Financing Medium and Long Term Energy Security for a Low...
18
Financing Medium and Long Term Energy Security for a Low-Carbon Economy October, 2014
Transcript of Financing Medium and Long Term Energy Security for a Low...
Financing Medium and Long Term Energy Security
for a Low-Carbon Economy
October, 2014
2 October 14 Financing Medium and Long Term Energy Security for a Low-Carbon Economy
1. Erste Group / BCR & Our Energy Infrastructure Finance Competence
2. Europe’s Energy Strategy
3. Romania’s Renewable Energy
4. Romania’s Energy Efficiency Potential
Agenda
Bucharest Energy Forum
Profile – Banca Comerciala Romana
Banca Comerciala Romana (BCR) was established in 1990
Taking over the commercial banking operations of the National Bank of Romania
BCR is the most important financial group in Romania - currently manages assets of
over EUR 15bn, has over 3.2 million customers, and is the market leader with over
18% market share
BCR is the most valuable financial brand in Romania, according to level of customer
trust and number of clients who mainly bank with BCR.
From 2006 BCR became a member of Erste Group
Erste Group was founded 1819 as the first Austrian savings bank.
Since 1997 Erste Group has developed into one of the largest financial services
providers in Central and Eastern Europe
46,000 employees, 16.5 million clients, 2,900 branches in 7 countries
BCR brand
Integration
into Erste
Group
Commitment to Romania
Erste Group has invested so far more than EUR 7.5 bn in Romania, through BCR and
as direct investments in Romanian commercial exposure
BCR has doubled the volume of its outstanding loan portfolio since 2006 and has been
the main supporter of the Prima Casa program (60% market share for Prima Casa 4)
Financial results as of FY2013 - Erste Group posts net profit of EUR 61 million
October 14 3 Financing Medium and Long Term Energy Security for a Low-Carbon Economy
4
Group Infrastructure Finance Energy and Environment infrastructure targeted
October 14 Financing Medium and Long Term Energy Security for a Low-Carbon Economy
Wind Parks PV plants Biomass/Biogas
Oil/Gas Generation Electricity Networks Transmission Systems
Public Systems Waste Treatment
Hydro Plants
Water Treatment Waste Management
Energy Efficiency
5 October 14 Financing Medium and Long Term Energy Security for a Low-Carbon Economy
Agenda
Progress report
1. Erste Group / BCR & Our Energy Infrastructure Finance Competence
2. Europe’s Energy Strategy
3. Romania’s Renewable Energy
4. Romania’s Energy Efficiency Potential
Low Carbon Emissions
20-20-20 targets
6 October 14 Financing Medium and Long Term Energy Security for a Low-Carbon Economy
• 20% reduction in CO2 emissions compared
to 1990 levels
• 20% of EU’s energy consumption to come
from renewable energy sources (RES)
• 20% reduction of primary energy demand
by increasing energy efficiency
• increase EU’s energy
independence
• combat climate change
• strengthen EU competitiveness
The Energy Efficiency Directive (EED)
• The Energy Efficiency Directive (EED 2012/27/EU) adopted on 25 October 2012 has to be transposed by all
Member States (MS) by the beginning of June 2014;
• Common framework of measures for achieving the Union’s 2020 20 % headline target on energy
efficiency;
• Member states are on their way to accomplish the national indicative target of 9% reduction of final
energy consumption by 2016 as it was requested under the ESD 2006/32/CE, which represents a less
ambitious objective than the 20% level adopted in 2012.
New EU Energy Security Strategy
Released on 28 May 2014
7 October 14 Financing Medium and Long Term Energy Security for a Low-Carbon Economy
8 October 14 Financing Medium and Long Term Energy Security for a Low-Carbon Economy
Agenda
Progress report
1. Erste Group / BCR & Our Energy Infrastructure Finance Competence
2. Europe’s Energy Strategy
3. Romania’s Renewable Energy
4. Romania’s Energy Efficiency Potential
Energy Efficiency A Global and European Priority
October 14 9 Financing Medium and Long Term Energy Security for a Low-Carbon Economy
• Energy Efficiency is key part of EU 2020 strategy;
• The Energy Efficiency Directive (2012/27/EU) recently approved imposes energy
saving obligations to Member States;
• Energy efficiency obligation schemes or policy measures in all Member States
• Exemplary role to be played by the public sector
• The Cohesion Policy proposals for 2014 -2020 allocate a significant amount of
funding to Energy Efficiency;
• ELENA, The four J’s (Jeremie, Jaspers, Jessica, Jasmine), EEEF (European Energy
Efficiency Fund), etc. to support investments in Energy Efficiency; Energy
Performance Contracting (EPC) Campaign started by DG Energy;
• EBRD, EIB, IFC have all started Energy Efficiency Initiatives.
