REECL (Bulgaria) Residential Energy Efficiency FW (ext.)



Project number:


Business sector:

Financial institutions

Notice type:


Environmental category:


Approval date:

01 Jun 2011



PSD disclosed:

27 Apr 2011

Translated version of this PSD: Bulgarian

Project Description

The EBRD is considering an extension of the Residential Energy Efficiency Credit Line (REECL) Framework initially launched on the Bulgarian market in 2005. Under the facility the EBRD would extend credit lines to Participating Banks (PB) for on-lending to the retail sector for residential energy efficiency projects.

Sub-borrowers could be one of the following groups who intend to perform eligible sub-projects on their own or occupying buildings:

  • individuals or groups of individuals and households registered under the laws of Bulgaria as residents or owners in the building for which they intend to perform eligible sub-projects;
  • associations of apartment owners registered as formal associations under the laws of Bulgaria.

EBRD funds of up to EUR 40 million would be complemented by the Kozloduy International Decommissioning and Support Fund (KIDSF) grant funding (the Grant). The contributors to the KIDSF are the European Commission, Austria, Belgium, Denmark, France, Greece, Ireland, Netherlands, Spain, Switzerland and UK. The Project is being prepared in co-operation with the Ministry of Economy, Energy, and Tourism of Bulgaria.

The Grant amounting to EUR 14.6 million will be used to provide:

(i) completion fees to sub-borrowers;
(ii) technical cooperation aimed at preparation, administration and verification of the sub-projects (see below “technical cooperation”); and
(ii) first loss scheme available to the PBs for comprehensive building refurbishment projects.

Transition Impact

The original REECL established in 2005 was the first scheme to systematically address energy wastage on a household level, using the retail lending market to finance efficiency improvements and structuring the supply side with strict criteria for energy efficiency equipment. The new facility will build on the success of the original framework, continuing the good work that has been achieved with PBs and will especially target areas that remain underdeveloped, i.e. more complex refurbishment of larger dwellings as well as housing associations that have just received legal status.

The transition impact of the Project extension stems from the followings sources:

  • Expansion and enhanced competition in the market for energy efficiency products and services - the stringent eligibility criteria under this facility will only allow installation of best available technology equipment thus creating a demand pull for more efficient equipment as well as quality suppliers/installers to compete for providing quality equipment and services, alongside other energy efficiency products, to the market.
  • Demonstration of energy efficiency products in the market - the expanded Project will include higher standard equipments and expand towards more comprehensive building level refurbishments. Market penetration rates of specific eligible techniques are close to zero and REECL financing will help to expand the market of technologies and associated services;
  • Demonstration of intermediation with associations of apartment owners - refurbishments by associations can have a more comprehensive and larger scale impact on energy efficiency and emissions savings. However, Bulgarian banks are not yet confident and do not have experience with structuring lending to these newly established housing associations, that evidently lack credit history. The introduction of a loss risk cover mechanism and other incentives under the facility will help promote lending to associations of apartment owners and this targeted lending will help demonstrate the association’s viability as market participants. This will have a strong demonstration effect and may encourage other transactions in the area of energy efficiency with housing associations, or even in other sectors.

The Client

The clients will be Bulgarian PBs which will on-lend the funds to individuals, households, group of inviduals or associations of apparment owners planning to undertake energy efficiency investments in the residential sector.

EBRD Finance

Senior loans of up to an aggregate of EUR 40 million to be allocated to PBs in Bulgaria.

Project Cost

EUR 40 million from EBRD and EUR 14.6 million from KIDSF.

Environmental Impact

FI screened project. PBs will be required to comply with the Bank’s Performance Requirements for FI (specifically PR2: Labour and Working Conditions and PR9: Financial Intermediaries). A verification process relying on an independent expert (Project Consultant) will ensure that only the selected equipment or measures will qualify for incentives.

Increased energy savings deriving from implementation of eligible measures will improve efficiency in the use of heat and energy and lead to a reduction of air pollutants (e.g., SO2; NOx; CO2; particulates) resulting from heat and electricity generation. This is a clear and quantifiable environmental benefit on which the PBs will provide details in an annual environmental report to the Bank.

Technical Cooperation

The TC component is essential to the Project and ensuring that eligible projects are pursued and satisfactorily completed, and only in such case the incentives are paid.

Similar to the original REECL, the Project Consultant’s assignment is to ensure the successful implementation of the Project by providing technical, administration and marketing services that will:

  • ensure there are clearly defined technical criteria under which PBs make loans and these are consistently applied and updated;
  • market the facility so that potential sub-borrowers appreciate the benefits of energy efficiency and are aware of the financing/incentives available under the facility;
  • establish an efficient tracking, monitoring and reporting system to ensure accurate data and standard forms are utilised by the PBs, sub-borrowers and the EBRD;
  • ensure that grant funding is applied consistently in line with the eligibility criteria and that this is supported with an appropriate level of validation, to avoid any misuse of the loan proceeds and grant.

The Project Consultants will have an enhanced role in terms of the building-level projects under this extension such as:

  • supporting individual owners of apartments in multi-storey buildings in establishing associations of apartment owners by providing legal advices on registration of associations, facilitating the decision making process and setting-up of a management structure of the association;
  • helping PBs in assessing credit worthiness of the associations and structuring financing mechanism for them;
  • giving advice and training to PBs on dealing with housing associations;
  • preparing conceptual design documentation for building-level refurbishment undertaken by the associations;
  • developing process scheme for building level sub-projects with indication of time sequence and responsibilities of all parties involved.

Company Contact

Galina Shterionova, Principal Banker, Financial Institutions Team
17, Moskovska Str.
Sofia, Bulgaria
Tel. +359 (0) 2 9123 414
Fax: +359 (0) 2 9123 441

Alexandar Hadzhiivanov, Principal Manager, Energy Efficiency and Climate Change Team
One Exchange Square
London EC2A 2JN
Tel. +44 (0)20 7338 7605
Fax: +44 (0)20 7338 6942

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168

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