Regional Loan Funds
The international finance institutions that provide Regional Loan Funds include:
• EBRD Western Balkans Sustainable Energy Direct Funding Facility (WeBSEDFF)
• EBRD Private Sector Support Facility for Western Balkans window for Sustainable Energy Financing Facility (WBPSSF - SEFF) (EBRD Croatia project webpage)
• EBRD Western Balkans Sustainable Energy Financing Facility (WEBSEFF) (NB: previously WEBSECLF)
• EBRD Kosovo SEFF (new, coming soon)
• EIB/EC EE Credit Line
• CEB/KfW/EC Facility
• KfW - Banking Facility for Sustainable Energy Finance (new Serbia Unicredit coming soon)
• UNECE – E4F/EE21
• Green for Growth Fund
Examples of the use of these funds (case studies, or success stories) can be seen on the WEBSEFF website, or on EBRD’s SEFF. The first WEBSEFF is now fully committed to partner banks and the banks have already on-lent EUR 36.3 million to 73 projects in the private sector which have led to the reduction of almost 108,000 tons of CO2 per year and energy savings of more than 600 GWh per year.
The “WeBSEDFF” has provided already direct loans to 10 renewable energy and energy efficiency projects for EUR 40.8 million, saving 433 GWh of energy and 96,000 tonnes of CO2 emissions yearly and has recently been extended by another EUR 50 million.
Subject to the approval of the Western Balkan Investment Framework Steering Committee, the EBRD plans to widen the scope of the existing instruments to encompass the public sector within the framework of a Regional Energy Efficiency Programme supported by the WBIF. This envisages credit lines up to a total of EUR 60 million available to participating financial institutions for on-lending to eligible public and private borrowers for energy efficiency and small renewable energy projects. This programme will be supported with technical cooperation services, a risk sharing mechanism and a performance based incentive system which will be designed to address specific barriers depending on the sector and type of investment. There will also be a continuation of EBRD’s direct lending activities with a specific focus on financing pilot ESCO projects in the region.
These will be complemented by a policy dialogue and business development component to lay the foundations for energy efficiency in the public sector. The latter comprises three activity levels that support legislators and investors to eliminate market barriers to energy efficiency, and accelerate the take up of energy services, especially in the public sector:
• on a policy level – supporting beneficiary countries to draft necessary secondary legislation in support of the transposition and implementation of EU Energy Services Directive (and, as appropriate, the forthcoming Energy Efficiency Directive, when this has been be adopted by the Energy Community) and EU Energy Performance of Buildings Directive;
• on a programme level – enabling public actors to effectively translate the NEEAPs into investment programmes with a focus on commercially-financed ESCO projects and, where existing, implement Municipal Energy Plans;
• on a project level – enabling stakeholders to prepare, procure, implement and monitor commercially-funded ESCO projects in the public sector.
KfW loan funds are generally targeted at the private sector (SMEs, industrial enterprises or households) though some are also suitable for municipalities:
• CEB/KfW/EC Facility
• KfW - Banking Facility for Sustainable Energy Finance.
In 2013 KfW will launch a credit line for municipal environmental infrastructure and energy efficiency investments in Serbia. A total amount of 30 m Euro will be made available and will be disbursed to eligible municipalities and public sector utility companies via Serbian on-lending banks, following the standard procedures for municipal borrowing. This is a continuation of the current project on "Municipal Infrastructure via the Financial Sector". To provide more incentives for Serbian municipalities to invest in energy efficient and environmental projects KfW and the European Commission have signed an agreement at the end of 2011. A grant scheme will be implemented to award municipal environmental infrastructure and energy efficiency investments after their successful completion, with grants of 15% to 20% of the loan amount financed from the KfW credit line.
For more information, please, download a KfW brochure.
The Green for Growth Fund
The Green for Growth Fund fund is the latest model for combined funds for EE/RE in the Western Balkans. The fund uses an innovative financial structure to encourage the involvement of private sector investors, where contributors (donors, IFIs and private investors) own shares in the fund. The aim is to serve all the main groups of potential borrowers - SMEs, private households, energy service companies etc., with appropriate mixes of loan, grant, TA and guarantees, providing innovative financial mechanisms as necessary.
The World Bank also has loan projects in the following countries:
• former Yugoslav Republic of Macedonia - Sustainable Energy GEF Project
• Serbia - Energy Efficiency Project
• Montenegro - Energy Efficiency Project in Public Buildings
These projects provide loans, grants and technical assistance for energy efficiency measures, and support for policy changes to allow innovative measures such as “budget capture” and ESCO financing. The World Bank hopes to develop follow-on investment operations in all three countries. They expect to shift from what is now largely a public financing scheme to a revolving scheme. Several countries are now considering to use such a schemes as Energy Efficiency Funds, which may be one option for increasing investments into the public (and possibly residential) building sectors.
Regional Technical Assistance Funds
These are provided as assistance to governments to develop and implement EE related policies. Programming is usually done on an annual basis and can be rather flexible to respond to specific needs.
• USAID/Hellenic AID Synergy Project
• GIZ Open Regional Fund
• CEI Trust Fund Italian Government at EBRD
• EBRD Policy and Programme Support (see EBRD under loans section)
EU TA funds are also available but these are planned in advance to solve specific needs for technical assistance. These are country specific TA under National IPA programmes. Some Western Balkan counties are participating in EU support programmes, like Intelligent Energy – Europe, FP7-Energy, Covenant of Mayors etc.
Grant funds (up to 20%) are also available with many of the Regional Loan Funds. In many cases the grant element is financed by the EC under IPA.
However, countries are now setting up their own Energy Efficiency Funds or providing grant funding of their own. Management of the funds and their purposes vary from country to country.
These funds support local lenders by guaranteeing funds should a private sector borrower default. They are generally used when local banks are more experienced in lending for energy efficiency.
Funds at local banks
While the availability of funding varies across the region, there are funds available at banks in every country. Some local banks take funds from several sources.
More details of all of these funds, including contacts are available in Review of Financial Support Facilities for Energy Efficiency and Renewable Energy in the Western Balkans, June 2011 (hardcopy or downloadable); or its summary dated Nov 2011, also available at http://www.wbif.eu/Energy).