Giving credit to energy

July 31, 2014

EBRD has distributed more than two billion euros to fund sustainable energy projects around the world.

 

The European Bank for Reconstruction and Development (EBRD) was the first international financial institution that set up an internal team of experts on issues related to energy efficiency and climate change in 2006. The institution launched a very ambitious program – the Sustainable Energy Initiative (SEI). Since then, the EBRD has distributed more than two billion euros to fund sustainable energy projects of which benefited more than 80 financial institutions, reaching 40,000 end customers in 20 countries. This has resulted in annual savings of more than four million tons of CO2 emissions.

All this has been possible thanks to a series of green finance tools called Sustainable Energy Financing Facilities (SEFFs) that the EBRD created within the SEI. These include credit lines promoted in the countries in which the EBRD operates (normally, transition countries in Central and Eastern Europe) to finance projects of green energy in the residential sector and local, small and medium sized enterprises.

“Currently there are 23 active SEFFS, such as PolSEFF in Poland, TurSEFF and MidSEFF in Turkey, WeBSEFF II in the Western Balkans , KoSEP in Kosovo, just to name a few,” explained Daniela Diedrich-Ristic, associate manager of Energy Efficiency & Climate Change for the EBRD.

Thanks to the SEFFs, local banks have access to funds that they can make available for individuals or companies that apply for them upon presentation of projects covering energy efficiency or renewable energy measures. Each credit line will have a series of specific criteria for technical and financial eligibility of such projects.

“The main objective of these credit lines is the scaling up of financing for energy efficiency and small-scale renewable energy projects,” highlights Daniela Diedrich-Ristic.

The EBRD is aware of the great potential for investments in sustainable energy and, through the SEFFs, expert guidance is provided to build capacity in appraising the financial and technical potential of such investments. Financial institutions learn how to assess the feasibility of energy efficiency and renewable energy projects and how to develop suitable financial products. In addition, their clients receive access to a new line of financial products and learn how sustainable energy investments can improve productivity and increase profits.

In fact, this is a growth opportunity both for the local banking sector and for the end users. Local banks have the ability not only to access new funds and financial instruments that are attractive to their customers, but also to develop skills and experience in an industry expected to grow more and more. Businesses have the opportunity to invest and build their own future energy savings or to introduce new forms of power generation such as CHP, which will increase their competitiveness.

The feedback has been very positive so far. Let’s just look at a few examples.

After only four months after its launch in February 2014, KoSEP (a total value of 12 million euros) approved eligibility of 278 projects worth 1.9 million euros. Of these, 267 are in the residential sector with 400,000 euros; the others are companies and are worth about 1.5 million euros.

Secondly, in November of 2013, three years after its launch, TurSEFF (total value of $520 million) has financed projects for $285 million. TurSEFF saved 274, 652 tons of CO2, equivalent to the energy consumption of about 1.8 million people.

Finally, MidSEFF, worth nearly one billion euros, is the largest credit line ever established by the EBRD. In 2013, the project exceeded the threshold of 500 million euros of funding, supporting approximately 3% of the total installed capacity of renewable energy in Turkey and reducing CO2 emissions by 0.5% per annum.

This article was originally published in Italian on Now How, a sustainability web magazine powered by Stantec in Italy.

Daniela Diedrich-Ristic is a manager in EBRD’s Energy Efficiency and Climate Change Team. In her function, she develops new and innovative financing instruments to support EBRD  and manages various technical assistance programs with a particular focus on the Western Balkans.

MWH, now part of Stantec, has been serving EBRD for more than 10 years, offering sustainable energy and environmental and social consulting services in the countries where the bank operates.

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