energoefeqturobis centri Energy Efficiency Centre

1

Financing Options for Municipal EE Projects

& Covenant of Mayors

as a driver for Municipal EE in Georgia

George Abulashvili

Workshop on Energy Efficiency for Sustainable Cities

Sixth International Forum on Energy for Sustainable Development

29 September – 2 October 2015

Yerevan Armenia

eec EEC What is the Covenant of Mayors?

The Covenant of Mayors is the fast growing mainstream European movement supported by the European Commission involving local, regional and national authorities in sustainable energy development and climate protection It is based on a voluntary commitment of municipal councils to improve the quality of life of their citizens by improving energy efficiency and expanding usage of renewable energy that will result in at least 20% CO2 emissions reduction by 2020

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Therefore: Battle to secure energy future and against climate change is won or lost at LOCAL LEVEL

Above 55% of world population is urban

‘An estimated 70 percent of greenhouse gas emissions come from cities and more than 70 percent of energy is consumed in urban areas.’

Covenant of Mayors ‘Philosophy’

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Therefore: Covenant of Mayors

Since 2008, more then 6450 local governments and self-governments with 206 Mln inhabitants around the globe have made a voluntary commitment to strive for sustainable energy development at local level.

eec EEC CoMO East in figures CoM East

Countries No of

Signatiories Population CNC CS

Armenia 9 1,324,137 1 2

Azerbaijan 1 4,000

Belarus 10 273,349

Georgia 13 1,929,300 2 2

Moldova 29 1,557,984 1 1

Kazakhstan 8 2,271,170 1 1

Kyrgyzstan 2 267,300

Tajikistan 1 30,000 1

Ukraine 82 8,838,526 1

Total 149 16,455,552.00 6 7

eec EEC Georgian Signatories Signatories Population Adhesion Akhaltsikhe, GE 19,200 31 Oct 2014 Batumi, GE 170,000 15 Jul 2011 Bolnisi, GE 76,600 16 Mar 2015 Gori, GE 51,200 13 Jul 2012 Kazbegi , GE 4,900 27 Feb 2015 Kutaisi, GE 196,600 15 Jul 2011 Mtskheta, GE 7,800 11 May 2015 Rustavi, GE 120,800 2 May 2011 Tbilisi, GE 1,100,000 30 Mar 2010 Telavi Distr, GE 70,900 30 Jan 2015 Telavi City Hall, GE 21,800 24 Mar 2014

Tianeti, GE 12,900 13 Jan 2015 Zugdidi, GE 76,600 1 Aug 2013

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The Covenant Signatory Cities commit to:

Develop a local sustainable energy and climate protection policy

Adapt relevant administrative structures to implement the above policy

Select basic year or scenario baseline emission inventory, design Sustainable Energy Action Plan (SEAP ) and investment projects

Involve citizens and other stakeholders to develop and implement SEAPs

Publish periodic reports to show concrete progress and results of SEAP implementation

Encourage other cities to join the initiative

eec EEC The Covenant step-by-step

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What is the baseline emission inventory?

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CoMO-East Project: 4 principal missions

Promotion of the CoM Eastwards

Awareness raising & training

Technical assistance and support for cities to implement activities

Support to JRC and COM grant projects

IFI’s and Donors’ coordination to finance SEAP measures

eec EEC Estimation on GHG Emission reduction by sectors [tCO2-eq] by 2020 CoM data set as of 13th of May 2014 Buildings, Equipment, Facilities & Industries 83,790,055 44% Transport 35,978,776 19% Local Electricity production 26,268,357 14% Local District Heating, CHPs 17,150,441 9% Other Sectors 25,368,527 13% TOTAL 188,556,156

eec EEC Estimated investments as reported in SEAPs [Million €] : CoM dataset as of 13th of May 2014

Buildings, Equipment, Facilities and Industries 39,851 Transport 8,793 Local Electricity production 1 5,289 Local District Heating, CHPs 36,101 Other Sectors 8,666 TOTAL 108,701 As it can be seen in the table, the highest estimated implementation cost are planned to take place in the building sector (ca. €40 billion). To reap the benefits of energy efficiency in buildings, the biggest challenge is to accelerate and finance upfront investments and speed up the renovation rate of the existing stock from 1.4% - today’s average - to above 2% annually (EC COM (204) 520).

