Energy Efficiency and Renewable Energy Source investment platform
About this good practice
In the process of implementation of the Energy Efficiency Directive Law on Energy Efficiency (EE Law), was adopted on 3 November 2016. Under this law, the Energy Companies (electricity and natural gas transmission and distribution companies) must enter into an agreement regarding the required amount of annual energy savings for each separate energy company (proportionally to their annually transmitted or distributed energy amount). The Energy Companies may save the energy by implementing energy efficiency and renewable energy projects (EERES) at their own facilities or at the facilities of any other consumer. EERES projects might be implemented by the Energy companies themselves, or by delegating this obligation to another subject (e.g., the manager of energy efficiency increases project investment fund). VIPA agreed with one of the energy companies to establish IP which would be financing ERES projects.
IP is designed to respond to the market failure to finance energy efficiency projects, as the banking sector is reluctant to finance such projects. It’s a innovative and flexible financing mechanism, which allows to raise and blend different sources of funding and achieve high level of investments and leverage effect with the goal of developing green and sustainable economy. Platform is reaching different groups of beneficiaries via shareholders webpages and seminars. The IP is targeting market with a huge market potential through discussions with EIB and EBRD.
Resources needed
To set-up the platform following resources were incorporated: VIPA’s human resources, external consultants, investor. VIPA took the role of General partner. With equity in amount of 10 MEUR. Investment platform borrowed additional 12.5 MEUR from EIB and negotiating additional 12.5 with ERBD.
Evidence of success
As of the end of 2020 IP has received applications in amount exceeding 66 MEUR, 24 MEUR of which is RES. Platform investors are offered a return on the investment and the lenders get interest for the provided funding. The IP is targeting markets with funding gap and insufficient financial situation (green investments) and generates energy savings and reduced CO2 emissions, which has a direct impact on tackling climate change, thus its important vehicle to reached ambitious sustainability goals.
Potential for learning or transfer
Other partners can learn that investment platform can be established as private partnership entity which is common structure for the funds in most of EU countries, thus having high potential of transferability. Such scheme should be also developed by National promotional bank or institution, to dedicate considerable resources for the development of such scheme while maintaining favorable conditions for final beneficiaries and if possible, acting as one stop shop while blending grants with financial instruments.
Further information
Website
Good practice owner
You can contact the good practice owner below for more detailed information.
Public Investment Development Agency