Financing Efficient Energy Use is Good Business for Central and Eastern Europe
IFC has helped local banks finance energy efficiency projects in Central and Eastern Europe. As a result, these projects lead to reduced costs for businesses, profitable business lines for financial institutions, better public services of sub-sovereign institutions, as well as lower energy bills and improved living environment for the people. Based on these successes, IFC is now promoting similar projects globally.
IFC, through its Sustainable Energy program, has for the past eight years helped local banks finance energy efficiency projects in Central and Eastern Europe and has shown companies in these countries that investing in energy efficiency projects makes good business sense. IFC provides clients' banks and leasing companies with credit lines and credit enhancement packages, coupled with capacity building to assist them in structuring and marketing their financial products.
In the winter of 2005-2006, with temperatures plummeting across Central and Eastern Europe, a large number of residents in Hungary paid less for their energy bills than they might have anticipated. Over the last 5 years IFC has helped a local Hungary Bank to build a business providing loans for home improvements, such as better insulation, new efficient windows, better heating controls, which lead to lower energy bills and a more comfortable living environment.
In the Czech Republic, one of IFC's energy efficiency programs allowed the Delta Bakery, the country’s biggest industrial bakery, to install a new boiler. With help from IFC and the Building Technologies Group of the industrial giant Siemens, Delta Bakery swapped its old boiler for a more efficient new one. The boiler’s steam is used both for heating the building and for pre-heating the bread dough. The investment pays for itself in 6 years.
In Russia, IFC is now working with local banks to finance projects in companies that often use outdated heating systems and antiquated production lines. The country, which consumes about ten times more energy per unit of production than developed countries, has huge potential for energy savings in its industrial sector. For example, in Rostov-on-Don, a southern Russian city, IFC is assisting a local bank in financing several energy efficiency projects in industry as well as the communal sector. One such project involves the installation of individual heat stations and meters in 400 homes. Heat supply to these homes currently costs $7.7 million per year, whereas new heat stations will reduce the cost to $4.6 million, providing residents with a 40 percent saving. The investment will be paid back within a year and a half and consumers will have the benefit of better and cheaper heating services.
Based on these successes in Central and Eastern Europe, IFC is now promoting similar projects globally.