Financing Residential Energy Efficiency in South-East Europe Gianpiero Nacci Head of Sustainable Resources Investment, EBRD Residential Energy Efficiency in South-East Europe – Challenges and Opportunities, Brussels 20th June 2017

What is the EBRD Multilateral financing institution established in 1991 to support transition to market economies Owned by 65 countries, the EU and the EIB €30 billion capital base €41 billion portfolio €8.9 billion average annual business in the past 3 years 3 key operational principles Sound banking Transition impact Environmental sustainability EBRD region of operations: Caucasus and Eastern Europe Central Asia and Mongolia Central and Eastern Europe Cyprus Greece Southern and Eastern Mediterranean Turkey Western Balkans Russian Federation

Green Economy Transition (GET) 40% Green finance in EBRD annual business by 2020, from a 2015 level of 30% € 4 billion Target annual EBRD green business by 2020 € 22 billion Target cumulative EBRD green business 2006-2016 The environment and sustainability are central to the EBRD’s EBRD adopted its Green Economy Transition approach in October 2015. The GET targets: 40% of EBRD’s annual business to be Green by 2020 Approximately equivalent to € 4 billion Since 2006, EBRD has provided over € 22 billion in Green finance (through 2016) @EBRD #EBRDgreen #GreenCities

EBRD’s green financing €22.2 billion cumulative EBRD green financing 2006 - 2016 1,271 projects with climate components 33% of 2016 business

EBRD’s experiences in financing residential energy efficiency since 2006 Annual Green impact 441 1385 GWh of primary energy saved per year € million invested in residential buildings energy efficiency improvement across 349,000 38 projects, and accounts for tonnes CO2 eq. reduced per year 22.4% of EBRD’s total green investment in buildings.

Bulgaria: Residential Energy Efficiency Credit Line (REECL) Through REECL, the EBRD offers credit lines to local partner financial institutions in Bulgaria for on-lending to individuals and housing associations investing in residential energy efficiency. REECL Key Facts Financing framework: €110 m €50 million (2005-10) €40 million (2011-14) €20 million (2016- ) KIDSF support of €24.6 million for incentives and technical assistance Amount signed with PBs: €99.4 m Number of projects: 53,345 (~ 8,000 per year) Energy savings: 240 GWh per year Carbon reductions: 249,000 tons CO2 per year EBRD Participating Banks (PBs) Sub-Borrower (SBs) € Credit Line Loan Agreement Confirms Sub-Project compliance; Verifies implementation KIDSF Funded Contract Training and Marketing Support Project Consultant

REECL: Case study After: 146 kWh/m2.a Costs: EUR 28,000 IRR: 16% OFFICIAL USE REECL: Case study After: 146 kWh/m2.a Costs: EUR 28,000 IRR: 16% Insulation of external walls of the two main facades Replacement of windows in apartments Before: 178 kWh/m2.a Pazardjik, 19 D.Debelianov str. Apartment building of 10 apartments

Launch of “REEP Plus” in 2017 REEP Plus is an integrated package of finance, technical assistance and policy dialogue, implemented jointly with the Energy Community Secretariat Objective Sustainable market for energy efficiency in the Western Balkans Window 4 Direct Lending to Municipalities €20m direct EBRD financing €4.5m grants (EU IPA + Other Donors) Direct loans to the State, cities or municipal companies Focus on public buildings EE Capital expenditure grant co-financing and TA Window 2 Intermediated financing & Window 3 Direct financing €108m EBRD & KfW financing via FI €27.05m grants (EU IPA + Other Donors) SME and public sector lending (KfW) Residential sector lending across all 6 WB countries (EBRD). €1.8m WBIF, €2.7m Austrian Federal Ministry of Finance for TC €30m direct EBRD financing €1m grants (EU IPA + Other Donors) Direct lending for Medium scale RE, EE Target financing of ESCOs TA for project preparation Window 1 ESCO support & Policy dialogue ESCO development €3m grants (EU IPA + Other Donors) TA for ESCO projects and tenders preparation Policy dialogue €2.5m grants (EU IPA) Key focus on residential sector regulations

Conclusion Western Balkans’ residential energy efficiency potential unrivalled Significant opportunities to capture this potential Credit lines that engage private banks key to capturing this potential

Head of Sustainable Resources Investment EBRD Gianpiero Nacci Associate Director Head of Sustainable Resources Investment EBRD NacciG@ebrd.com One Exchange Square London, EC2A 2JN United Kingdom www.ebrd.com 29 March 2017