New billion euro initiative starts to unlock private investment in energy efficiency
The first operation under the Private Finance for Energy Efficiency initiative, a new European scheme to increase private sector investment in reducing energy use was announced today with leading Czech bank Komerční Banka A.S.
This marks the first agreement with a local bank to support energy efficiency investment under the new Private Finance for Energy Efficiency (PF4EE) financial instrument. The announcement of the first agreement with partner bank Komerční Banka A.S., one of the major banks in the Czech Republic and a member of the Société Générale international financial group, comes a few months after the PF4EE was launched by the European Investment Bank and European Commission (LIFE Programme). Under the PF4EE instrument, EUR 75 million worth of energy efficiency-focused loans to corporates, mostly SMEs, managed locally by Komerční Banka, will be supported.
The PF4EE instrument combines three elements. The first is an EIB loan to support eligible energy efficiency projects to be managed by local banks. The second component covers potential losses by partner banks that may be incurred from energy efficiency loans. The third part will strengthen the implementation of PF4EE by passing on technical and financial experience gained from similar schemes elsewhere.
Laszló Baranyay, EIB Vice-President responsible for lending operations in the Czech Republic, commented: “The EIB and European Commission have joined forces to back crucial climate-related investment through this new initiative, which demonstrates Europe’s contribution to global energy, climate and environmental goals. From today, the new PF4EE energy efficiency lending scheme is enabling local banks to unlock new investment essential to reducing energy use. We look forward to working with other banks across Europe under the new programme and invite any bank interested in increasing energy efficiency lending to get in touch with the EIB.”
“Private sector engagement is essential to reduce energy use and increase investment in energy efficiency. I am pleased that PF4EE is now ready to support the first projects and that this new partnership between the European Commission and the European Investment Bank is now fully operational. The new agreement with Komerční Banka will unlock new climate-related investment in the Czech Republic and provides a model for other partners to follow elsewhere in Europe” said the European Commissioner for Climate Action and Energy, Miguel Arias Cañete.
“Komerční banka is the main financial partner for small and medium-sized enterprises in the Czech Republic. As such, we are always looking for innovative financing solutions for our clients. In line with this approach we are pleased to be the first bank to actively join the European Investment Bank’s and the European Commission’s initiative geared towards energy savings in the business sphere. Our specialized team supporting our clients in financing their energy efficiency related projects will help them to fully leverage this new financing facility. Reducing energy intensity, combined with innovations, is a major pillar of the growth in Czech companies’ competitiveness. We are delighted to have the opportunity to assist in this growth,” added Patrice Begue, Executive Director for Marketing and Communication at KB.
The new PF4EE operation signed with Komerční Banka will focus mainly on private SMEs. More specifically, projects targeted will generate energy savings and enhance energy efficiency in buildings, for example by (i) modernising and reconstructing electricity, gas and/or heat distribution systems in buildings, as well as concretely implementing energy management systems in industrial areas; (ii) upgrading lighting systems for buildings and industrial sites; (iii) reducing energy intensity and increasing energy efficiency in manufacturing and technological processes; (iv) re-using waste energy in production processes; and (v) increasing the use of renewable energy.
Under the new PF4EE scheme, a portfolio of energy efficiency loans totalling EUR 75 million is expected to be built up by Komerční Banka by the end of 2017. This will be covered by a 19-year EIB loan at competitive rates. This portfolio will also be backed by a risk mitigation mechanism covering up to 80% of the potential losses up to a maximum amount and dedicated advisory support.
The EIB is one of the largest lenders for investment in climate-related investment worldwide. In 2014 it provided more than EUR 19 billion for climate-focused projects, representing around 25% of the EU Bank’s overall lending activity.