Russians Take an Energy Efficiency Loan and Start Saving Immediately!

Is it possible to install energy-efficient equipment in a multifamily building and cut heating costs by 84 percent? Members of homeowner association Voskhod confirm that it is, and that the savings more than cover monthly payments on the loan they had to take out to buy the equipment.

A couple of winters ago, residents of a 70-unit apartment building in the city of Shakhty in Rostov region were paying 50 rubles per month per square meter to heat their homes. Despite paying some of the highest heating costs in the city, the people still shivered inside the building.

To solve this problem, residents first installed a heating meter system for the entire building. Then, they decided to install a separate boiler house. Having estimated the cost of installation at 1.5 million rubles (approximately $50,000 at the time), residents considered their own resources and realized that they would need to borrow money. Fortunately, a few years earlier the residents had created a homeowner association, HOA Voskhod, which meant they could apply for a bank loan.

Nonetheless, taking out a loan presented difficulties: most banks refused because HOA was not a commercial organization, and all banks required personal guarantees from a few board members. The only positive decision came from Center Invest Bank, which in 2009, with IFC support, opened a special lending program to enable homeowner associations and housing management companies to make capital and energy efficient renovations in multifamily buildings.

“Our experience shows that the economic benefits from introducing energy efficient improvements significantly exceed loan payments,” said Sergey Smirnov, head of the investment loan department at Center Invest Bank. “Adequate capital enables renovation with the most advanced energy-saving technologies, ultimately providing more comfortable living conditions and lower communal charges.”

“Specialists from Center Invest Bank estimated the profit that we would get from installing a boiler house, and we decided to trust the bank’s experience,” said Tatiana Frolovna Kukarina, head of HOA Voskhod.

And the bank’s estimations were correct. With 1 million rubles of their own and the half- million ruble loan from the bank, residents installed a boiler house and their payment for heat decreased by an astounding 84 percent.

Paying 8 rubles per square meter per month in heating costs today, residents are saving 42 rubles per square meter from what they were paying before the renovations. With monthly loan payments now of only 6.82 rubles per square meter, savings in an average apartment of 43 square meters reach more than 1,500 rubles per month. Collectively, implementing a single energy-efficient measure enabled residents to save 388,000 rubles annually.

Center Invest Bank also lends on other energy-efficient measures like installing individual heat stations and energy efficient light bulbs, replacing entrance doors and windows, and more. That is why Tatyana Kukarina is sure: “This is only the beginning of the energy efficient modernization of our apartment building!”