A successful EBRD sustainable energy programme comes to an end.
In 2004, Bulgaria was three years away from its EU accession. It was set to become the EU’s most energy intensive economy, while beginning a programme to shut down the oldest units of the Kozloduy Nuclear Power Plant, which produced 40 per cent of the country’s electricity.
In this challenging context, the EBRD inaugurated a new model of private sector credit lines in Bulgaria, which aimed to make businesses and households more energy efficient and to replace the lost generation capacity with renewable energy production. Sustainable Energy Financing Facilities (SEFFs) combine EBRD credit lines to local partner banks with donor-funded technical assistance and financial incentives for the final borrowers and partner banks.
Setting the template for SEFFs
The Bulgarian Energy Efficiency and Renewable Energy Credit Line (BEERECL) was the Bank’s first SEFF and targeted industrial and commercial borrowers. Launched in 2004, it combined €155 million of EBRD funds lent to eight participating banks with a €35.2 million grant fund from the Kozloduy International Decommissioning and Support Fund (KIDSF).
The grant component had three uses. First, it supported market awareness of the benefits of sustainable energy investments and advised borrowers on their sustainable energy projects. Secondly, it supported an independent verifier to confirm the completion of the funded projects. Upon confirmation, the grant would fund an incentive payment to the final borrower worth 15-20 per cent of the sub-loan granted by a partner bank.
Replicating market models
BEERECL became a “one-stop-shop” model for opening the local lending market to sustainable energy. The Bank replicated the model in 20 countries of operations and the overall signed funding total for SEFFs is higher than €2 billion.
BEERECL concluded its operations at the end of February 2014. In the 10 years since its launch it has financed nearly 300 projects mobilising €230 million of total investments. BEERECL projects are estimated to save nearly 1.1 million MWh per year. This is equivalent to the residential electricity use of 893,000 Bulgarians, about one eighth of the country’s population. The annual CO2 emission reduction of 710,000 tons is equal to the emissions from 390,000 passenger cars.