Energy Efficiency Decoupling economic growth from energy consumption
October 14 10 Financing Medium and Long Term Energy Security for a Low-Carbon Economy
• Annual renovation target of 3% for APC (and possibly for APL) buildings above 500m² (starting 01.2014) and above 250m² (starting 07.2015).
• Cost optimal renovation can bring up to 60% energy savings.
• Share of public building in building stock accounts to 12%.
Renovation of Public
Buildings
• Until 31.12.2015, the newly established ANEE & ANRE will evaluate the national potential for the application of efficient cogeneration, heating & cooling together with a cost-benefit analysis, for identifying the most efficient solutions.
• If the analysis will prove the benefits exceed the costs, the competent authorities will take measures to promote the development of such infrastructure.
High Efficiency Cogeneration
& Efficient Heating/ Cooling
• Mandatory energy audits for companies (except SMEs) with an annual energy consumption of over 1000 toe.
• Development & promotion of ESCO companies.
• Creation of the Energy Efficiency Investment Fund with revenues form EUA auctions for funding Energy Efficiency projects.
Alternative Policy
Measures
Energy Performance Contracting (EPC)
in the Public Sector
October 14 11 Financing Medium and Long Term Energy Security for a Low-Carbon Economy
About 30%-40% of primary energy consumption comes from public and private
buildings
Public sector advantages
- Large and homogenous asset stock (e.g. schools, hospitals, etc.)
- Significant energy saving potentials of up to 40% due to underinvestment and operational
inefficiencies
- Simple pilot projects for market development (e.g. street lightning: 1. stable demand; 2. clear
baseline; 3. high savings and short payback period; 4. clear ownership structure)
- Potentially clear procurement mechanism
ESCO market development in public sector opens up large markets and
generates experience and trust in actors
ESCO/EnPC project development resources are not available in-house for
municipalities
If funds/grants are available: leverage by co-financing EnPC and finance in particular efficiency
measures with long, commercially unattractive payback period
Energy Performance Contracting (EPC)
Energy Performance Contracting (EPC)
- Procurement of works and services on basis of NPV
- Contents: system analysis, (pre-)financing, design, implementation & optimised operation of
entire building, controlling
- Payments based on achieved savings
- Requirement: long, stable use of building; Ideal application: public buildings
October 14 12 Financing Medium and Long Term Energy Security for a Low-Carbon Economy
Advantages of EPC/ESCO approach
October 14 13 Financing Medium and Long Term Energy Security for a Low-Carbon Economy
ESCO
• Private sector expertise to design, implement EE
investments and optimised operation
• Procurement based on energy performance or NPV
• Off balance sheet financing on commercial basis
Advantages of ESCO projects
Tradditional financing of EE in
public sector • Lack of expertise to design, tender and implement EE
investments and operate optimally
• Procurement procedure does not relate to EE performance
• Requires on balance sheet debt financing or large amounts
of grants
Energy Transformation
Energy Transport
Energy Use Energy Source
Fuel Switching to cleaner and cheaper energy sources (natural gas, renewable energy)
Self-generation of electricity and/or heat through efficient boilers and generators
Minimization of energy losses (heat recovery, heat exchangers, insulation, variable speed drives, business process optimization, automatic controls, metering devices)
Energy efficient equipment (lighting, air conditioning, refrigeration and other domestic appliances, industrial production lines, etc.)
Addressing the entire efficiency value chain
14 08/10/2014
Energy Service Companies (ESCOs)
World Outlook for Energy Services Companies
- ESCO markets are a growing market worldwide
- ESCO revenues in Europe > over EUR 8bn in 2010
New EnPC markets
• Legal uncertainties which are perceived as
risks
• Limited contract timeframes
• Limited investments => limited savings
• Limited BS of ESCO companies
• Limited understanding & willingness to
invest by both banks and equity providers
Mature markets
• Tested legal framework
• Longer tenors
• Significand investments =>
unlocking the full savings potential
• Well developed ESCO companies
• Interest of equity and debt
providers to invest
October 14
Energy Efficiency Projects
October 14 15 Financing Medium and Long Term Energy Security for a Low-Carbon Economy
Financing Energy Efficiency Projects
• EED preamble “Member States should encourage the use of financing facilities to further the objectives of
this Directive”;
• Romanian authorities have engaged in finding solutions to develop and implement innovative and smart financing
mechanisms for available funding sources (private, EU, banks), such as the development of an ESCO market and
a suitable mechanism for the functioning of EE business.
