Innovative Financing for EE Retrofits in Romania. October 18 th 2016

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1 Innovative Financing for EE Retrofits in Romania October 18 th 2016

2 Key sectors for EBRD - municipal infrastructure Energy Efficiency Public Lighting Water and Wastewater Urban transport Solid waste District Heating 2

3 EBRD EE financing facilities in Romania (currently finalized) EUR 80 mill. Partner banks BCR, BRD, BT, CEC, Raiffeisen, OTP EUR 65 mill. Partner banks BCR, BRD, Banca Transilvania, UniCredit EUR 10 mill. Partner bank BRD

4 EBRD experience: credit line programmes for energy efficiency in the residential sector Bulgaria Slovakia Georgia Kosovo EUR 90 mln EUR 150 mln EUR 20 mln EUR 12 mln (residential and (residential and SME sector) SME sector) Turkey Moldova Russia Kyrgyzstan USD 350 mln EUR 35 mln USD 100 mln EUR 15 mln (residential) (residential & SME sector) Residential financing facilities under development in other countries: Croatia, Poland 4

5 Structural design Technical assistance Consultant Training Marketing Technical assistance EBRD Loans Partner Banks Verification Consultant The extend of technical verification reflect specifics of the product and requirements of national authorities Loans Support to residential beneficiaries Sub-borrowers A separate Verification Consultant might not be needed (depends on the scope of investment and on the scope of TA provided by the Consultant) 5

6 EBRD- RO Government Memorandum of Understanding In the Context of the Memorandum of Understanding signed between the Romanian Government and EBRD in 2012, in order to improve the absorption capacity and prepare the strategic projects for EU programmes, the EBRD support related to EE included 3 projects: q National action plans for energy efficiency sector in Romania- SWOT analysis of results q Preparation of a strategy regarding the co-financing from structural funds of energy efficiency investments in public buildings and public lighting, including private sector investments, for the period q Preparation of an energy efficiency financing strategy for the residential sector, for the period The following slides summarize some of the proposed schemes for EE in buildings (public and residential) 6

7 1. Short term institutional setup - Public buildings MA (national budget and ERDF) Guarantee FNGCIMM Guarantee scheme for ESCOs from state budget Financial Institutions (Banks, IFIs) Apply for gurantee on behalf of ESCO RDAs as IBs Public finance for commercially nonfeasible share of investment Loan applica<on & Yearly reimbursement from savings Private finance for commercially feasible share of investment & Bridge loan (op<onal) Grant applica<on Implement and pre-finance works, services based on EnPC PA (adding own contribution) Payment from public finance at turn key Payment from savings yearly based on EnPC ESCO (adding own contribution)

8 2. Dedicated Fund taking on MA functions Public Buildings Managing Authority ERDF + state budget, grant and equity FNGCIMM Guarantee scheme for ESCOs (op<onal) Guarantee EE Fund Financing instruments for ESCOs Apply for gurantee on behalf of ESCO Capital or loan IFI Applica<on for financing instrument & reimbursement Cash flow ensured Financial intermediaries (optional) Payment form grant and savings Public authority EE works and energy services, energy audit ESCOs

9 Supporting instruments In the short term, introduction of a Guarantee fund in the form of first loss reserve, up to 20% of the commercial funding of the scheme, to be made available from the EU grants, in order to address the perception risk of the financiers, aiming to open the private sector financing market; In the medium term, introduction of a Forfeiting Fund, to be made available either by the commercial market or by the EU grants, depending on the needs, in order to address the need for increasing financing capacity of ESCOs in a growing market. 9

10 1. Parallel Co-Binancing Residential Buildings

11 1. Revolving Fund Residential Buildings

12 EBRD pilot programme EE public sector (ESCO market development) ESCOs are private companies able to design, implement and operate energy efficiency projects for public clients, paid from their own resources and then recovered from future savings on energy bills. The ESCOs own funding can be combined with grant funds. The EBRD programme, financed by GEF, is aimed at supporting cities to prepare and tender EnPCs for ESCOs(target public buildings) The programme is curently under review, given the many obstacles encountered. ESCO implements EE measures End of EnPC contract Energy bill City energy bill Energy savings revenue for City Energy savings revenue for ESCo Years 12

13 Next steps integrated approach - A national facilitator has to streamline the process - Tailor made financing schemes / instruments should reflect country and market specifics - The legal and regulatory framework should be developed/upgraded - EU (Eurostat Note, Aug. 2015) and Romania, for EnPC/ESCO type of investments - Awareness and capacity building/technical assistance: public authorities, local banks, construction companies, technical consultants & engineers, ESCOs - Policy dialogue - Start simple / Pilot / Extend 13

14 Contact Venera Vlad Associate Director Senior Banker, MEI Coordinator Dana Ionescu Principal Specialist Tel: Fax: