EBRD opportunities – Energy Efficiency Investments Venera Vlad 27 October 2011

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 : – 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 Banks total investment, (24% in 2010) – Annual emission reduction of 37 million tons of CO 2 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 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

4 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 CO EUR/ton, Investment per CO 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) 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 - 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 company 15% 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) 60 mil. Euro framework Loans - of up to 1 million Euro EU-financed free Technical Consultancy Eligible areas: Commercial EE investments Commercial EE investments Stand-alone small scale RE investments Stand-alone small scale RE investments Buildings sector EE and RE investments Buildings sector EE and RE investments Investment loans for eligible manufacturers, suppliers of EE and RE technology, equipment and materials Investment loans for eligible manufacturers, suppliers of EE and RE technology, equipment 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, 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 waterHeating Ventilation/ air conditioning EPC development

46 investments with a combined value of 34 million Euro are under-way or complete... 10Autumn 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 EBRDs Project Consultant - the EEFF Team at Tractebel Engineering... EEFF Help Line , EEFF website – or contact any Participating Bank 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 it will lead you to that bank's EEFF product page. Contacts for EEFF

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 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 Energy saving service Co-ordination Supply Technical issues remuneration saving guarantee remuneration natural gasdistrict heat electricityoil Utilities Gas, electricity and/or fuel supply companies Public Authority/ Building owner General maintenance 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

EE 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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