EBRD to boost energy savings in Hungary

The EBRD is providing a €25 million credit line to Raiffeisen Bank Zrt. to finance energy saving investments in the Hungarian municipal sector.

The proceeds of the loan will be used for on-lending to Hungarian municipalities, municipal companies as well as energy saving companies providing services to municipalities in order to support the upgrade of the energy efficiency of municipal infrastructure, including rehabilitation of heating and power distribution systems, replacement of outdated boilers and improvement of thermal insulation of buildings. This facility will help Hungarian municipalities reduce energy consumption by up to 150 GWh per year, comparable to the amount of electricity consumed in a year by the households of Gyor, Hungary’s sixth largest town with a population of 128,000.

Awareness of the benefit of energy efficiency has increased in recent years, but local municipalities still rely almost exclusively on government funds and EU grants for modernisation of infrastructure. With EBRD support Raiffeisen Bank Zrt. will increase the availability of funding for energy conservation projects for municipalities and energy saving companies in Hungary, helping to improve the energy efficiency of this sector.

A fully owned subsidiary of Raiffeisen International Bank-Holding AG, Raiffeisen Bank Zrt. is the fifth largest bank by assets in Hungary and the second largest provider of municipal finance.

The loan is part of a European Union – EBRD programme to promote medium and long-term funding for energy efficiency improvements in the municipal sector through commercial partner banks.

To enhance the effectiveness of investments, the EBRD credit line is complemented by grant funds from the European Commission, which will be used to help the municipalities assess energy saving potential and financial feasibility of infrastructure rehabilitation projects, as well as to provide investment incentives to borrowers who successfully implement projects. The incentives will be based on estimated level of energy savings and will amount to up to 20% of the sub-loans.

Since the beginning of its operation in Hungary, the EBRD has invested over €1.9billion across more than 100 projects.