Western Balkans Sustainable Energy Direct Financing Facility
Policy measure

According to the European Bank for Reconstruction and Development (EBRD) (2010), it established a EUR 50 million Western Balkans Sustainable Energy Direct Financing Facility (WeBSEDFF) in 2008, which provides the EBRD with an instrument to extend debt financing for sustainable energy (industrial energy efficiency and small renewable energy) projects to local enterprises in Albania, Bosnia & Herzegovina, Croatia, FYR Macedonia, Montenegro and Serbia, which are currently not sufficiently supported by other financing sources. Under this framework, the Bank will make loans to participating banks which will then provide credits to private firms.


“The EBRD aims to help participating banks build up expertise in this area by combining its energy efficiency mandate and tailored technical consultant services within a commercially viable framework.” (EBRD, 2009)

Implementation

“Grant funds of up to EUR 8 million will be sought for incentive payments. The incentives will be provided to the borrowers under the Facility upon successful completion of their projects and will aim to overcome various barriers to sustainable energy investments in the Western Balkans. The size of the individual loans provided under the Facility will be in the range of EUR 1 million to EUR 6 million.” (EBRD, 2010)


The first loan of EUR 10 million was signed with Banca Intesa Belgrade in 2009 (EBRD, 2009).

Challenges
No identified challenges.
Outcomes
The following expected project outcomes have been identified (EBRD, 2010):
  • "Demonstration of new replicable behaviour and activities: The project will demonstrate the impact of efficient energy utilization on improving industrial productivity and competitiveness in the energy intensive economies of the Western Balkan countries through promotion of investments in rational energy utilization. It will demonstrate how to overcome barriers and market failures that prevent energy efficiency and renewable projects from becoming commercially viable.

  • Demonstration of new financing mechanisms: The project demonstrates a new design of incentive payments, the level of which is linked to the externality (CO2 emissions avoided), thus enhancing incentives to maximise energy savings and facilitating future transition of the grant scheme into market based shadow pricing of electricity through white/green certificates, emissions trading or emission taxes;

  • Transfer of skills: The project is expected to build and transfer expertise related to energy efficiency and renewable energy sources to local companies. Local companies will acquire knowledge in assessing the need for energy efficiency measures as well as in financing the corresponding investments in such projects;

  • Legislative reforms and capacity building: Part of the TC funding will be used to support dialogue with the local authorities on adoption of new legislation in the area of energy efficiency and renewable energy sources, as well as in building the necessary institutional capacity. This will create a proper framework for the development of SE projects in the region and will help the countries in the region to embrace a SE path for the development of their economies."

References

EBRD (European Bank for Reconstruction and Development), 2009. €10m to Banca Intesa. Available at: www.ebrd.com/english/pages/news/press/2009/090325b.shtml.


EBRD (European Bank for Reconstruction and Development), 2010. Western Balkans Sustainable Energy Direct Financing Facility. Available at: www.ebrd.com/english/pages/project/psd/2008/39115.shtml.