UTILITY INTERMEDIATED ENERGY EFFICIENCY: ADVANTAGES AND POTENTIAL FINANCING OPTIONS

Transcription

1 UTILITY INTERMEDIATED ENERGY EFFICIENCY: ADVANTAGES AND POTENTIAL FINANCING OPTIONS Remon Zakaria, Associate Director, Energy Efficiency and Climate Change Aleksandar Hadzhiivanov, Associate Director, Energy Efficiency and Climate Change Sumeet Manchanda, Principal, Energy Efficiency and Climate Change

2 AGENDA INTRODUCTION TO EBRD EEOS AND UTILITY INTERMEDIATED ENERGY EFFICIENCY EBRD PROPOSAL

3 WHAT IS THE EBRD? Public financing institution established in 1991 to foster transition to market economies Owned by 65 countries, the EU and the EIB Operates in 36 countries in Central and Eastern Europe, Central Asia and the Southern and Eastern Mediterranean region 30 billion capital base 41 billion portfolio 8.9 billion average annual business volume in the past three years AAA rated The EBRD has invested approximately EUR 120 billion since 1991, in over 4,000 projects. 3

4 MAINSTREAMING GREEN FINANCING EBRD CROSS-SECTORAL STRATEGIES The EBRD has adopted cross-sectorial strategies to mainstream green financing across operations and increase the Bank s share of green finance. 2 November,

5 MAINSTREAMING GREEN FINANCING RESULTS IN 2006 H FINANCED 1,300+ projects and credit lines SIGNED 23 billion of green financing REDUCED 85 million tonnes of CO 2 /year 1,000+ directly financed projects with green components, and 290 credit lines to locals financial institutions for onlending to smaller projects For projects with a total value of 130 billion In green financing represented 32% of EBRD s total business, up from only 15% in Emission reductions equal to twice the annual energy userelated emissions of Sweden +annual water savings of 190 mln m 3 since 2013 equal to a third of Londoners water use 5

6 EBRD S BUSINESS MODEL Financing on commercial terms Additional tools to foster markets and address barriers Financing offered on market terms Debt Equity Guarantees Choices of currency Capital markets Targeted technical support Enables transfer of skills, builds up the capacity of clients to develop their businesses, assists in introducing new policies or products, etc. Policy dialogue engagement Helps overcome barriers hindering green investments (e.g. by streamlining the institutional and regulatory context) Address sustainability and environmental market failures 6

7 INTRODUCTION TO EBRD EEOS AND UTILITY INTERMEDIATED ENERGY EFFICIENCY EBRD PROPOSAL

8 UTILITY INTERMEDIATED EE IS INCREASINGLY COMMON, WITH EEOS BEING A MAJOR DRIVER Most OECD members have some form of Utility intermediated energy efficiency scheme. Principal drivers for utilities are: Regulatory compliance Market opportunities and business diversification The EU s main regulatory driver is the (optional) Energy Efficiency Obligation Scheme, part of Article 7 of the Energy Efficiency Directive. Other countries, especially those with EU Association Agreements, are designing schemes: Montenegro, Serbia source ENSPOL 8

9 UTILITIES ARE DIVERSIFYING TO MEET OBLIGATIONS AND ALSO THE NEW ENERGY RETAIL CONTEXT RWE, Enel, Engie, EDF, CEZ, EVN, E.ON all are diversifying and are now providers of energy services as well as energy commodities. Their initiatives include: Residential Boiler exchange, repairs, servicing, insurance Electric car leasing packages Building s energy performance (e.g. insulation, windows) SmartHome package from simple thermoregulator to complete solution Assistance to exchange household appliances etc. Installation of renewable energy e.g. SHW, PV Heat pumps Municipal Public lighting EE and RE in buildings Commercial and Industrial Boilers and CHP/CCHP units Energy Management Systems Building s energy performance (e.g. insulation, windows, etc.) Industrial lighting, cooling, heating, process steam EV charging packages Renewable energy generation on site with onsite operation by Utility Own operations Investment in smart grids, smart meters, networks and renewables, own buildings energy performance Mechanisms used On-bill financing Supplier partnerships Service providers partnerships 9

