|Mechanisms for funding projects to energy efficiency in buildings|
Experience in implementing the provisions of the federal legislation on energy saving and energy efficiency shows that one of the significant barriers still remain to finance projects aimed at achieving energy efficiency in final consumption of energy.
At the same time funding for projects on energy efficiency of buildings are in critical condition, because assigned to the owners of buildings. Consider the existing financial mechanisms:
Funding by the building owners
- Subsidies subjects of the Russian Federation on the implementation of energy efficiency programs (Article 27 , paragraph 3, of the Federal Law N261- FZ RF Government Resolution of 5.09.2011 № 746) including implementation of measures aimed at improving the energy efficiency of buildings
- Subsidies GC "the Fund of assistance to reforming housing and communal services", regional and local budgets for building owners through targeted programs overhaul to implement energy-saving measures aimed at improving the energy efficiency of buildings, including metering.
-Targeted funding for the implementation of regional programs for energy saving and energy efficiency of the regional and local budgets, including those aimed at improving the energy efficiency of buildings.
-Establishing long-term energy tariffs to include in their composition of the investment component, aimed at implementing projects to increase energy efficiency in buildings (Article 31 of the Federal Law N261-FZ).
- Formation of energy efficiency programs in the tariff regulatory organizations
- Providing for tax credits (Article 34 of the Federal Law N261-FZ, Government Decree of 12.07.2010 N562).
Using state (municipal) institutions of the savings resulting from energy efficiency measures (Article 24 of the Federal Law № 261-FZ, dated 30.12.2010 Ministry of Finance Letter. № 02-03-06/5448).
-Loans from Russian commercial banks and international financial organizations and reimbursement of expenses for interest on loans received for the implementation of investment projects in the field of energy efficiency of buildings (Article 27, paragraph 2 of the Federal Law N261-FZ).
-Implementation of energy service contracts in order to increase energy efficiency in buildings (Article 19 of the Federal Law N261-FZ).
4. Attracted financing
- Grants within Russian and international programs, with the stated aim of improving energy efficiency in buildings.
- Co-financing of projects by foreign foundations and international organizations, projects aimed at the transfer of expertise to improve energy efficiency of buildings.
A practical example
St. Petersburg - the first subject of the Russian Federation applying PPPs for investment projects. Legal basis - Law of St. Petersburg of 25.12.2006 N627-100 "On participation of St. Petersburg in public-private partnerships" which:
-allows the investor to borrow on better terms;
-guarantees the rights of the investor, due to change of legislation;
-applicable to projects of any scale
5. Additional opportunities to attract investments and loans:
-Professional liability insurance for architects and builders.
-Using the energy management to improve the financial sustainability of the borrower in the performance of buildings for energy efficiency projects.
-Attracting energy service companies to provide energy efficiency in buildings.
- The inclusion of the energy service agreements, provisions on the use of the final consumer economy, which he gets by increasing of energy efficiency in buildings, in the means of ensuring the return on loans and investments.
6. Risks of financing projects in the field of energy saving:
-Low capitalization level of developing energy service and engineering companies.
-Complexity of fixing of economic effect with constantly changing prices and tariffs.
-Lack of regulations providing access of investors to financial flows in the implementation of energy efficiency projects.
- Lack of guarantees to protect the rights of investors and customers.
-The high financial risks.
State program "Energy saving and energy efficiency by 2020," adopted by the RF Government Decree of 27.12.2010 N2446-p provides funding for activities in the field of energy saving and energy efficiency in the volume of 9532 billion rubles, including: 7.3 % - 695 billion rubles from the budget of the Russian Federation and the subjects and 92.7% - 8837 bln. from extra-budgetary sources.
The total volume of federal funds received by each subject of the Russian Federation is determined based on a specially designed in accordance with the order of application of the State program and RF Government Decree of 5.09.2011 N746 in 2011.
