The Bulgarian Energy Efficiency Fund – Tool for Energy …€¦ · 1 The Bulgarian Energy Efficiency Fund – Tool for Energy Efficiency Projects Financing Dimitar Dukov Workshop

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The Bulgarian Energy Efficiency Fund –

Tool for Energy Efficiency Projects Financing

Dimitar DukovWorkshop on Case Studies on Overcoming Barriers to Investments into Energy Efficiency and

Renewable Energy Projects through Policy Reforms

Kiev, Ukraine10-11 November 2009

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Preconditions for successPreconditions for success (1)(1)Stable and predictable investment climate ► low inflation and bank interest rateFull cost recovery energy prices ► abolishment of subsidies and price distortionsAdequate EE legal base. The Energy End-use Efficiency and Energy Services Directive (2006/32/EC)– Mandatory EE audits and improvements for buildings with more than 1000 m2 area and Industrial facilities with energy consumption more than 3000 MWh/y. ► creation of obligations to the potential marker playersLicensing of energy auditing companies after successful completion of training courses ► creation of common energy efficiency auditing methodology

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Preconditions for successPreconditions for success (2)(2)State programs for auditing of public buildings ► EE projects development – public facilities as market clientsState programs for auditing of industrial companies, mainly SME ► EE projects development for target clientsState support for creation of specialized EE credit lines ►creation of adequate financial sourcesInvolvement of the commercial banks in the EE market ►creation of alternative financial sources and competition in the EE financing marketSubsidies programs for target clients (housing sector, SME, public buildings, hospitals) ► grant 20-40% usually after project completion - debt reducing

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Success Factors Success Factors

The creation of the energy efficiency projects The creation of the energy efficiency projects market is result of the simultaneously actions of market is result of the simultaneously actions of administrative and market forcesadministrative and market forces

The Government has a key role for the legal, The Government has a key role for the legal, financial and technical structuring of the market financial and technical structuring of the market

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Bulgarian Energy Efficiency FundBulgarian Energy Efficiency FundEstablished with the Energy Efficiency Acts from 2004 and confirmed with the EEA from 2008Initial capital - BGN 22 millionCapitalized with grants from the World Bank (GEF), The Government of Austria, the Government of Bulgaria, DZI Bank, “Lukoil Bulgaria”, “Brunata Bulgaria”, “Enemona”.Combines the functions of financing/guaranteeing institution and a consultancy center

Target: Financing projects for improvement of energy efficiency in public, industrial and residential buildings and industrial facilities.

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Principles Principles

Public-private partnershipIndependent managementSelf-sustaining capacityTransparencyEqual opportunities for all group of clientsTechnical assistance in project preparation

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Organizational StructureOrganizational StructureDonors` Assembly includes representatives of the four primary sources of financing of the Bulgarian Energy Efficiency Fund (BEEF):

- The Global Environmental Facility (GEF)- The Government of Bulgaria- The Government of Austria- Private donors and contributors

Management board is the primary governance body responsible for the overall strategic management of BEEF in compliance with its stated objectives and principles of operations.Fund manager selected after public procedure (private company) is responsible for the entire day-to-day operation of BEEF and for implementation of the project cycle. Its main objective is to operate the Fund as a profit-oriented business.

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Market position and productsMarket position and products

EE potential Bankableproject Grants

Technical assistance

BEEF

InsufficientBureaucratic

BanksHigh interest rates and collaterals

Bulgarian Energy Efficiency Fund

Portfolio PCGsClients – ESCOs, Banks – refurbishment of

residential buildings.Up to 5% cover from the credit bank losses. Very high risk toleranceLow guarantee feesTechnical assistance

BEEF financingCheaperHigh risk toleranceSmaller projectsTechnical assistanceBridge financing

Project PCGsUp to 80% coverHigh risk tolerance0.5% to 2% annual feeTechnical assistanceFast processing

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Project Eligibility Criteria Project Eligibility Criteria The project must apply a well proven energy saving technologyAt least 50% of project`s benefits must come from energy savingsEnvironment friendly projectsInvestment payback period – up to 5 yearsInvestment range BGN 30 000 – BGN 3 000 000Project Developer’s equity contribution – at least:

10% in case of co-financing (BEEF + commercial bank)25% in case of financing from BEEFIn compliance with the requirements of the banks regarding guarantees

Credit maturity period – up to 5 years

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Types of projectsTypes of projects

Refurbishment of buildingsReplacement of the fuel (example: from naphtha to natural gas or bio-mass)Thermal insulationReconstruction of the heat source and heat distribution networkReconstruction of heating, ventilation, air-conditioning and lighting systemsModernization of street lighting systemsSmall cogeneration systemsEnergy efficiency in industrial processes, incl. purchase of equipment, installation etc.

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Types of borrowers1. Municipalities – 49% of BEEF total portfolio volume. Typical projects – EE reconstruction of public buildings (schools, kindergartens and administrative buildings); Reconstruction and improvement of street lightening.

2. SMEs – 30% of BEEF total portfolio volume. Typical projects – EE reconstruction of industrial premises; replacement of old machinery with new, less energy consuming equipment.

3. Universities/Hospitals – 21% of BEEF total portfolio volume. Typical projects – EE reconstruction of educational/hospital premises.

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Results as of 30 Sept. 2009Results as of 30 Sept. 2009Number of

projectsProject size

(BGN million)BEEF financing (BGN million)

Financed projects 74 30.8 20.8

Street lighting 5 1.8 1.4

Energy reconstruction of the heat source

11 5.0 3.4

Refurbishment and reconstruction of buildings 58 24 16

Municipalities 31 14.5 9.8

Corporate clients 32 9.5 6.4

Hospitals 5 3.8 2.5

Universities 6 3 2.1

Credit guarantees 13 5.3 0.3Portfolio guarantee for ESCO projects 13 5.3 0.3

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Environmental resultsEnvironmental resultsas ofas of 3300 Sept.Sept. 20020099

Savings Dimension QuantityElectricity (net) kWh 13 070 000Heat energy (net) kWh 37 708 000Oil equivalent ТОЕ 4 367Annual GHG emissions reductions

tones CO2 equiv. 44 283

Lifetime GHG emissions reductions

tones CO2 equiv. 885 660

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Implemented projects Implemented projects “Vinprom Troyan” AD

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Implemented projectsImplemented projectsTailoring enterprise “Maneva-Tomik” - Pleven

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Implemented projectsImplemented projectsBuilding of Pharmaceutical Faculty of the Medical

University in Plovdiv

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Implemented projectsImplemented projectsBuilding of “St. St. Cyril and Methodius” School in the

town of Slivnitsa, Slivnitsa Municipality

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Implemented projectsImplemented projectsBuilding of Elementary School “St. St. Cyril and

Methodius” in the town of Elhovo, Elhovo Municipality

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Implemented projectsImplemented projectsBuilding of the Municipal Administration and Community Center “N. J. Vaptsarov” in the Town of Krovodol(ESCO project of “Enemona” AD)

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Implemented projects Implemented projects Five kindergartens in the town of Karlovo(ESCO project of “Enemona” AD)

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Thank you for your attention!Thank you for your attention!

ContactsContacts::“Kuzman Shapkarev” str. № 4

Sofia 1000, Bulgariatel: +359 (2) 81 000 80fax: +359 (2) 81 000 05

e-mail: [email protected]: www.bgeef.com