The C&AG noted potential risks for the Department of Communications, Climate Action and Environment in relation to an externally controlled investment fund.
The Energy Efficiency National Fund (EENF) was established to provide loan financing to both private and public organisations in order to support the delivery of energy-efficiency improvement programmes.
In 2012, after a legal challenge, funds from the Carbon Revenue Levy Account into which electricity providers had been required to pay, were redistributed. Some €35 million went to the EENF and €9.4 million was given to the Office of Public Works for energy-efficiency schemes in the public sector.
But instead of investing directly in energy-efficiency projects, the department decided to establish a “qualified investor fund”, or QIF, managed by outside fund advisors.
The C&AG said there were potential risks for the department in accepting a minority interest in an externally controlled investment fund.
Services costs
These included that the department did not have control over the investment decisions and that it may incur significant professional services costs.
The comptroller said that although the Government made €35 million available for investment in the QIF, only €2.9 million had been drawn down by March 2018. Just before the closure of an extended investment period in May 2018, a further €10.8 million was drawn down from the energy fund for projects that the directors of the QIF confirmed had been committed to.
“This brings the total transfers from the EENF to €14 million. The Department has stated that there will be no further investment in the QIF by the EENF and that the balance remaining of €21 million will be transferred instead to the Climate Action Fund,” the C&AG said.
“In seeking Government approval, the department projected an annual rate of return on the investment of 8 per cent, and anticipated a significant investment in energy efficiency in the State. The significant investment in energy efficiency projects has not yet been achieved.”
The report added that the complex structure used to invest in the EENF resulted in “a disproportionately high level of costs to date”.
“Effectively, it will cost the State at least €2 million in fees and expenses out of a total transfer from the EENF of €14 million. However, the value of the State’s investment into the future is not known at this stage.”