Project specific risks
Lack of project standardization / Lack of track record
Which components? Street lightning? Public
buildings? Energy Management?
KPIs?
Lack of supporting regulatory framework / clarity
Concessions? Acquisition of public services?
Payments to ESCO: operational expense or
investment?
Limited public sector support due to limited additional
indebtedness potential
Lack of collateral coverage
ESCO specific risks
ESCOs assumes both performance and the underlying
customer credit risk – if the customer goes out of
business, the revenue stream from the project will
directly impacted, putting the service provider at risk
ESCOs financing may give raise to leveraging problems
for the service provider, as it may become too indebted
at some point
Various guarantee schemes are
being discussed with IFIs
Projects bankability under question
Team and Contacts
Ioana Gheorghiade
Banca Comerciala Romana
Public Sector and Infrastructure Finance Executive Director
Bucharest, 15 Calea Victoriei, 3rd District
Tel.: +40 373 516 517
Mobile: +40 731 042 090
Cristina Ghimbovshi
Banca Comerciala Romana
Head of Infrastructure and Specialized Lending
Bucharest, 15 Calea Victoriei, 3rd District
Tel.: +40 373 516 653
Mobile: +40 785 252 993
Mihai Dorin Voican
Banca Comerciala Romana
Energy Infrastructure Specialized Finance Manager
Bucharest, 15 Calea Victoriei, 3rd District
Tel: +40 373 516 525
Mobile: +40 733 040 225
Oana Roxana Mogoi
Banca Comerciala Romana
Energy Infrastructure Coordinator
Bucharest, 15 Calea Victoriei, 3rd District
Tel.: +40 373 516 524
Mobile: +40 726 168 576
Sebastian Mihai Stancu
Banca Comerciala Romana
Energy Infrastructure Financing Expert
Bucharest, 15 Calea Victoriei, 3rd District
Tel: +40 373 515 571
Mobile: +40 784 242 375
Raluca Georgiana Badau
Banca Comerciala Romana
Energy Infrastructure Specialized Finance Manager
Bucharest, 15 Calea Victoriei, 3rd District
Tel: +40 373 515 597
Mobile: +40 784 240 872
Page 17 08/10/2014
EE/EM for
Municipalities in
CEE
ANNEX
Examples of EE technologies (1)
Sector Potential Borrower
Energy Efficient Equipment
INDUSTRIAL Industrial companies, SMEs
» Energy efficient machinery and production lines
» Waste heat recovery devices
» High efficiency electrical motors and drivers
» Compressed air systems
» Electricity peak-load control systems
» Efficient boilers, heaters, refrigerators
» Fuel switching (coal/oil natural gas)
» Self-generation through cogeneration or RE
» Complex energy optimization projects
AGRICULTURE Agribusinesses » Water treatment, water pumps » Efficient irrigation technologies (drip irrigation) » Methane capture projects
» On-site generation (cogen, biomass, biogas)
» Reforestation, sustainable habitats, eco-farming
COMMERCIAL Commercial buildings, retail shops, offices buildings, industrial
buildings, etc.
» Efficient lighting » Efficient Air-conditioning » Heating and ventilation equipment » Control and metering systems » Electricity peak-load control systems » Heat pumps, solar water heaters » Sustainable construction
Compact fluorescent lamps
Solar water heaters
Page 18 08/10/2014
EE/EM for
Municipalities in
CEE
ANNEX
Examples of EE technologies (2)
Sector Potential Borrower
Energy Efficient Equipment
RESIDENTIAL Households and private individuals
» Energy efficient domestic appliances
» Lighting, refrigeration, air-conditioning
» Fuel switching to natural gas for cooking
» Sustainable construction
» Green mortgages
TOURISM Hotel and other tourism business
operators
» Efficient air conditioning » Efficient refrigeration » Efficient lighting » Energy and water efficient laundry equipment » Sensors and automatic controls for consumption
management » Building insulation » Natural gas boilers for heat productions (hot water,
kitchen, laundry); » Heat recovery devices for hot water;
» Self-generation through cogeneration or RE
TRANSPORT Public transport operators, taxi drivers, transport companies
» Hybrid cars » Electric vehicles » Mass transport (e.g. Rapid bus transit)
Insulation material
Domestic appliances
