EBRD to fund household energy efficiency investments in Romania

EBRD to fund household energy efficiency investments in Romania
Funding for energy-efficient measures such as solar panels and insulation as well as energy-efficient appliances such as boilers and fridges, will now be available for Romanian households / bykst pixabay
By bne IntelliNews June 28, 2017

The European Bank for Reconstruction and Development (EBRD) launched a facility of up to €100mn to help Romanian households invest in energy efficient technologies on June 27. 

The Green Economy Financing Facility (GEFF) is in line with the bank’s Green Economy Transition approach, under which it aims to make 40% of its investment in the area of climate finance by 2020 — up from around 25% over the last five years. 

The EBRD has already launched GEFFs in several countries and regions, including Egypt, Poland and the Western Balkans, but this is the first time the bank is financing energy efficiency in Romania’s residential sector.

“GEFF is one of those products that translates the Green Economy Transition approach into practice,” said Matteo Patrone, the EBRD’s director of Romania and Bulgaria. 

“This is one product that is part of a bigger approach which permeates all the activities we do in the country in every sector,” he told bne IntelliNews after an event to launch the GEFF in Bucharest. 

The EBRD will use the facility — initially €70mn to be increased to up to €100mn in future — to fund partner financial institutions that will on lend to individuals (and some companies active in the area) to invest in green economy projects. 

According to Patrone, there are a wide range of potential uses of the funds. Eligible investments will range from purchases of energy efficient appliances such as refrigerators, boilers, lighting (especially LED lighting), building insulation and solar panels. It will also support home mortgages for new low emission and low energy houses, as well as mortgages to renovate houses to reduce energy consumption. In the corporate sector, the money can be used for business loans for companies that supply energy efficient products and services. 

The EBRD is making investments into clean technologies such as renewables, but it is also supporting efforts to bring down energy consumption by increasing efficiency.

As the president of Romanian energy regulator ANRE, Niculae  Havrilet, commented at the event in Bucharest, “the cheapest energy is the energy that you don’t use through efficient use; the most expensive is the energy you want but you don’t have.” 

Patrone told journalists that the current level of energy efficiency in Romanian residential buildings is generally low, so any level of contribution will help. 

“Most of Romania’s residential buildings were constructed between 1960 and 1990 with low thermal insulation,” he said. 

“While energy efficiency improvements are urgently needed, access to finance for such investments remains limited. We are happy to offer a new financing product that addresses this issue and look forward to Romanian banks joining the effort.”

Banca Transilvania is the first local lender to join the framework and has received a €40mn loan for on-lending to households, housing associations and service providers for energy-saving investments. Meanwhile, the TaiwanICDF, which manages the Taiwanese overseas development programme, has contributed $12mn to the loan.

Banca Transilvania, in which the EBRD is a shareholder, is already developing products to launch through the scheme, with plans to target smaller purchases through its credit cards as well as issuing lower interest mortgage loans. 

“We are the first bank granting loans for households to be more energy efficient from the EBRD,” said Gabriela Nistor, deputy general manager for retail banking at Banca Transilvania, expressing the hope that the bank would “contribute to this ripple effect amongst our customers”.  

The bank in turn will work with online retailer eMag, which as of 2016 was responsible for around 22% of household appliance sales in Romania. 

The firm’s commercial vice-president Stejara Pircan said that the market has already rebounded to pre-crisis levels, and that offering A++ appliances on the market is expected to trigger faster growth in future. In 2016, the household appliance market was worth 2.5mn units, up 20% compared to 2015 after seven years of a depressed market.

Aside from the financial incentives for households, Patrone says the EBRD’s market assessment “gave us some reason for optimism” about Romanians’ interest in improving energy efficiency. “Of course you need incentives for people … but the potential is there. If a bank like Banca Transilvania, which is so close to the market and so active, is a keen partner, that’s another source of optimism.” 

However, there are concerns about the reliability of energy efficiency certificates issued in Romania, with the country manager for the Buildings Performance Management Institute Europe, Serban Dancu, pointing out that trust in the certificates is low compared to other EU countries. This is one of the factors that could hamper investment into energy efficient technologies by households. In response to a question on the issue, Patrone said the bank was taking this into account. 

The launch of the household energy efficiency programme also comes after major setbacks for renewable energy investment in Romania. After the initial launch of an extremely generous green certificate scheme resulted in billions of euros of investment flowing into the sector, Bucharest made retroactive revisions that resulted in many projects becoming uneconomic to the dismay of investors. 

“Unfortunately the renewable energy market in Romania has been heavily affected by the retroactive revision of the green certificates so there is no new investment going on there,” says Patrone. This “frankly jeopardised a €7bn market,” he says. However, he adds that a potential exception could be the biomass sector, which is not subject to the same incentive system. 

 

Related Articles

Moldova’s largest lender maib puts Bucharest exchange listing on hold

The largest bank in Moldova, Moldova Agroind Bank (main), announced it is postponing its plan to list on the Bucharest Stock Exchange (BVB) because certain provisions in Moldovan legislation make the ... more

Romania’s leading financial group Banca Transilvania reportedly takes over BRD Pensii

Banca Transilvania, the leading financial group in Romania by assets, has reportedly reached the stage of agreeing technical and legal details for the takeover of BRD Pensii division from BRD-SocGen, ... more

Romania’s leading lender Banca Transilvania takes over OTP Bank’s subsidiary

Romania’s largest financial group by assets, Banca Transilvania (BVB: TLV), announced that it had signed a contract ... more

Dismiss