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EBRD Support for Renewable Energy and Energy Efficiency projects Ian Brown

EBRD Support for Renewable Energy and Energy Efficiency projects Ian Brown Power & Energy Utilities Team. Pristina, 14 May 2013. Overview of the EBRD. AAA/Aaa stable rated multilateral development bank owned by 63 countries and the EU and EIB

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EBRD Support for Renewable Energy and Energy Efficiency projects Ian Brown

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  1. EBRD Support for Renewable Energy and Energy Efficiency projects • Ian Brown • Power & Energy Utilities Team Pristina, 14 May 2013

  2. Overview of the EBRD • AAA/Aaa stable rated multilateral development bank owned by 63 countries and the EU and EIB • Invested over €79 billion in more than 3,644 projects since 1991 • Active in 35 countries.

  3. Primary objectives in the energy sector • Support sector reforms that enable energy sectors to function according to market principles (e.g. increased competition, market liberalization and private ownership) • Strengthen frameworks for regionalisation (trans-border transmission lines, energy trading) • Prioritise environmental, energy efficiency and renewable energy investments

  4. EBRD Power Sector Financing Financing by Sector(2009-2012) • Cumulative EBRD financing to power & energy projects since 1992 is €8.1 bn across 170 projects with €28.4 bn total value • In 2012 invested over €1.0 bn in 23 projects with a total value of €3.2 bn • In the last five years, number of projects per year has tripled and annual business volume has quadrupled • Renewables represent an increasing portion of total financing, comprised primarily of wind and hydro but also including biomass and solar Unaudited as at 31 December 2012 Note: Renewable power does not include large hydro. Source: EBRD data

  5. Case study: EPCG Montenegro • EBRD made a loan of EUR 35 million in 2010 to EPCG in Montenegro to install 175,000 smart meters • Objectives were to improve energy efficiency, reduce distribution losses and improve collections • Already 80,000 meters have been installed with very interesting results • Distribution losses in areas where all the meters have been changed are coming down to the level of technical losses • Half the loss reduction comes when 80% of meters are changed, the other half from the remaining 20% in an area • Bill collection rates are substantially higher for customers with smart meters • Old debts are being collected • EBRD have now approved an additional EUR 30 million to complete the smart meter changeover for all consumers in Montenegro

  6. Power sector investments • Long lived – from 20 years (wind turbine) to more than 60 years (hydropower); long pay-back times • Large scale – investments range from EUR 10 million to more than EUR one billion • Natural monopolies – networks obviously but often generation also, especially in small markets • High political profile – essential utility, viewed as a public service • Central to resource efficiency and climate change agendas Regulatory environment is critical

  7. Key regulatory issues • Overall: a regulatory framework must be clear, predictable, stable and enforced • Tariff methodology that focuses on transparency and efficiency – social issues dealt with separately. Affordability is a key concern. • How to deploy renewables without being overwhelmed or paying too much?

  8. Western Balkans Sustainable Energy Direct Financing Facility • A direct financing facility operated by the EBRD • For (small) renewable energy and energy efficiency projects • EUR 100 million of loan funds + up to EUR 21.5 million in Technical Cooperation (TC) and incentive payment funds • Senior (secured) loans from EUR 2 million to EUR 6 million EBRD financing • Average (expected) maturity of 6-8 years for energy efficiency and 12 years for renewable energy projects, with appropriate grace periods and flexible repayment schedules

  9. Energy efficiency credit lines project with EU • EU supported EUR 12 million framework for energy efficiency investments in SMEs and households (with EUR 3 million in EU grant funds) for small energy efficiency projects for SMEs and households • EBRD recently signed the first credit line with TEB, others to follow • Initial EUR 5 million is being provided to TEB – this is a pilot project • EU is providing grant funds that provide up to 20% of the loan principal to the final borrower as an incentive payment

  10. Key Messages • KEDS privatisation is an important step forward but this is step on the road towards having a financially sound distribution sector, and not an end in itself • EBRD strongly supports investments in renewable energy and energy efficiency in Kosovo, but as part of a balanced generation mix which uses Kosovo’s available resources, including new higher efficiency lignite fired generation • The importance of having a stable, predictable and independent regulatory climate cannot be overstated.

  11. Nandita Parshad Director, Power and Energy +44 (0)207 338 6537 parshadn@ebrd.com Ian Brown Senior Adviser, Power and Energy +381 63 233 954 browni@ebrd.com Thank you

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