During a panel discussion hosted on 11 March 2025, as part of the PROSPECT+ Final Policy Dialogue and Closing Event, the panellists provided valuable, practical insights into the real-world experiences cities face when they carry out energy transition at the local level.  

The discussion explored the realities on the ground, including the limited capacity, regulatory uncertainty, and the difficulty of engaging private sector partners. The panellists pointed to pathways for progress, emphasising the need for greater clarity, flexibility, and peer-supported solutions at local, national, and EU levels. 

They emphasized the role of municipal energy agencies and one-stop shops as trusted intermediaries that can assist municipalities, protect the public interest in negotiations, and foster long-term trust with citizens. However, without stable funding, they risk becoming unsustainable and face challenges in competing with the private sector. 

The panellists also explained why municipalities often approach private investors from a position of weakness. Many believe they lack leverage when, in fact, cities possess valuable assets and influence demand. What they typically lack are the frameworks and support necessary to negotiate confidently. Without clear, ready-to-use models and legal guidance, municipalities struggle to engage in meaningful dialogue with private actors. 

They also advocated for developing model contracts or white-label solutions, arguing that standardised templates tailored to national legal frameworks would save time, enhance transparency, and expedite agreements with private partners. 

Making climate action relevant to citizens

Marcin Grądzki, Director of Climate and Air Quality Department, City of Warsaw, Poland  

Marcin Gradzki urged cities to change their approach to discussing climate action. Instead of focusing on abstract goals, cities should emphasise outcomes that resonate with citizens, such as stability, affordability, and long-term resilience. In the context of political cycles and public scepticism, reframing the benefits can foster stronger support.  

Marcin also emphasized that cities need the freedom to test and adapt without fear of political or legal repercussions. Mistakes should be viewed as a part of the learning process, not as failures. Reframing projects as ‘learning in practice’ instead of ‘pilots’ could encourage more flexible and innovative implementations aimed at a larger scale. 

He also described the complexity cities encounter in managing fragmented funding streams. With staff already stretched thin, applying for multiple programmes - each with narrow eligibility criteria and separate reporting—creates inefficiencies and discourages innovation due to administrative complexity and limited staff capacity: 

“Our bandwidth is quite full. The fragmentation of available funding options and their eligibility criteria creates significant additional workload, paperwork, and inefficiency.” 

Gradzki emphasized that strict compliance requirements and narrow eligibility rules complicate project implementation, often hindering the adoption of integrated approaches. He also highlighted the reluctance to involve private investors, explaining that cities tend to prioritize funding sources they know, due to limited internal capacity: 

“Involving private investors consumes a significant amount of resources. We naturally prioritize familiar funding sources because they don’t require us to continuously learn new administrative processes.” 

Recommendations from Marcin: 

• Simplify and harmonize eligibility criteria across EU funding programmes to reduce administrative burdens and fragmentation. 
• Recognize the staffing and capacity limitations of cities when designing new funding schemes. 
• Allow greater flexibility and integration across various types of eligible activities (e.g., resilience, accessibility, and climate measures within the same funding source). 
• Encourage a culture of “learning-by-doing" where mistakes are permissible, particularly as cities begin to utilize new instruments. 

Energy agencies as key intermediaries in the energy transition

Marco Costa, Renewable Energy Communities and One Stop Shops Team Lead, AESS: Energy and Sustainable Development Agency, Modena, Italy 

Marco underscored the essential role municipal energy agencies play as crucial intermediaries between cities and the private sector, particularly in forming renewable energy communities. He pointed out the challenges cities encounter due to regulatory uncertainties, specifically highlighting Italy’s changing yet at times ambiguous regulatory landscape.  

Marco further elaborated that policy delays and concerns regarding private-sector dominance impede municipal engagement and confidence. He emphasized that municipal energy agencies have become crucial in navigating these uncertainties, serving as reliable intermediaries that safeguard municipal interests while fostering effective collaboration with private-sector entities. 

“Municipal energy agencies are fundamental because cities trust them. They ensure municipal interests remain protected. Without these agencies, cities would likely be more hesitant in dealing directly with private investors due to risks and uncertainties”. 

Costa emphasized the necessity for simplified and standardized business models that municipalities could adopt rapidly, contrasting them with bespoke, tailor-made solutions, which he deemed too slow and resource-intensive for effective large-scale implementation. 

“Tailor-made solutions are simply too slow. Municipalities urgently need replicable, standardized business models.” 

He also shared positive experiences from Italy, where well-designed pilot projects successfully demonstrated feasibility and built trust, enabling quicker adoption among municipalities despite initial uncertainties. These pilots provided practical proof that innovative financing and renewable energy communities could effectively function at the local level, creating models that other municipalities could easily replicate. 

