RUSSIA SUSTAINABLE ENERGY FINANCE PROGRAM
The Russia Sustainable Energy Finance Program works across Russia to encourage investments in energy efficiency projects. The project helps financial institutions and companies to assess modernization projects, and provides long-term credit to banks to enable energy efficiency loans. By participating in public information campaigns, the project also works to raise general awareness about the need for greater energy efficiency in Russia.
Supported with funds from the World Bank’s Global Environment Facility, Danish Energy Authority, Ministry for Foreign Affairs of Finland and Ministry of Economy and the Employment of Finland.
The Challenge
Energy prices are increasing rapidly in Russia. However, many industrial companies are still using energy-intensive equipment that was installed more than 20 years ago – nearly 48% of production assets in Russia date from before 1985. Company managers take an overly conservative view when it comes to assessing energy efficiency potential. The project’s survey of 625 industrial companies has shown that industrial enterprises underestimate energy savings opportunities by 2-3 times, and only 24% of companies applied for loans to finance energy efficiency projects. Financial institutions, on the other side, are reluctant to finance energy efficiency loans due to the higher perceived risk and longer-term financing requirements.
The IFC Solution
The Russia Sustainable Energy Finance Program provides a wide range of advisory services to financial institutions, their clients, and other market players to support investments in energy efficiency. IFC helps financial institutions to develop local expertise in energy efficiency-based lending through trainings, joint promotional activities, resource materials, and advice on transactions. The project also works with end-user companies, to assist in analyzing energy efficiency projects under consideration and in identifying opportunities to save energy. To encourage growth of the energy efficiency market, the project helps vendors and product developers build relationships with potential clients and with financial institutions. To educate the public about the need for greater energy efficiency, the project also conducts and distributes market surveys and information campaigns.
IFC complements these advisory services activities with investment, by providing Russian financial institutions with dedicated long-term energy efficiency credit lines to promote loan generation.
RSEFP Achievements as of March 31, 2009
- Five partner financial institutions have launched dedicated energy efficiency finance products.
- RSEFP has enabled financing of more than 100 energy efficiency projects totaling $100 million through targeted credit lines to partner banks and advisory on energy efficiency. These enterprises will save $17.7 million per year in energy costs and reduce CO2 emissions by over 153 thousand tons per year.
- IFC energy efficiency financing commitments in Russia amount to $150 million.
- The joint IFC-IBRD report "Energy Efficiency in Russia: Untapped Reserves", was released in 2008. The paper was designed to provide senior policymakers with a comprehensive analysis of Russia’s energy-efficiency potential, and give recommendations for tapping into this potential. According to the report, Russia has the potential to save 45 percent of its total primary energy consumption.
- In 2007, the Program published the first-ever survey of energy efficiency practices in Russian medium-size industrial companies. Among the key findings were that enterprises underestimated energy savings opportunities by 50-70%, and despite nearly 60% of companies identifying lack of funds as a barrier to energy efficiency investments, only 24% applied for loans to finance those projects.
- Also in 2007, RSEFP partner Center-Invest Bank (Rostov-on-Don) was awarded the Silver Medal for “Sustainable Banker of the Year” at the FT’s Sustainable Banking Awards in London.
- Worked with the Moscow Department of Fuel and Energy to launch a large-scale social advertising campaign called “Save Energy!” which has helped the Moscow government to develop a systematic approach to promoting energy conservation. The campaign helped to double sales of compact fluorescent bulbs in Moscow over the course of one year, and was replicated in other large cities throughout Russia.
