EXPERIENCE FROM WESTERN BALKAN AND UZBEKISTAN NENAD PAVLOVIC SOUTH EAST EUROPE CONSULTANTS (SEEC) BELGRADE, SERBIA BERLIN, 7 MAY 2010 INOVATIVE FINANCING FOR EE AND RES PROJECTS

Major framework conditions Energy Policy & Strategy Yes Secondary legislationYes/No, but mostly not in place Feed In TariffsYes, mostly Energy carrier pricesAlmost/Cost reflective Primary energy resources Poor Financial IEE schemesYes, available PrivatizationMostly done Service marketNot enough developed, TA needed EE product marketDeveloped Western Balkan countries Energy Policy & Strategy No Secondary legislationNot in place Feed In TariffsNo Energy carrier pricesNo cost reflective (Gas only 50 US$/1000 m3) Primary energy resources Gas, huge reserves Financial IEE schemesIn preparation PrivatizationNot completed Service marketNot enough developed, TA needed EE product marketDeveloping Uzbekistan

Energy Efficiency in Public Buildings (SER, MNE; WB) Evaluation & Reporting РАДОВИ МЕРЕЊА АНКЕТА Technical monitoring DEA ‘BEFORE’ ‘AFTER’ Social monitoring Technical monitoring

Traditional Credit Lines (EBRD, KfW, IFC, etc.) IFI Borrower Project Consultant Verification consultant €€ Contract Loan Agreement Incentive Payment* IFIs do not want to destroy local financial market Typically hire project and verification consultant Credit conditions are similar at the local commercial market with some benefits (longer maturity or grace period, for instance) Local bank €€

WeBSEDFF (EBRD) – EBRD Borrower Project Consultant Verification consultant €€ Donor Funded Contract Donor Funded Contract Loan Agreement Incentive Payment* Incentive payments will be paid upon technical completion of the investments to eligible Borrowers CO2-based Incentive Payments IP = CO2 emissions avoided per year x Price per ton of CO2 x Annuity factor (depending on discount rate and number of years over which CO2 emissions reductions will be remunerated

UZEEF – Industry, M 25 US$ World Bank Republic of Uzbekistan Uzpromstroi Bank Asaka Bank Hamkor Bank Industrial Enterprises (IEs) Financing Agreement Subsidiary Credit Agreements Sub-Loan Agreements Project Agreements MoE

Jumping vs. gradual increase of EE At present Local BAT World BAT CONTINUOUS EE INCREASE JUMP to TARGET EE POTENTIAL YEAR $ $ $ $ $

Challenges Outdated and life spent of both production and energy technologies  Large technical potential for EE improvement  Energy carrier prices not cost reflective – smaller market potential  Difficult to make distinction between IEE vs. refurbishment, replacement, production extension - misunderstandings Faster EE product penetration than development of new services Commercial banks still treats these markets as high risks area -> expensive loans – TA for development of new product ‘IEE loan’ Privatization ongoing – focus on renewal of physical production, not on energy and IEE; faster development of service market – TA needed! Oversized capacities – real challenge how to structure the approach Demand Side Management in factories – demand is high ! Training of consultants (EA, BP, BAT, etc.) – demand is high

Thank you for your attention QUESTIONS & UNSWERS