Recommendations from Marco: 

• Clarify and simplify national regulations to give municipalities the certainty they need to confidently engage in renewable energy community projects. 
• Enhance the intermediary role of municipal energy agencies in fostering trusted cooperation between cities and private investors. 
• Provide standardized, reproducible business models and templates that municipalities can quickly adopt, thereby overcoming delays associated with customized approaches. 
• Widely promote successful pilot examples to build trust and accelerate broader adoption in municipalities. 

Building long-term trust and stability for scalable urban energy projects

Petra Bijvoet, Senior Strategic Advisor Energy Transition & European Affairs, Department of Urban Development, City of The Hague, The Netherlands 

Petra Bijvoet pointed out that one-off projects are insufficient. Long-term transformation requires consistency, political buy-in, and trust built over time. She emphasized that cities require predictable frameworks and support mechanisms that endure beyond the span of political cycles. 

She shared The Hague’s experiences in implementing district heating projects, highlighting the practical difficulties cities face due to high financial risks and the complexity of executing large-scale projects. She explained that these challenges led The Hague to focus on smaller, more feasible, and socially beneficial projects: 

“Initially, we faced considerable risk and high costs with large district heating projects. We shifted our focus toward smaller, manageable initiatives, such as installing heat collectors under sports fields. These proved more feasible and offered important benefits in terms of social cohesion.” 

She also highlighted the ongoing challenge that cities encounter in quantifying and integrating social benefits into financial valuation frameworks, suggesting that additional methodological clarity and support are necessary. 

Recommendations from Petra: 

• Prioritize smaller, community-focused projects to effectively manage risk and create additional social value. 
• Create methods to quantify and incorporate social benefits, such as enhanced social cohesion, into the financial assessment of municipal projects. 

Empowering cities in negotiations with private investors

Ryan McManus, Vice President, Bankers Without Boundaries (BwB) 

Ryan McManus offered critical perspectives from the investor side, emphasizing the importance of empowering cities in negotiations with private-sector partners. He argued that the next frontier for technical assistance should be to support municipalities not only in understanding financing instruments like green bonds but also in the actual negotiation process itself. “It’s not just about knowing the tools,” he explained, “it’s about being prepared in the room where deals happen.” With better preparation and support in those critical moments, cities can enter negotiations from a position of strength and fundamentally shift the dynamics to secure better outcomes. 

“Cities often underestimate their leverage. When cities prepare well and understand their strengths clearly, it fundamentally shifts the power dynamics during financial negotiations.” 

Ryan also emphasized the importance of standardized frameworks, urging cities to adopt transparent and predictable templates that enable smoother and faster agreements between the public and private sectors. 

Final recommendations from Ryan: 

• Empower cities through focused training in negotiation strategies and leveraging techniques to secure favourable terms. 

• Promote standardized and transparent financing templates to simplify negotiations, lower transaction costs, and expedite the engagement process between municipalities and investors. 

The power of peer learning and regulatory clarity in innovative financing

Vlasta Krmelj, Mayor of Selnica ob Dravi, Member of the European Committee of the Regions and CEO of ENERGAP, Slovenia 

Drawing on her extensive experience in Slovenia, Vlasta Krmelj emphasized the crucial importance of capacity building, clear guidance, and peer-to-peer learning in facilitating cities' adoption of innovative financing instruments, particularly Energy Performance Contracting (EPC). 

Krmelj explained that Slovenia successfully revised EPC legislation by closely coordinating with the Ministry of Finance and the Ministry of Energy, demonstrating how clear regulatory frameworks and inter-ministerial collaboration significantly improved cities’ confidence in EPC: 

“When we changed EPC legislation in Slovenia, it required close cooperation between the ministries of finance and energy. This collaboration provided the clarity and trust municipalities needed to move forward.” 

She emphasized peer-learning initiatives, stressing that municipalities gain the most value from sharing experiences through real-life testing rather than theoretical knowledge alone: 

“Peer-to-peer learning and practical testing are crucial because they reveal real barriers we might otherwise miss.” 

Vlasta highlighted how Slovenia’s EPC regulation was adapted through experimentation, involving the testing of different business models, adjustments made along the way, and learning from experience. She also stressed that initial scepticism among smaller municipalities could be overcome by promoting smaller pilot projects, gradually building trust and paving the way for broader adoption. 

Recommendations from Vlasta: 

• Foster collaboration among ministries to clarify EPC regulatory frameworks. 
• Enhance peer-to-peer learning through exchanges of practical experiences and test projects. 
• Encourage small-scale pilot projects as an effective way to build initial municipal confidence in innovative financing models. 

 

The panel discussion was moderated by Sylwia Slomiak, Senior Climate Finance Advisor at Eurocities. 

More resources: 

• Listen to the recording: listen on Youtube
• This panel discussion was hosted by PROSPECT+ on 11 March 2025 as part of the Final Policy Dialogue and Closing Event: read more about the event here).  
• For the final recommendations and results of our consultations on the attitudes to innovative financing instruments, click here.