EBRD opportunities –

Energy Efficiency

Investments

1

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

– Investments in 353 projects and 29 countries

– EBRD SEI financing account on average for 20% of the Bank’s total investment, (24% in 2010)

– Annual emission reduction of 37.2 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.

3

Barriers to sustainable energy

financing

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

– Low awareness and lack of information about the sustainable energy and energy saving concepts;

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

– High perceived risk of the ESCO investment, lack of expertise and experience on the financial market;

– 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; lack of technical expertise for appraisal and risk assessment

4

Institutional and regulatory barriers

Insufficiencies of housing legislation:

– Legal statute of associations of apartment owners;

– Responsibilities and legal liabilities of Associations;

– Management of Associations

– Decision making procedures

– Relationship with management companies and utilities

Insufficiencies of building regulatory

– Lack of energy performance classification

– Lack of energy certification scheme

– Structure and complexity of energy efficiency requirements

– Lack of institutionalised energy assessment procedures

– Insufficient institutional framework supporting energy performance assessment

5

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)

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:

– Secondary legislation on EE of buildings: Russia

– Law on Energy efficiency of buildings (Moldova, Kyrgyzstan)

– Regulations, technical regulations, ministerial decree/ordinances (Ukraine, Moldova, Kyrgyzstan);

– Sustainable Energy Action Plans (Kazakhstan, Moldova, Russia, Ukraine, Turkey)

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.

Policy dialogue in Building

Policy dialogue maintained on energy efficiency legal & regulatory framework in Kyrgyzstan, Moldova, Russia and Ukraine:

Primary and secondary legislation transposing EU Building Directive in Moldova and Kyrgyzstan (SSF funded):

Minimum EE requirements;

Methodology for energy performance assessment (new&existing buildings)

Energy performance certification

Regular inspections of heating and air-conditioning installations

Independent energy assessors

Amendment of housing codes in Moldova and Russia (SIDA and GEF funded)

Engagement on secondary legislation in Russia and development of energy efficiency financing mechanisms (GEF-funded)

Assistance on up-grade of EE and housing legislation in Ukraine, awareness raising& capacity building.

EE in Public Buidlings - Next Steps

Agree conclusions of the market study

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 (eg FREE)

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

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

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

The steps to an EPC

Analysis of existing technical documentation

Field inspection of the building and related facilities

Technical and energy chart analysis

Annual energy consumption

Rehabilitation and modernization solutions

Economic efficiency analysis of solutions to increase EPC

Conclusions on building assessment

Energy Audit Report

Lightning

Hot water Heating

Ventilation/ air conditioning

EPC development

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

12 Autumn 2010

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

Applying for a bank loan, free technical consultancy and an EU grant is easy with the EEFF

Contact EBRD’s Project Consultant - the EEFF Team at Tractebel Engineering...

EEFF Help Line - 031 224 8104, eeff@eeff.ro

EEFF website – www.eeff.ro

... or contact any Participating Bank

2011 14

If your local branch is not familiar with the EEFF, please contact Tractebel

Engineering who will give you the names of EEFF contact points for all the

participating banks. Also, if you click the logo of a participating bank on the home

page of www.eeff.ro, it will lead you to that bank's EEFF product page.

Contacts for EEFF

Energy Efficiency in Public Buidlings

EPC Programme Outline

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 framework

Cold/Heat generation

Cold/Heat distribution

Hot water generation

Ventilation system

Climatisation

Lighting

Energy saving potential: 20-40% = costs public budget does not have

to bear

Energy potential in public buildings

Facilities /sites

ESCO

Co-ordination

Supply

Technical issues

remuneration

saving guarantee

remuneration

natural gas district heat electricity oil

Utilities

Gas, electricity and/or fuel supply

companies

Public

Authority/

Building owner

Energy Performance Contracting (EPC) – simpliest form

Energy 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

Neutral process management:

• Trustworthiness, both technical and economic know-how

• Potential mediator in conflict situation

20

Thank you!