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More energy efficiency opportunities created by EBRD
To increase awareness of energy efficiency in central and eastern Europe and the former Soviet Union, the European Bank for Reconstruction and Development (EBRD) is financing a four-year multi-project facility (MPF) in which it will invest up to US$ 25 million (ECU 20 million) in energy service companies (ESCOs) with Honeywell Inc.
"While use of ESCOs within the EBRD's countries of operations is one of the most effective mechanisms for implementing energy efficiency, commercial banks have little experience in this area. This makes it difficult for the ESCOs to raise finance from these sources. The EBRD's presence will provide political risk comfort to Honeywell as well as a degree of risk sharing for both institutions," said Jacques de Larosière, President of the EBRD.
"The new companies will be able to provide the essential link between the customer who wants to invest in energy efficiency but has no access to conventional financing, and equity investors who want to support and participate in the region's growth but have no way of accessing the returns of the project and ensuring the repayment," explained Giannantonio Ferrari, President and Chief Operating Officer of Honeywell. Honeywell's first ESCO under the MPF will be launched in Poland within the next two months.
The EBRD expects the project to develop the energy service sector in the region as well as increasing the availability of financial resources to public and private sector entities which are unable to raise significant debt themselves. A longer-term benefit will be to reduce the energy requirements of those countries in which investments are made.
The ESCO's core service is the Energy Performance Contract (EPC). Under this contract, the ESCO installs, at its own expense, appropriate technology in its clients' premises to reduce their energy consumption while at the same time providing a guaranteed level of savings.
Honeywell Inc. is a multi-national company which manufactures and markets building control systems, industrial process control systems and space and aviation systems. Honeywell is the world leader in energy controls with recognised expertise in the products and services that allow maximum efficiency and control in all steps of the energy chain - production, distribution and consumption.
This MPF is the tenth such facility undertaken by the EBRD. It is the third large-scale funding of ESCO activities by the Bank under MPFs and builds on its previous experience in this sector. Total EBRD investment in ESCOs anticipated under these MPFs is approximately US$ 175 million (ECU 140 million), with a further US$ 350 million (ECU 280 million) from the sponsors.
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