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Challenges of Municipal EE Project Implementation

Source: ESMAP - Financing Municipal Energy Efficiency Projects

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Main Financing Options

eec EEC Main Financing Options

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Financing Ladder

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How Revolving Fund Works

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Types of Municipal EE Projects and Related Financing Options

eec EEC Potential International Funding Institutions & Barriers

• World Bank • EIB • EBRD • KfW • NEFCO

• ADB • IFC • E5P • GGF • GCPF • CEB • Other IFI’s

Limited Access to the Financing !!! Obligatory of Involvement of National Governments!!! Specialized Municipal Financing ??? Warranty Funds???

eec EEC Municipal Key Criteria's for prioritization EE measures

Socio- economic /political benefits Relevance to the (National/Local)strategies Fiscal savings potential Energy Saving potential Relevance to the SEAP GHG(CO2) mitigation potential

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Financial liability of the lender SPP, NPV, IRR values GHG/Energy/Bill saving Potential Existence of experienced PIU Socio - economic benefits Others . . .

Criteria's for IFI’s and other funding institutions

eec EEC Initial Financial Appraisal Supporting tool for the financing of SEAP measures in:

-Collecting financial economical data of the measure;

-In transforming SEAP into the investment plan. Initial Financial Appraisal is a short (10pg’s max) document that contains description of the investment project As for today we are in close cooperation with COMO East cities. Investment demand of individual projects varies from 40K€ to 7 mln€. Most of investment projects are focused on EE retrofitting of municipal buildings.

eec EEC Donor’s IFI’s INVENTORY IFIs / Banks (Donors) Address Contact person Phone FaxWorldbank The World Bank Office in

Ukraine1, Dniprovskiy Uzviz, 2nd Floor, 01010 Kiev

Qimiao Fan, Country Director for Ukraine, Belarus and Moldova, Paolo Belli Program Leader, Ukraine, Belarus, and Moldova Country Uni

+380 44 490-6671, 72, 73, 74

+380 44 490-6670

Glazkov Dmytro, Energy and Infrastructure Operation Officer Sustainable Development Departament Europe and Central Asia Region

+380661624976

Tamara Sulukhia U.S. Agency for International development (USAID) USAID

9A Lva Tolstoho Str., 1st floorKyiv 01004, Ukraine

William Taker, head of the Project,Andriy Mitskan, Deputy Project Manager Municipal Energy Reform Project (MERP)International resources group Ltd. (IRG)September 27, 2013 – September 29, 2017

Tel.: (044) 596.596.0 fax: (044) 596.596.1European Investment Bank (EIB) EIB resident representation

in Ukraine101 Vladimirskaya Street01033 Kiev

EIB Info desk

Liliya CHERNYAVSKA, Head of office in Ukraine +380 44 390 8010

+352 437922000 +352 437962000Anastasiya Kharlan, Business analyst 380443908011,

+3524379-67495European Bank for Reonstruction and Development (EBRD) EBRD Office Ukraine

16, Nemirovicha-Danchenko Street01133 Kiev

Managing director, Eastern Europe & Caucasus: Francis Malige Country Director: Sevki Acuner Head of Energy and Infrastructure: Senior Banker Mark Magaletsky (Power & Energy

+ 380 44 277 11 00 +380 44 270 61 35'+380 44 270 61 59'+380 44 277 11 60

KfW KfW Office UkraineWul. Welika Wasilkiwska 44Office nr 101004 Kyiv

Director: Gunnar Wälzholz, Team:Lyudmyla GordiyukSergei GorbachevInna Lytvynenko

+38 04 4581 1955 +38 04 42 89 11 55

Nordic Environment Finance Corporation NEFCO NEFCO Ukraine officeVelyka Vasylkivska Street, building 23-B, section B, offices 212.Kiev 01601

Julia Shevchuk, Irina Lyashenko +380 44 287 0106

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24

19, D.Gamrekeli Str. ,Tbilisi 0160

Tel.: +99532242540; 242541

Fax:+99532 242542

eecgeo@eecgeo.org

www.eecgeo.org

Thank You for Your Attention