Greening Siberia

A self-sufficient roadside café in the middle of the Russian steppe became an iconic symbol for Pavel Teremetsky and Cristian Carraretto from the EBRD’s Energy Efficiency team during their recent trip to Siberia. Equipped with solar panels, a small biomass plant and a mini wind farm, the small venture seems to represent much of what Siberian companies should aspire to.

“Today Siberian companies understand the importance of energy efficiency to varying degrees. Some enterprises are already getting equipped with energy efficient technologies, whereas others are in urgent need of modernisation,” Mr Teremetsky explains.

Traditionally, Siberian companies and residents are huge energy consumers, which is partly due to a harsh winter climate, but also to the Soviet legacy of a dilapidated infrastructure and the relatively low cost of energy compared with other countries.

However, this is about to change and energy efficiency investments are gaining momentum. That is why the two EBRD bankers travelled through Siberia with Natalia Blinova from the Bank’s Krasnoyarsk Resident Office to follow up on potential business opportunities previously identified by the EBRD.

Knowledge transfer

“The reason why some companies haven’t taken full advantage of energy-efficient technologies yet is not a lack of interest, as such investments are very profitable for them and improve their competitiveness,” Mr Carraretto explains. “It is often simply a lack of knowledge.”

A local aluminium parts producer visited by the team was a case in point. The company’s production processes eat up a lot of energy and involve, for example, induction furnaces operating at over 700 °C. By replacing the old machines, the firm could reduce energy costs significantly. Furthermore, part of the heat could be recovered and used elsewhere in the company. “The surprising part is that the firm, as many others, was not even aware of such possibilities,” Mr Carraretto stresses.

The team encountered a very similar problem at a local agribusiness firm. The company is in an expansion phase, but the use of an outdated coal-fired boiler to produce hot water and steam is currently leading to avoidable energy losses and has an environmental impact. Also, the company’s planned expansion into animal breeding opens up the opportunity to generate biogas, which can be used for power and heat production.

“This is a typical situation where synergies from the implementation of energy saving projects and efficient energy generation could lead to substantial improvements in the company’s sustainability and profitability,” says Mr Carraretto.

Added value

The combination of the EBRD’s long-term financing and its technical expertise in energy efficiency investments puts the Bank in a unique position to help Siberian companies, the team explains. This know-how is coupled with free-of-charge technical assistance and advisory activities and is funded through donor grants, which help companies to become more energy efficient and the Bank to achieve a long-lasting impact on the ground.

The team’s visit to a company, which produces components for the power and energy sector, illustrates this point yet again. With increased demand for its products, the company is considering building an in-house copper smelting as well as power generation facilities, but could benefit from technical assistance in the form of detailed feasibility studies before starting the project.

“The EBRD is well-placed to confer knowledge to private companies – in Siberia and elsewhere,” says Nikolay Sorokin, Head of the EBRD’s Krasnoyarsk Resident Office. “It’s the combination of providing finance and technical advice; the Resident Offices’ work to help identify and create relationships with clients and adding value through technical knowledge that makes the Bank an interesting partner for clients.”

Donor funding

In this context, the EBRD has recently obtained grant funding of US$ 8 million through the Global Environment Facility (GEF) to assist large industrial clients with developing, financing and implementing energy efficiency projects.

The grants aim to help companies optimise their energy systems, integrate processes and use technology innovation in order to make them more energy efficient and competitive. Furthermore, grants can be used to introduce and train firms on how to develop and use energy management systems, which help to optimise the use of energy and to minimise energy costs.

“The three companies that we visited are good examples of how the funds could be used in practice. During our site visits and meetings with company management and technical staff, we identified opportunities for profitable investments into energy efficient technologies at each of the plants ranging from €5 million to €10 million,” says Mr Teremetsky.

However, the opportunities for investments in energy efficiency are not constrained to the private sector, he adds. That is why the team also met with the authorities of several Siberian cities to explore opportunities for energy efficiency in the public and residential sectors, for example, in schools, hospitals, multi-apartment blocks and other buildings.

In both of these sectors the EBRD is now launching five-year programmes, funded by GEF, with the aim of supporting municipalities to establish energy efficiency projects. 

Incentives for change

“Energy efficiency is a key word in Russia at the moment,” says Mr Carraretto. This is partly a result of the Russian government’s plan to reduce the energy intensity of the country’s economy by 40 per cent by 2020, he explains. Further, a recent legislative change commits all public entities to reducing their energy consumption by 15 per cent within five years.

“There are vast opportunities for energy efficiency investments in Siberia and the EBRD’s knowledge is much needed here,” Mr Sorokin concludes.
 

The EBRD’s energy efficiency and climate change-related investments in Russia have already reached €1.83 billion since the Bank launched its Sustainable Energy Initiative in 2006.

Overall, the EBRD has invested in more than 650 projects in Russia, with a net business volume of €17.4 billion.

By Volker Ahlemeyer

Photos: Cristian Carraretto/Pavel Teremetsky 

Last updated 28 July 2011