EBRD Opportunities

EBRD opportunities – Energy Efficiency Investments Venera Vlad 27 October 2011

Outline 

EBRD Sustainable Energy Initiative

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Energy Efficiency Financing Facility

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Energy Efficiency in Public Buildings

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Sustainable Energy Initiative The SEI responds to the specific needs of the energy transition in the EBRD region, as well as to the EU call for the IFIs to scale-up climate change mitigation investment.

SEI Results 2006- 2010: – EBRD SEI investments of € 6.1 billion for total project value of over €32 billion – EBRD SEI financing account on average for 20% of the Bank’s total investment, (24% in 2010) – Annual emission reduction of 37 million tons of CO2 1. Industrial Energy Efficiency

2. Sustainable Energy Financing Facilities

3. Power Sector Energy Efficiency

4. Renewable Energy Scale-up

5. Municipal Infrastructure Energy Efficiency

6. Carbon Markets Development

Barriers to sustainable energy financing – Uncertainties about market demand for EE financing; lack of reliable data – Low awareness about the sustainable energy and energy saving concepts; – Skeptical attitude on the clients’ side about the technical risks and financial benefits of energy efficiency – Legal enforcement in the property and residential sector – Non-supportive procurement rules – Public budgeting rules (”pressure to spend”) – Accounting problems (investment vs. operating costs); lack of ”off-balance sheet” solutions – Lack of specific structures for implementation; limited technical expertise for appraisal and risk assessment

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EBRD integrated approach 

Tailor made financing vehicles reflecting country and market specifics: – REECL-type (Bulgaria); – SlovSEFF type (Slovakia case study see next slide for summary) – EEFF, RoSEFF (Romania) SME Sustainable Energy Financing Facility

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Capacity building: local banks, technical consultants & engineers, local authorities Awareness raising: general public, project stakeholders, authorities Corporate sector: technology and service providers, utilities, project developers; Policy dialogue: assistance on development/upgrade of supportive legal and regulatory framework: legislation; regulations, sustainable energy Action Plans

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High leverage of national (Donor funded) support programs.

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Example: SLOVAK SUSTAINABLE ENERGY FINANCING FACILITY EE, RE AND RESIDENTIAL HOUSING ASSOCIATIONS 

Drivers: high energy intensity, significant potential for energy savings, closure of Bohunice Nuclear Plant.

EBRD Credit Line: €60 million Framework of loans to local banks (four to date) for on-lending to enterprises and housing associations to make better use of their energy resources. 

Grant Support: Bohunice International Decommissioning and Support Fund (BIDSF) of €15 million financing technical assistance (€2.5 M), incentives to sub-borrowers (€ 10 M) and participating local banks (€2.5 M). 

Results to date

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Portfolio of projects €56.4 million with a pipeline for the remaining €3.4 million (under preparation)

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250 residential energy efficiency projects

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41 industrial energy efficiency and/or renewable energy projects

Estimated Impact –

1,105,000m2 of floor area refurbished and 46,000 people benefiting from lower energy bills and better thermal comfort; an estimated 14,316 households have been targeted

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Estimated energy savings of 32%, twice as much as initially foreseen

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279,197 MWh/a of primary energy savings and 63,120 tCO2 emission reductions per year;

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Grant per CO2 12.5 EUR/ton, Investment per CO2 81.1 EUR/ton;

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Every EUR of Donor Support received has resulted in energy savings of 355kWH;

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One new job created for every EUR 9,000 of investment*, meaning SLOVSEFF has helped in the creation of 8,535 jobs so far. * According to methodology indicated by the Slovakian Authorities.

