Early Lessons on Introducing Energy Performance Contracts in Italy: Milan’s Energy Efficiency Program

This briefing by the Climate Policy Initiative examines the 'Energy Efficiency Milan Covenant of Mayors' program, an initiative administered by the Province of Milan to retrofit public school buildings using 'pure' Energy Performance Contracts (EPC). The program aims to achieve energy savings of at least 20% and annual emission reductions of approximately 9,000 tCO2, utilizing third-party financing from the European Investment Bank (EIB) and technical assistance from the ELENA program. While the program successfully tested standard EPCs in the Italian market and moved investments off municipal balance sheets, it faced significant delays and barriers due to existing bundled ESCO business models and banking uncertainties regarding energy efficiency collateral.

• The 'Energy Efficiency Milan Covenant of Mayors' program is the first initiative in Italy to implement 'pure' Energy Performance Contracts (EPC) on a regional scale, specifically focusing on energy savings rather than bundled energy services.
• The program's environmental and economic goals include achieving annual emission reductions of about 9,000 tCO2, energy savings of at least 20%, and the creation of 900 permanent jobs.
• Financial and technical support from the European Investment Bank (EIB) and the ELENA program were critical; the EIB provided a credit line of approximately EUR 65 million (covering up to 75% of investment), while ELENA provided EUR 2 million to cover 90% of technical assistance costs.
• A significant barrier to the program's success is the prevalence of 'servizio energia' contracts in Italy, which bundle energy supply with efficiency services. These bundled contracts are often preferred by ESCOs and public administrations but discourage actual energy consumption reductions because savings can be achieved through fuel discounts rather than efficiency investments.
• The program experienced substantial delays, missing its original December 31, 2013 completion deadline. These delays were primarily caused by the time-consuming process of selecting technical, financial, and legal consultants, as well as difficulties in finding a financial intermediary through public tenders.
• Local banks expressed reluctance to participate in the tender process for the financial intermediary, partly because energy efficiency investments lack physical collateral (like mortgages), exposing banks to long-term corporate default risk.
• The program demonstrated that moving energy efficiency investments off municipal balance sheets and using external grants for capacity building can help local administrations overcome knowledge gaps and financial constraints.

APA

Micale, V., Deason, J., & Hervé-Mignucci, M. (2014). Early Lessons on Introducing Energy Performance Contracts in Italy: Milan’s Energy Efficiency Program. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2014/09/SGG-Brief-Early-Lessons-on-Introducing-Energy-Performance-Contracts-in-Italy-Milans-Energy-Efficiency-Program.pdf

Chicago

Micale, Valerio, Jeff Deason, and Morgan Hervé-Mignucci. Early Lessons on Introducing Energy Performance Contracts in Italy: Milan’s Energy Efficiency Program. Climate Policy Initiative, 2014. https://www.climatepolicyinitiative.org/wp-content/uploads/2014/09/SGG-Brief-Early-Lessons-on-Introducing-Energy-Performance-Contracts-in-Italy-Milans-Energy-Efficiency-Program.pdf.

Wikipedia

{{cite report |last1=Micale |first1=Valerio |last2=Deason |first2=Jeff |last3=Hervé-Mignucci |first3=Morgan |title=Early Lessons on Introducing Energy Performance Contracts in Italy: Milan’s Energy Efficiency Program |publisher=Climate Policy Initiative |date=September 2014 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2014/09/SGG-Brief-Early-Lessons-on-Introducing-Energy-Performance-Contracts-in-Italy-Milans-Energy-Efficiency-Program.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{micale2014early, author = {Micale, Valerio and Deason, Jeff and Hervé-Mignucci, Morgan}, title = {{Early Lessons on Introducing Energy Performance Contracts in Italy: Milan’s Energy Efficiency Program}}, institution = {Climate Policy Initiative}, year = {2014}, month = sep, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2014/09/SGG-Brief-Early-Lessons-on-Introducing-Energy-Performance-Contracts-in-Italy-Milans-Energy-Efficiency-Program.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }