EBRDEBRD opportunities – opportunities – Energy Efficiency Energy Efficiency

InvestmentsInvestments

Venera VladVenera Vlad27 October 201127 October 2011

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Outline

EBRD Sustainable Energy Initiative

Energy Efficiency Financing Facility

Energy Efficiency in Public Buildings

1. Industrial Energy Efficiency

4. Renewable Energy Scale-up

2. Sustainable Energy Financing Facilities

5. Municipal Infrastructure Energy Efficiency

3. Power Sector Energy Efficiency

6. Carbon Markets Development

Sustainable Energy Initiative

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

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.

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Barriers to sustainable energy financingBarriers to sustainable energy financing

– Uncertainties about Uncertainties about market demand market demand for EE financing; lack of for EE financing; lack of reliable datareliable data

– Low awareness Low awareness about the sustainable energy and energy saving concepts;about the sustainable energy and energy saving concepts;

– Skeptical attitudeSkeptical attitude on the clients’ side on the clients’ side about the technical risks and financial about the technical risks and financial benefits of energy efficiencybenefits of energy efficiency

– Legal enforcement Legal enforcement in the property and residential sectorin the property and residential sector

– Non-supportive Non-supportive procurement rulesprocurement rules

– Public budgeting Public budgeting rules (”pressure to spend”)rules (”pressure to spend”)

– AccountingAccounting problems (investment vs. operating costs); lack of ”off-balance problems (investment vs. operating costs); lack of ”off-balance sheet” solutionssheet” solutions

– Lack of specific structures for Lack of specific structures for implementationimplementation; limited technical expertise for ; limited technical expertise for appraisal and risk assessment appraisal and risk assessment

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EBRD integrated approach 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

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

High leverage of national (Donor funded) support programs.

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

– Portfolio of projects €56.4 million with a pipeline for the remaining €3.4 million (under preparation) – 250 residential energy efficiency projects– 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 – Estimated energy savings of 32%, twice as much as initially foreseen – 279,197 MWh/a of primary energy savings and 63,120 tCO2 emission reductions per year; – Grant per CO2 12.5 EUR/ton, Investment per CO2 81.1 EUR/ton;

– Every EUR of Donor Support received has resulted in energy savings of 355kWH;– 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)The EU EBRD Energy Efficiency Finance Facility (EEFF)

A ‘fast track’ integrated package ofA ‘fast track’ integrated package of

Loans - of up to 2.5 million Euros per from participating banksLoans - of up to 2.5 million Euros per from participating banks

EU-financed free Technical Consultancy from Tractebel Engineering (GDF SUEZ)EU-financed free Technical Consultancy from Tractebel Engineering (GDF SUEZ)

- Prepared under contract to EBRD - Prepared under contract to EBRD

- Includes a Rational Energy Utilization Plan and an Energy Performance Certificate- Includes a Rational Energy Utilization Plan and an Energy Performance Certificate

15% EU grants - up to 375,000 Euros per company15% EU grants - up to 375,000 Euros per company

- Paid by EBRD when the investment is verified to be complete and operational- Paid by EBRD when the investment is verified to be complete and operational

New EU EBRD Energy Efficiency Finance Facility (RoSEFF)New EU EBRD Energy Efficiency Finance Facility (RoSEFF)

60 mil. Euro framework60 mil. Euro framework

Loans - of up to 1 million EuroLoans - of up to 1 million Euro

EU-financed free Technical ConsultancyEU-financed free Technical Consultancy

Eligible areas:Eligible areas:

• Commercial EE investmentsCommercial EE investments

• Stand-alone small scale RE investmentsStand-alone small scale RE investments

• Buildings sector EE and RE investmentsBuildings sector EE and RE investments

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

and materialsand materials

EEFF to finance energy efficiency in buildingsEEFF 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 46 investments with a combined value of 34 million Euro are under-way or 34 million Euro are under-way or

complete..complete....

11Autumn 2010

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

Developing a suitable EPC-model for the Romanian market

Use initial TA to assess market and identify main obstacles

Implement capacity building programme to support cities, ESCOs and banks

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

Saving energy, reducing public spending and GHG-emmissions

EPC is included in the Romanian National Energy Policy

– Government Ordinance (GO) 22/2008 (transposed from 2006/32/EC)

Defines the National Energy Policy

Defines ESCOs and energy services

Defines EPC

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

EPC and the Romanian legal frameworkEPC and the Romanian legal framework

Facilities /sites

ESCO

Energy saving service

Co-ordinationSupply

Technical issues

remuneration

saving guarantee

remuneration

natural gas district heat electricity oil

UtilitiesGas, electricity and/or fuel supply

companies

Public Authority/

Building owner

General maintenance

Energy Performance Contracting (EPC) – simpliest formEnergy Performance Contracting (EPC) – simpliest form

Energy Efficiency Services – Criteria and Conditions for SuccessEnergy Efficiency Services – Criteria and Conditions for Success

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 StepsEE in Public Buidlings - Next Steps

Prepare basic financing proposal for funding mechanism

Approval for EBRD framework financing

– Direct financing of ESCOs (€5m to €10m)

– Dedicated vehicle for financing EPC contracts

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

Select and engage consultants for project support teams

Begin operations and working with municipalities 2012

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Thank you!