Danfoss Debt Facility for Industrial Energy Projects
Policy measure

The Danfoss Group, the world leader in research, development and production of mechanical and electronic components for refrigeration and air conditioning, heating and water, and motion control, provided a debt facility to finance 80 per cent of individual energy efficiency projects in Russian, Polish  and certain other Eastern European breweries (EBRD, 2002; EBRD, 2003). 


The project objective was to combine the technical skill of a leading engineering and environmental components company with the European Bank for Reconstruction and Development (EBRD) financing to enable breweries in the region to improve their operating efficiency. (EBRD, 2002)


Total project cost was estimated to be at least EUR 12.5 million as the loan would finance 80 per cent of each energy efficiency investment. The EBRD lent EUR 10 million as a seven-year loan to fund the programme. (EBRD, 2002)

Implementation

The proceedings generated were used to finance up to 80 per cent of each investment, which were entirely repaid out of energy savings. Moreover, financed investments had a payback period of four years or less. Danfoss Solutions A/S carried out the implementations on a performance contract basis. (EBRD, 2002)

Challenges
No identified challenges.
Outcomes

According to EBRD (2002), the financing was expected to enable breweries across the Eastern European region to use energy, including water, steam and electricity, more efficiently, helping instil Western operating standards at a time when energy costs were rising. It was expected that the programme would allow breweries “to reduce utility bills by up to 20 per cent and permit the strong environmental benefit of lower greenhouse gas emissions”. The cost of the improvements were expected to be repaid out of energy savings, making them entirely self-financing. (EBRD, 2003)


Moreover, the cash flow freed up due to the reduction in energy bills was expected to further benefit the breweries (EBRD, 2002).

References

EBRD (European Bank for Reconstruction and Development), 2002. Danfoss Debt  Facility for Industrial Energy Projects. Available at: www.ebrd.com/english/pages/project/psd/2002/27003.shtml.


EBRD (European Bank for Reconstruction and Development), 2003. Making Eastern European Breweries More Energy Efficient. Available at: www.ebrd.com/english/pages/news/press/2003/02jan08.shtml.