10 UTILITY DSM SCHEMES BENEFITS BENEFITS Utility Society Customer Business opportunities Brand marketing & recognition Customer retention Corporate social responsibility Regulatory compliance Deferred investments in new generation capacity Improved quality of service Energy security and reliability Economic efficiency and sustainability Reduction of environmental impacts Market transformations Improved efficiency of transmission, operation and distribution Increase in the use of indigenous resources Energy bill saving Greater control over energy consumption Contribution to behavior change Active market participation Education and information Financial payments from market participation (DR and micro-generation)

11 UTILITY EE SERVICE EXAMPLE E.ON SERVICES FOR BUSINESS Energy Analysis and consultancy e.g. Connect BMS to E.ON Energy Management Centre E.ON then suggests ways to optimise lighting, heating, ventilation, air-conditioning, chillers, process steam etc. On-site generation: e.g. co and trigeneration, heat pumps, photovoltaics Demand response management and virtual power plants Distributed generation services (E.ON Connected Services ) E-vehicle charging services 11

12 UTILITY EE SERVICE EXAMPLE ENEL FOR BUSINESS Smart Energy Solutions Distributed Generation Consultancy services: the service includes the installation of monitoring systems and consumption measurement, energy audits, feasibility studies, monitoring and planning of interventions. Technology supply: Power factor banks LED lighting and automation CHP/microgeneration Electric mobility: fullfeatured turnkey solutions, designed for the different needs of big customers and small businesses to access battery charging stations. EPC turnkey solutions for: Combined Heat and Power (CHP) Trigeneration Biomass plants

13 INTRODUCTION TO EBRD EEOS AND UTILITY INTERMEDIATED ENERGY EFFICIENCY EBRD PROPOSAL

14 UTILITY DSM PROGRAMME OVERALL STRUCTURE Procurement, management and quality assurance EBRD Dedicated loan Technical Expertise Product structuring and marketing support Utility company Project development and optimisation tools Technical assistance scope of work Client Fresh commercial opportunities 1. Review and identification of appropriate utility DSM options including techno-economic analysis and business planning; 2. Support in the overall structuring of the selected utility DSM scheme including corporate governance; 3. Support in the marketing of the selected utility DSM scheme to reach its Client base and ensure successful implementation; 4. Support in setting the necessary monitoring, reporting and verification processes for energy savings

15 PROPOSED FINANCING STRUCTURE EBRD Utility Repayment: on completion, or in tranches, perhaps via separate item on bill Contract/ instruction Contractor or internal department Utility s customers (Industrial, commercial, residential, municipal) EBRD provides debt finance to the Utility and will assist with expertise The Utility markets energy services (such as building EE/ renewables, electric vehicle packages, etc.) to customers it considers credit-worthy, then contracts and implements either itself or through its contractors Payments are collected through utility bills or after completion of works. EBRD may be able to offer technical support for project development 02 November 2017 Finance Project development technical support Implementation Repayments 15

16 PROPOSED FINANCING STRUCTURE Guarantee required Utility company Repayment via utility bills EBRD SPV Finance, design, implementation, O&M Alternative repayment Utility s customers EBRD provides debt finance to a special purpose vehicle (SPV) in which the Utility have equity stakes. Allows finance to be provided to this new entity entirely off-balance sheet to the Utility. Also suitable when the Utility is considering entering into a JV with another industry partner. Depending on various end-beneficiary considerations, loan could be based on guarantee or receivables * Collateral and Guarantees will need to be arranged by the Utility. * EBRD may participate as a minority equity investor 02 November 2017 Finance Project development technical support Implementation Repayments 16

17 THANK YOU Contacts: Remon Zakaria - zakariar@ebrd.com Svetlin Pislenski - PislensS@ebrd.com Alexander Hadzhiivanov - hadzhiia@ebrd.com Sumeet Manchanda manchans@ebrd.com