The EU EBRD Energy Efficiency Finance Facility (EEFF) A ‘fast track’ integrated package of Loans - of up to 2.5 million Euros per from participating banks

EU-financed free Technical Consultancy from Tractebel Engineering (GDF SUEZ) - Prepared under contract to EBRD - Includes a Rational Energy Utilization Plan and an Energy Performance Certificate

 15% EU grants - up to 375,000 Euros per company - Paid by EBRD when the investment is verified to be complete and operational

New EU EBRD Energy Efficiency Finance Facility (RoSEFF) 60 mil. Euro framework Loans - of up to 1 million Euro EU-financed free Technical Consultancy Eligible areas:

• Commercial EE investments • Stand-alone small scale RE investments • Buildings sector EE and RE investments

• Investment loans for eligible manufacturers, suppliers of EE and RE technology, equipmen and materials

EEFF to finance energy efficiency in buildings Eligible investment categories are: 1. Industry and agriculture: investments that bring >20% energy savings • Boiler replacement or improvements (automation, economisers, burners, insulation) • Production line or process improvements (that save energy) • Steam distribution improvements (steam traps, condensate recovery) • Automation and control systems, Energy Management Systems • New machines, new equipment, new motors, new pumps…

2. Any company: investments in buildings that bring >30% energy savings • Improving energy efficiency in industrial buildings, offices, farm buildings, hotels etc • Insulation of walls and roofs, new windows, doors, lighting systems, boilers, ....

3. Any company: cogeneration to meet own power and heat needs* • (Or tri-generation to meet own power, heat and cooling needs) • So large buildings such as hotels and shopping centres may finance CHP with the EEFFCo-gen/tri-gen investments are subject to case-by-case approval by EBRD

46 investments with a combined value of 34 million Euro are under-way or complete...

Autumn 2010

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Four examples of energy efficiency investments financed using the EEFF...

(Selected as being those most relevant to buildings) 1.Simple building rehabilitation 2.Relocation as an opportunity to become more energy-efficient 3.Self-generation of heat and power 4.Energy efficient lighting

Energy Efficiency in Public Buidlings 

Aim to support development of public EPC market in CEE and CIS, initially: Romania, Bulgaria,Russia and Ukraine

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Developing a suitable EPC-model for the Romanian market

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Use initial TA to assess market and identify main obstacles

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Implement capacity building programme to support cities, ESCOs and banks

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Provide initial financing through ESCO financing, commercial banks or dedicated funds

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Saving energy, reducing public spending and GHG-emmissions

EPC and the Romanian legal framework EPC is included in the Romanian National Energy Policy – Government Ordinance (GO) 22/2008 (transposed from 2006/32/EC) 

Defines the National Energy Policy

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Defines ESCOs and energy services

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Defines EPC

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Defines financing instruments for EPC-projects

– Government Decision (GD) 163/2004 defines the National Energy Efficiency Strategy (targets) – GD 1661/2008 identifies efficiency measures (incl. EPC) – National Strategy for Energy Efficiency – under revision

Energy Performance Contracting (EPC) – simpliest form Public Authority/ Building owner Gen er

al m

remuneration

ESCO

saving guarantee

ainte n

ance

Facilities /sites

vin a s gy Ener

remuneration natural gas district heat

electricity

oil

Utilities Gas, electricity and/or fuel supply companies

rvic e s g

e

Co-ordination Supply Technical issues

Energy Efficiency Services – Criteria and Conditions for Success 

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Driving force: • Decision makers who take on the responsibility Reliable legal framework: • Procurement: EPC allowed, tender procedure formally approved (guideline

by ANRMAP) Standardized procedures and contracts approved by ANRMAP: • Reliability, transparency, time and cost effectiveness for implementation • Need to ensure obligations under EPC do not count as municipal debt • Need to ensure energy savings can be re-allocated to payments under EPC over life of contract • Need to ensure ESCOs are free to assign payments under EPC as basis for financing

EE in Public Buidlings - Next Steps 

Prepare basic financing proposal for funding mechanism

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Approval for EBRD framework financing – Direct financing of ESCOs (€5m to €10m) – Dedicated vehicle for financing EPC contracts

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Design full technical assistance programme to help municipalities develop, launch and implement EPC programmes

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Select and engage consultants for project support teams

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Begin operations and working with municipalities 2012

Thank you!

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