The planned funding of state guarantees for loans to implement energy efficiency programs
303 billion rubles. (Annex to the State Program of the Russian Federation "Energy saving and energy efficiency for the period up to 2020"). Guarantee is offered to secure the obligations of the principal to repay a loan of up to 50 percent of the principal amount disbursed, the principal involved in a Russian bank;
-not less than 15% of the total project cost should be financed by the principal of its own money; -
-amount of state support should not exceed 75% of the total project cost;
-50% - for ensuring the fulfillment of projects to improve energy efficiency in the housing sector with a payback period of 5 years, including with the use of an energy service contract;
-50% - for projects to improve energy efficiency in industry.
A partial list of financial instruments in the Russian market
- EBRD - Sustainable Energy Finance Program in Russia (RUSEFF). Loan amount per borrower - up to 10 million USD.
- Group of the World Bank and the Corporation IFC - Program to stimulate investment in the resource in Russia. Major infrastructure projects are implemented through the participation of the bank. Lending to small and medium-sized projects through the Corporation. Loan amount on the 1st of the borrower - to 2 million USD. Improving the energy efficiency of the housing sector.
-Bank KFW - Support Program for midsize and small businesses.
-Eurasian Development Bank - Energy Efficiency Program.
-Nordic Investment Bank and the Nordic Environment Finance Corporation (NEFCO)
- Loan Program for energy saving for major infrastructure projects; - Energy Saving Loan Program for small and medium projects. The maximum loan of 9.5 million rubles. NEFCO can provide up to 90% of the total project cost. Payback period of up to 4 years. Fixed interest rate of 3% per annum (rub). Providing is required: Municipal guarantee.
- Loan Program "Cleaner Production". For private or municipal enterprise, producing eco- friendly products. Maximum loan amount of 350 thousand euros. NEFCO may finance up to 90% of the total project cost. Payback period of 4 years (in some cases up to 8 years). Fixed interest rate of 6% per annum (the euro) or 9% (RR) is necessary to providing: min. 125% of the loan amount. Warranty (eg Bank, the parent company, municipal); pledge of equipment.
A practical example of implemented projects to improve energy efficiency in buildings on a program NEFCO:
- Korjazhma (school and baths)
- Reconstruction of heat supply system in Kotlas
- Street lighting in Velsk
- Vel'sk (2 building in social sphere)
- Vel'sk (2 hospitals and schools)
-School in Soyga
Republic of Karelia
- Kostamuksha (9 schools and kindergartens)
-Segezha and Nadvoicy (17 schools and kindergartens).
-Segezha (installation of 23 ITP on social sites: 15 kindergartens, 6 hospitals and clinics and 2 schools. Project cost 10.7 million rubles. Including 9.5 million rubles - NEFCO and 1.2 million rubles – Administration)
- Murmansk city hospital
- Olenegorsk (14 schools and kindergartens)
- Kandalaksha (30 schools and kindergartens (initial phase)
2. Program of Russian financial institutions to finance energy efficiency projects
-Vneshekonombank and the agency of energy efficiency and energy saving;
-OAO Gazprombank, a joint project with the World Bank Group of Companies;
-Sberbank of RF;
-ZAO "Raiffeisenbank", a joint project with NEFCO OJSC
- "Bank" Saint Petersburg ", etc.
Financial mechanisms recommended to the introduction:
-Creating involving public authorities: federal, regional, municipal guarantee funds to provide collateral for loans to credit institutions in the absence of full or collateralized by the borrower: owner of the building, an energy service company for projects to improve energy efficiency of buildings.
-Creating involving public authorities: federal, regional, municipal special revolving funds to finance energy saving projects to increase energy efficiency in buildings.
-The development of the energy performance contract (contract guaranteed savings), which includes energy audits, energy service contract and service contract whole set of equipment, providing a guaranteed energy savings.
-The creation of regional funds for repair of buildings with individual accounts of apartaments and houses.
-Concessional loans of Russian commercial banks and international financial organizations to compensation by public authorities: federal, regional, municipal portion of the interest on loans granted to investment projects in the field of energy efficiency of buildings.
-Subsidizing part of the financial costs on an energy audit and development of design and estimate documentation of project to improve energy efficiency of the building and on creation the Energy Passport of building.