Financing of projects in the biomass sector ebrd

FINANCING OF PROJECTS IN THE BIOMASS SECTOR European Bank for Reconstruction and Development (EBRD) Damir Cengic, Financial Analyst Sarajevo, 13 December 2013

What is the EBRD? 

International financial institution, promotes transition to market economies in 34 countries from central Europe to central Asia



Owned by 64 countries and two inter-governmental institutions

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Cumulative commitments of €78.9 billion Unaudited as at 31 December 2012

Capital base of €30 billion

How EBRD can support projects in the Biomass sector 

Public sector projects (sovereign and sub-sovereign)

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Senior loans to private companies

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Western Balkans Sustainable Energy Direct Financing Facility (WeBSEDFF)

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Western Balkans Regional Energy Financing Facility II (WeBSEFF II)

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Local Enterprise Facility (LEF)

Sovereign and sub-sovereign loans 

(i) Loans to BiH on-lent to public utility or loan to public utility with guarantee from BiH or (ii) Loans to Entity/Canton/Municipality on-lent to public utility or loan to public utility with guarantee from Canton/Municipality/Entity

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Terms: >EUR 4 million, max 15 years repayment (including 3 years grace)

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Pricing: (i) sovereign or (ii) commercial

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Up to 100% of eligible costs (excl. VAT)

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Possible TC and grant funds

Loans to Private companies 

Senior loans the private companies

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Minimum loan amount of EUR 4-5 million, repayment up to 12 years (including 2-3 years grace)

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Pricing: commercial

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EBRD participation in total investment costs of up to 50 per cent

Western Balkans Sustainable Energy Direct Financing Facility (WeBSEDFF) 

A direct financing facility operated by the EBRD

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For (small) renewable energy and (industrial) energy efficiency projects

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Senior (secured) loans and project finance arrangements

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From EUR 2 million to EUR 6 million EBRD financing (for certain countries from EUR 1 million) with market-based interest rates and EBRD participation of up to 65 per of the total investment costs.

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Average (expected) maturity of 6-8 years for energy efficiency projects, with appropriate grace periods and flexible repayment schedules

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Supported by TC funds for project identification and preparation as well as by incentive payments based on the estimated CO2 emission reductions generated by each eligible project (up to 10 per cent of loan principal)

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Eligible types of projects: Renewable Energy (including biomass systems up to 10 MW) and Industrial Energy Efficiency.

Structure of the WeBSEDFF EBRD

Donor Funded Contract

Loan Agreement

Project Consultant Technical Assistance

€

€

Borrower

Donor Funded Contract

Incentive Payment*

Verification Consultant Implementation Verification

* Incentive payments will be paid upon technical completion of the investments to eligible Borrowers

Western Balkans Regional Energy Financing Facility II (WeBSEFF II) 

EBRD financing through participating financial institution (local banks)

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For Private sector sub-borrowers

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•

–

Privately owned enterprises, subject to credit approval in line with the Participating Bank’s credit process

–

Sub-loan sizes up to €2 million (no working capital finance); Maturity up to 5 years (2 years grace); marketbased interest rates; up to 100 per cent of investment costs

–

Capital investments in premises, equipment, machinery, software, enterprise management systems and general upgrading

–

Renewable Energy projects resulting in significant estimated CO2 emission reductions

For Public Sector Sub-borrowers –

Any public or majority publicly owned entity at national or regional level, or SPV’s with energy management related services for public sector as their main activity (ESCOs)

–

Sub-loan sizes up to €2.5million; Maturity up to 5 years (2 years grace); market-based interest rates; up to 100 per cent of investment costs

–

Capital investments in measures improving energy efficiency

Investment Incentives

– Payment of investment incentives to end-borrowers upon verification of successful project implementation, based on the level of expected CO2 savings • up to 10% of disbursed sub-loan amount for private sector projects

• up to 15% for public sector projects and ESCO projects.

Structure of WeBSEFF II EBRD

EU Funded Contract

Credit Project Consultant Verification Consultant Technical Assistance

€ Line

PFI

Training and Marketing Support

Loan

EU Funded

€ Agreement

Sub-Borrower

Grant funds Investment Incentives to Sub-Borrower

Local Enterprise Facility (LEF) 

EBRD-Italy Local Enterprise Facility for small and medium-sized enterprises (SME’s) in Albania, Bosnia and Herzegovina, Bulgaria, Croatia, FYR Macedonia, Montenegro, Romania, Serbia and Turkey

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Investment very in size from EUR 1 million to up to EUR 10 million with repayment from 3 to 7 years. Market based interest rates

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For Private sector including expansion, restructuring and acquisition of existing private businesses. Funds can be used to purchase assets, equipment, for civil works, patents, trademarks, but also working capital needs and balance sheet restructuring.

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Endowed with up to EUR 270 million of loan funds + up to EUR 6 million in Technical Cooperation (TC)

Key requirements for Biomass projects 

Biomass supply: – sustainable availability

– adequate quality – long term supply agreements 

Financially strong sponsor(s)

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Relevant experience

Pale District Heating Project  

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Sovereign guaranteed loan to the JP “Gradske Toplane” Pale; Project is co-financed with grants from Western Balkans Investment Framework (“WBIF”) and EBRD Shareholder Special Fund (“SSF”); Loan and grant proceeds will be used to:

– Heating Plant: Construction of new boiler house and purchase of new energy efficiency biomass boiler (7.5 MW) and Light Fuel Oil boiler (10.5 MW) for peak and reserve loads – loan financed; – District Heating Network: Replacement of existing dilapidated DH network with preinsulated modern pipes (3.1 km) and network extension through installation of new DH pipes (1.6 km) – loan and grant financed; – Demand Side Measures: installation of individual heating substations (“IHS") at the building level equipped with heat meters, installation of individual heat meters or heat cost allocators at the consumers’ apartments and installation of thermostats on each radiator – grant financed. 

Total Project costs of EUR 8.3 million.

Pale District Heating Project (i) 

Technical cooperation (“TC”) funds for:

– Preparation of Feasibility Study – Preparation of Detailed design* – Assistance with project implementation including procurement process, supervision of work, and preparation of Financial and Operational Performance Improvement Programme (“FOPIP”) and Public Service Contract (“PSC”) Effectiveness of the loan will be subject to the following conditions precedent (CP’s): 

Signed preliminary agreements with 80 per cent of the potential new customers (equivalent to 120.000 m2 of additional area to be heated);

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Signed agreements for long term biomass supply in excess of 50,000 m3;

*The Consultant that will prepare Detailed design will also help the Company and the Municipality to meet the above mentioned CP’s.

Pale District Heating Project (ii) Priority Investment Plan Objective

Unit

Current

With Project

Total heated area

m2

48,000

200,000

Households

No.

650

1,800

Commercial Customers

No.

70

300

Public Institutions

No.

5

20

per cent

0

100

Fuel input

MWh

20,400

44,000

Energy supplied to customers

MWh

11,000

36,200

Energy losses total

per cent

47

18

Coal consumption

tonnes

230

0

Light Fuel Oil (LFO) consumption

m3

0

72

Biomass consumption

m3

27,500

62,000

Metered Consumption

Contact us Josip Polic Senior Banker

Damir Cengic Financial Analyst

EBRD Resident Office in BiH Tel: +387 33 667 946 E-mail: policj@ebrd.com

EBRD Resident Office in BiH Tel: +387 33 667 946 Email: cengicd@ebrd.com

For further information: www.ebrd.com