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Leasing companies and Sustainable Energy investment

Leasing companies and Sustainable Energy investment – a plethora of exciting business opportunities IFC experience in Europe, Middle East, and North Africa regions Prague January 1-3, 2012. IFC. Sustainability Additionality – advisory with focus on creating own internal capacity

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Leasing companies and Sustainable Energy investment

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  1. Leasing companies and Sustainable Energy investment – a plethora of exciting business opportunities IFC experience in Europe, Middle East, and North Africa regions Prague January 1-3, 2012

  2. IFC • Sustainability • Additionality – advisory with focus on creating own internal capacity • Member of the World Bank Group – political risks mitigation • Efficiency - compare to other Development Institutions • IFC is the largest global development institution (182 member countries), focused on the private sector in developing countries, working in their frontier regions - 20-30% of portfolio, investment portfolio in Russia - $2.24 bln

  3. IFC Sustainable Energy Investments via FIs Country: Russia, Ukraine, Belarus, FIs: 12 Financial Institutions IFC investment: $185M in credit lines Countries: Central/Eastern Europe FIs: Multiple banks IFC investment: $321M in lines of credit and guarantee facilities Country: China FIs: Industrial Bank, Bank of Beijing and Shanghai Pudong Development Bank IFC investment: $275M risk sharing facilities support SE loans of more than $500M Country: Mexico PFI: Vertice IFC investment: $20M line of credit for energy efficient housing Ongoing: Panama, Costa Rica, Country: Turkey FI: YapiKredi Leasing IFC investment: $75M credit line Country: Brazil FIs: BancoReal & Unibanco IFC investment: $80M credit line Country: Peru PFI: BBVA Banco Continental IFC investment: $30M credit line

  4. Key Takeaway from IFC experiencein Europe, Central Asia, and Middle East and North Africa regions • There is a HUGE market for Energy Efficiency leasing finance • Market is DIVERSE – many niches • Niche LEADERSHIP possible • IFC provides funding and/or guarantees + Advisory Services • COMPETITIVE EDGE in new markets

  5. Dispersed resource • Achieving 45% energy efficiency potential in Russia would cost USD 320 billion • Energy Efficiency Potential (WB study): Manufacturing industry: $37billion Housing and utilities sector : $43 billion Power sector: $106 billion investments annually • Developing economies need $97 billion in SEF annually * • New business opportunities for banks and leasing companies: financing of energy and resource efficiency projects in SME and corporate sector * Source: McKinsey Global Institute 2008

  6. Sustainable Energy Finance Project A repair/upgrade, replacement of equipment units, expansion of facilities A capital investment resulting in improvement against baseline: • Energy Efficiency (EE): Decrease in per unit (and/or total) energy consumption • Clean Energy (CE): More access to energy with less impact on the environment (including renewable sources) • Cleaner Production (CP): Increase in material yield, reduction in emission of waste and hazardous substances

  7. Key Benefits for Financial Institutions • Expanded market share through new business line: • Innovative product/first mover advantage • Sell on value to customer, not pricing • Monetize existing client base, attract quality new clients • New marketing channels through vendor partnerships • Improved risk profile of portfolio: • Energy cost savings as a part of cash-flow • IFC risk sharing products • Positive social and environmental impacts: • Enhanced brand reputation, PRopportunities For Informational Purposes Only

  8. Russian experience • 12 partner Financial Institutions • 250 projects / $213M worth financed • Annual energy savings over $35M • Annual energy consumption down by 1674GWh • Greenhouse gas emission down by450 000 tСО2per year • Median project amount $300K ($900 average)

  9. Work with Financial Institutions Investment + Advisory RUSSIA Standalone Advisory Regional expansion EMENA

  10. EE/RE Leasing Features • All types of Leasing Companies can benefit from Partnership Opportunities • Partners can be: • Equipment Manufacturers • Product Retailers • Installation Contractors • Electric and Heat Distribution Companies • Engineering Consultants • Marketing and Sales Representatives • Energy Services Companies (ESCOs) • Benefits under our terms: • Many types of equipment may be financed • No minimum or maximum size • Can be utilized in all sectors • Equipment may be reused (co- generation, large boilers, industrial processes) • New marketing channel through new vendor partnerships 10

  11. EXAMPLES SUNFLOWER OIL PRODUCER • Renewable energy: boiler fueled by sunflower seed husks • Investment: $1,100,000 • Gas savings: 660,000 m3/month of gas per month ($39,000/month) • Payback: ~2.5 years CONFECTIONARY FACTORY • Process equipment: new automatic chocolate line • Investment: $233,000 • Energy cost reduced: 33%/unit • Payback: 2 years • Improved product quality, increase in output capacity CAR MANUFACTURING PLANT • Lighting system retrofit: new automatic lighting management system • Investment: $300,000 • Savings: $100,000/year • Payback: 3 years • Improved quality of lighting

  12. EXAMPLES YAPI KREDI LEASING Turkey (‘09-10) • Process equipment light industry • Investment: $50M IFC loan • Energy cost reduced: 36%/unit • Projects: 39 • Median project amount: $315 ($700 average) • Financed: $28M • Improved product quality, increase in output capacity CO-GENERATION • Energy equipment: new gas piston cogeneration machine • Investment: $2,4M • Energy consumption per unit of output down: 33% • Annual energy savings:$637 000 • Payback: 2 years • Improved product quality, increase in output capacity BOILERS MANUFACTURING PLANT • Process equipment: bending machine + plasma cutting system to make gas boilers • Investment (leasing): $194,000 • Savings: $235,000/year • Payback: < 1 year • Improved quality

  13. Contacts • Europe and Central Asia Region • IFC Advisory services : • Maxim TitovProgram Manager • Russia Sustainable Energy Finance Program • Tel: +7 (495) 411 7555mtitov@ifc.org • Elena ShonyaDeputy Program Manager • Russia Sustainable Energy Finance Program • Tel: +7 (495) 411 7555eshonya@ifc.org For Informational Purposes Only

  14. Eligibility Criteria • Eligible transaction must be a project to finance reconstruction, renovation or refurbishment • Financing may be in the form of sub-loans/leases, aimed at investing into fixed assets and decreasing energy consumption of the borrower or utilizing renewable energy • Financing for new projects, not refinancing of an existing loan/lease • Eligible are projects such as: • Generic equipment (HVAC, lightning, compressors, etc) • Energy savings per unit (ESU) ≥ 15% • Process equipment • Energy savings per unit (ESU) ≥ 15% • Cogeneration (CHP) • Heat utilization ≥ 60% For Informational Purposes Only

  15. What are Sustainable Energy Finance Projects?

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