Peep Mardiste

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Funding for renewable energy and energy efficiency

• Peep Mardiste
• pepe_at_ut.ee

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Opportunity for climate lowering energy
intensity of economies

• Energy consumption in relation to GDP
• (tons of oil equivalents per 1 million Euro)
• Denmark 123
• Germany 165
• Sweden 224
• Finland 272
• Poland 650
• Latvia 759
• Estonia 1156
• Lithuania 1273

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Which investment priorities?
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Potential priority for funding energy saving in
households?

• in Russia the technical energy saving potential
  is 40...45 of total energy consumption
• EU has in average more than 20 saving potential
• in EU buildings account for 40 of total energy
  consumption
• in EU buildings have 27 energy saving potential
  by 2020
• (which would decrease EU energy consumption by
  11)
• in reducing the energy use in buildings,
  insulation is key (accounts for 78 of reduction
  potential)
• insulation on pitched roof need 30 EUR/m²
  investment,
• annual energy saving 7.5 EUR/m²
• payback time is 4 years

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Example of needs in housing sector Estonia

• 1.4 million inhabitants
• 1.1 million live in housing co-operatives
• current energy use 250 kWh / m² / year
• simple repair can achieve 50 kWh / m² / year
• - insulation of walls
• - using of windows which keep warm
• - using proper ventilation
• - enabling to adjust temperature in radiators
• - replace incandescent lightbulbs with energy
  saving lamps
• - using solar panels for heating of water in
  Summer
• cost of repair 200 EUR / m²
• In 10 years total investment in Estonia 6
  billion EUR
• ( energy bills of households in 20 years)
• Financial need state guarantees international
  fund (potential EU Climate Fund 2014-2020)

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Energy saving potential in housing
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EU framework for energy saving in households

• EU Directive 2002/91/EC on energy performance of
  buildings (EPBD)
• Green Paper on Energy Efficiency
• Action Plan for Energy Efficiency 2007-2013
• More ambition needed in EPBD
• abolish current 1000 m² threshold for major
  renovations
• establish minimum performance requirements for
  buildings
• Commission shall push all Member States to have
  very low-energy (or zero-net energy) standards by
  2015
• Member States shall ensure that financing,
  subsidies and incentives are in place to allow
  rapid implementation of proven available energy
  efficiency improvements (especially in existing
  buildings)

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Financial sources available in the Baltic Sea
region
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Financial sources for renewable energy and energy
efficiency, 1

• Funds and programmes of the European Union
• Baltic Sea Region Programme
• Competitiveness and Innovation Programme
• Interreg IVB and Interreg IVC
• JESSICA and JEREMIE
• Seventh Framework Programme
• Structural Funds

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Financial sources for renewable energy and energy
efficiency, 2

• Other financial instruments
• EU-Russia cooperation funds
• European Bank for Reconstruction and Development
  (EBRD)
• European Investment Bank (EIB)
• Council of Europe Development Bank
• Global Energy Efficiency and Renewable Energy
  Fund (GEEREF)
• Nordic Investment Bank (NIB)
• Nordic Environmental Finance Corporation (NEFCO)

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Availability of funds in countries
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EU Baltic Sea Region Programme

• Baltic Sea Region Programme 2007-2013
• built on earlier experience of 1997-1999 Interreg
  IIC and 2000-2006 Interreg IIIB
• under European Territorial Cooperation Objective
  and European Neighbourhood and Parthership
  Instrument
• total budget of 237 million EUR
• mostly targeted at territorial cohesion and
  cross-border cooperation
• transnationally relevant innovations in SMEs such
  as promotion and transfer of knowledge in
  alternative and renewable energy management
  patterns, environmentally sound and eco-efficient
  technology
• target of financing
• - 5 renewable energy projects (worth of total
  some 8 mEUR)
• - 3 energy efficiency projects (worth of some 4
  mEUR)

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EU-Russia cooperation funds

• main framework for EU funding for projects in
  Russia consists of Annual Action Programmes under
  the European Neighbourhood and Partnership
  Instrument (ENPI)
• - EU-Russia Energy Technology Centre support in
  preparation of bankable projects in the energy
  sector and providing technical assistance for
  project proposals, feasibility studies and other
  papers on energy efficiency
• Northern Dimension Environmental Program (NDEP)
• - started in 2001, 2.4 billion EUR pipeline of
  projects
• - international framework for financing priority
  environmental projects in north-west Russia
• - combines resources from EC, EIB, EBRD, NIB,
  World Bank and Russian Federation
• - energy efficiency is eligible (district
  heating Kaliningrad, Murmanks)

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EU Structural Funds

• 36 of the EU budget
• 2007-2013 strategic guidelines lists energy
  efficiency and renewable energy as one of the 12
  priorities
• de-centralised through some 450 national and
  regional Operational Programmes (OPs)
• estimated 4.8 billion EUR for renewable energies
  and 4.2 billion EUR for energy efficiency
• just some 2.6 of total Structural Funds budget
  (up from 1.6 in 2000-2006)
• mixed ambition in Member States over 5 in
  Lithuania, some 1.7 in Poland

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EU Structural Funds

• Percentage of total 2007-2013 Structural Funds
  assigned for sustainable energy in Central and
  Eastern Europe (draft!)

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European Bank for Reconstruction and Development
(EBRD)

• operates in Russia, Estonia, Latvia, Lithuania,
  Poland
• the only international financial institution
  (IFI) with a specialized energy efficiency team
• target to lend or invest a total 1 billion EUR in
  energy efficiency and renewable energy projects
  in 2006-2010
• loans to projects of a significant scale which
  save energy
• supports energy service companies (ESCO)
  projects which target social facilities, such as
  schools or hospitals
• loans for rehabilitation of district heating
  infrastructure

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Draft recommendations EU Structural Funds

• While carrying out in 2010 a mid-term review of
  use of EU Structural Funds for 2007-2013 the
  Commission and Member States shall indicate the
  share of projects implemented in sectors of
  energy efficiency and renewable energy and if
  needed, increase relevant allocations.
• While drafting and negotiating the Regulation for
  use of EU Structural Funds for 2014-2020
  earmarking of certain percentage of funds in all
  eligible regions for energy efficiency and
  renewable energy projects shall be considered.

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Draft recommendations EU-Russia cooperation funds

• In context of Baltic Sea region its important
  that EU continues and increases support to energy
  efficiency initiatives in Russia within ENPI.
  Individual EU member states from Baltic Sea
  region could also consider earmarking additional
  funds for concrete partnerships on energy
  efficiency such as EU-Russia Energy Technology
  Centre.

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Draft recommendations EBRD

• EBRD shall revise its energy policy to ensure
  emphasis on energy efficiency and set up
  gradually increasing targets for investments into
  energy efficiency, reaching for example
  earmarking of 50 of all lending in the power
  sector to increasing energy efficiency.
• EBRD shall revise its energy policy in order to
  set up targets for the financing of renewable
  energy projects, for example allocating 50 of
  all lending in the power sector in current or
  future EU Member States to renewable energy.
• Prior to the approval of any project, EBRD shall
  review related energy efficiency issues and
  ensure that an energy audit is undertaken.

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Draft recommendations NIB

• While Bank lends typically up to 50 of the
  project costs it shall consider adopting a policy
  of increasing its share of financing in case of
  renewable energy and energy efficiency projects
  to 80 or 90.
• Prior to the approval of any project, NIB shall
  review related of energy efficiency issues and
  ensure that an energy audit is undertaken.

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