76149



CASE STUDY 21: CENTRAL AND EASTERN EUROPE - COMERCIALIZING
               ENERGY EFFICIENCY FINANCE (CEEF) PROGRAM
 Barriers               Perception of high credit risks and poor capacity of project preparation

 Instrument             Partial risk guarantee

 Application            IFC provides guarantees, supported by GEF first loss guarantee

 Amount                 Up to US$ 106 (CEEF+HEECP2, IFC+GEF overall guarantee pool) million on guarantees


PROJECT BACKGROUND AND OBJECTIVES                         The Central and Eastern Europe Commercializing
                                                          Energy Efficiency Finance (CEEF) supported by IFC
CEEF is the scale up of IFC’s energy efficiency (EE)
                                                          and GEF aims to remove these barriers by:
lending programs in Hungary (HEECP and HEECP2),
that was expanded to the Czech Republic, Estonia,                 Supporting financing and implementation of
Latvia, Lithuania and Slovakia. The objective of the               sustainable energy projects
program was to encourage financial intermediaries                 Promoting the entry of domestic FIs and
(FIs) to finance EE and RE investments by partially                increase their experience and capacity
guaranteeing their loans in this area, and by                     Supporting FIs in developing and using
providing technical assistance. Selected countries                 financing structures appropriate for
had inefficient energy-using infrastructures and                   sustainable energy projects and thus
multi-billion dollar investment needs in EE. At the                providing more favourable credit terms to
same time countries had relatively well-developed                  borrowers
technical capabilities in the EE sector, improving
                                                                  Promoting the development of the energy
investment climate for EE, and relatively well
                                                                   efficiency and renewable energy markets
developed capital markets. However Local FIs were
                                                                   and related project development and
not lending for EE projects due to mostly small
                                                                   commercial ESCO industries.
project and relatively high transaction cost,
perception of high credit risks, and because FIs had      INSTRUMENTS USED
little experience with energy efficiency project
finance. In addition, there were few Energy Service       IFC provided individual and portfolio partial
Companies (ESCOs) developing the mostly small             guarantees for loans from domestic FIs for energy
projects and those had limited skills and resources.      efficiency and renewable energy projects. GEF
Most project sponsors do not have the necessary           provides grant funding to IFC for a first loss cover to
skills and experience in preparing energy efficiency      mitigate the FIs’ risk, backing a portion of IFC
projects. The GEF approved US$18 million to support       guarantee liabilities and to cover costs of technical
CEEF, of which US$15 million supported the                assistance, capacity building and program operation.
investments and US$3 million supported the
technical assistance activities. IFC’s earlier Hungary
Energy Efficiency Co-financing Program 2 (HEECP2)
was merged into CEEF.




1 | R E F I N e www.worldbank.org/energy/refine
INSTITUTIONAL ARRANGEMENTS
Local FIs takes the lead in finding projects, designing    OUTCOMES
their credit facilities and reviewing project proposal                                             1
                                                           Fourteen FIs participated in the program , providing
from project developers.
                                                           over US$ 135 million in loans for energy efficiency
ESCOs, or other project developers gain technical          and renewable energy projects for a total project
assistance financed by the GEF grant in project            cost of US$240 million. More than 800 projects were
preparation and development.                               supported, of which more than 700 embedded in
                                                           block house portfolios. No guarantees have been
IFC provides the partial guarantee for loans made          called for under CEEF.           Forty-one project
from FIs for approved energy efficiency projects. GEF      developers/ESCOS have been involved in the
grant funding is used to support IFC’s guarantee           implementation of the guaranteed projects. The
liabilities as well as to directly mitigate FIs’ risk on   program has demonstrated success in enabling the
portfolios, as needed.                                     commercialization of several areas of sustainable
                                                           energy finance.
FIs provide loans on commercial terms to project
developers, who will have to provide some equity
into the project.




                                                           1
                                                            Results include HEECP and HEECP2, merged with
                                                           CEEF



2 | R E F I N e www.worldbank.org/energy/refine
1 | R E F I N e www.worldbank.org/energy/refine