the public sector.
Innovative financing solutions
Under the LIFE Clean Energy Transition sub-programme and the ELENA Facility, the European Commission supports the development and testing of innovative financing schemes to mobilise private investment in energy efficiency and overcome key market barriers.
These schemes are implemented through pilot initiatives with strong replication potential, designed to attract the investment required to scale up energy efficiency across sectors, including buildings, small and medium-sized enterprises (SMEs), industry, district heating and the public sector. In practice, such support actions aim to
- improve the standardisation, accessibility and affordability of green mortgages and energy efficiency lending to facilitate building renovations for SMEs and households, while supporting energy service companies (ESCOs)
- develop new financing schemes, including on-tax and on-bill schemes, which allow energy savings to be monetised by attaching the debt to the energy meter or the building rather than to the individual household or company
- establish local investment structures, crowdfunding mechanisms and blended finance solutions to leverage additional financial resources, complement investment needs and accelerate the scale-up of energy efficiency markets
- encourage the uptake of Energy Performance Contracting (EPC) and Energy Efficiency as a Service (EEaaS) by identifying best practices at EU level and supporting the replication of proven business models at scale
Scaling up investment with the EIB Group
The EIB Group, in partnership with the European Commission, plays a central role in scaling up energy efficiency investments by deploying de-risking and financing instruments that enable the mobilisation of private capital.
This support is delivered through blended finance, guarantees, and dedicated financing solutions targeting vulnerable households and SMEs.
Technical assistance and project preparation (ELENA – InvestEU)
Under the InvestEU programme, the ELENA facility supports the preparation, aggregation, and structuring of energy efficiency investments by providing technical assistance to project promoters and financial intermediaries at early stages. By improving project maturity and bankability, ELENA helps bring investable pipelines to market and facilitates the effective deployment of EU financing and guarantee instruments.
On this basis, the EIB Group deploys EU-backed guarantees and risk-sharing instruments to reduce financial risks and improve access to finance for energy efficiency investments. These instruments leverage private capital and support the scaling up of investments across market segments.
Scaling up energy efficiency investment for SMEs
Small and medium-sized enterprises (SMEs) play a central role in the EU economy but continue to face structural barriers to investing in energy efficiency, including high upfront costs, limited access to tailored finance, and fragmented project pipelines. In this context, the EIB Group and the Commission launched a €17.5 billion financing initiative to support energy efficiency and decarbonisation measures by SMEs across Europe. The initiative combines debt and equity instruments, dedicated investment platforms, and a one-stop-shop entry point to improve access to finance and reduce investment risk. Between 2025 and 2027, the initiative is expected to support around 350 000 European SMEs and mobilise over €65 billion in total investments.
European Energy Efficiency Financing Coalition
The European Energy Efficiency Financing Coalition (Coalition) is a high-level initiative to enhance cooperation between the Commission, EU countries, financial institutions, and industry. It aims to mobilise private financing for energy efficiency, improve access to finance for enterprises and citizens, help de-risk projects and portfolios, and stimulate demand for energy efficiency solutions. Following a joint declaration by all 27 energy ministers in November 2023, the Coalition has been established as a functional collaboration platform across three layers:
1. A General Assembly for high-level steering
2. An EU expert platform with working groups under the focus areas of real estate and enterprises
3. National hubs that act as incubators for solutions tailored to the national contexts
Documents
- Report on the evolution of financing practices for energy efficiency in buildings, SME's and in industry (April 2022)
- Report - The quantitative relationship between energy efficiency improvements and lower probability of default of associated loans and increased value of the underlying assets (April 2022)