EBRD expands first energy efficiency fund in Bulgaria

By Sergiy Grytsenko

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The EBRD is boosting its support for energy efficiency projects in Bulgaria with a new €10 million loan to the Bulgarian Energetics and Energy Savings Fund (FEEI) – the country’s first private fund supporting energy-saving measures in publicly-owned buildings.

The seven year loan highlights the Bank’s long-standing commitment to supporting the public sector by helping close the gaps between the needs of public building owners and the constrained economic environment which is hindering energy-saving activities. This is part of the EBRD’s continuing support to the market development for energy efficiency operations in Bulgaria.

The Bank’s loan will be used to develop energy performance-based projects, attracting both financing and expertise from the private sector by engaging Energy Service Companies (ESCOs).

Energy Performance Contracts will be implemented primarily by Enemona, a Bulgarian engineering and construction company specialising in energy efficiency improvements across a wide range of public buildings, including schools, kindergartens, hospitals and administrative offices.

Through this loan, FEEI will provide the resources and skills needed to finance energy-saving initiatives for its clients, mainly Bulgarian municipalities and state-owned companies, at a time when local funding remains scarce.

“The Fund will support sustainable energy projects based on energy performance contracts. This scheme can generate energy efficiency investments that municipalities operating under tight budgets would never be able to fund themselves. As a result, they can achieve improvements at no initial cost, while the investments are recovered from the obtained energy and cost savings,” said Daniel Berg, EBRD’s Director for Bulgaria.

In Bulgaria, the government estimates that public building owners could save up to 50 per cent of their annual energy bills by undertaking energy efficiency improvements. The Fund is helping to realise this savings potential with a strong pipeline of projects to be implemented over the coming years. The projects will range from installing energy efficient public lighting and introducing combined heat and power generation plants to boiler updates and thermal insulation of walls and windows replacement in the municipal sector.

"Enemona is a leader in the market for ESCO services in Bulgaria. The company has long-term commitments in the sector and the ambition to extend the work not only in Bulgaria but also abroad, offering a unique know-how for energy saving contracts with guaranteed results and 100% financing. We believe that this partnership between an engineering organisation dedicated to one sector and a financial institution with long-term vision and strategy in the same sector such as the EBRD, is the most successful and correct one. Success which is equally beneficial to the Bank, the company and the community, "said Prokopi Prokopiev, Chief Executive Officer of Enemona.

ESCOs are used worldwide to offer a broad range of services including the design, financing and construction of energy-saving projects. Usually all the energy-saving measures are provided at no cost to the client, as the ESCO recovers its investments and return on these investments based on the energy and cost savings achieved. For this, the ESCO will typically use energy performance and energy supply contracting models, which allow the funding of energy efficiency upgrades from energy cost reductions. 

Energy Performance Contracting (EnPC) activities in public buildings are well-established in Europe. For instance, the EnPC market in Germany is worth around €350 million a year and €20 million a year in the Czech Republic. More recently in the EBRD region Hungary, Bulgaria and Romania are now also stepping up the pace of their activities in this market.

In Bulgaria the EBRD’s focus is on promoting the country’s transition to a low-carbon economy and enhancing its energy security.  This will be achieved through restructuring the power sector and improving its energy efficiency, developing greater export capacity as well as further strengthening of the infrastructure and financial sectors.

Since the beginning of its operations in Bulgaria, the EBRD has committed €2.5 billion in various sectors of the country’s economy, as well as mobilising additional investment in excess of €5 billion.

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