IFC SOLUTIONS 94897 Housing Finance Stories of Impact This series provides examples of our impact, expertise and lessons learned working with clients and partners. RESULTS & IMPACT Unlocking the Energy Saving  IFC invested $13.3 million in Albania’s Potential in Albania’s Residential Credins Bank for sustainable energy finance, with 20 percent allocated for Sector residential energy efficiency loans. Despite demonstrating significant economic growth in  IFC worked with Credins Bank, Besa the last decade, Albania remains one of the poorest Fund, NOA, and Societe Generale nations in Europe. Along with other factors, the Albania Bank. As of June 2013, these country’s development is constrained by an insecure financial institution have:  Disbursed over 2,500 residential power supply and obsolete energy infrastructure. energy efficiency loans totaling As it absorbs over half of all Albania’s electricity supply, $10 million. the residential sector represents a huge opportunity to  Reached 11.000 people. reduce energy consumption and address energy  Helped save over 13 million kWh deficits. Even basic repairs could lead to significant of energy. energy savings in aging residential buildings. However,  IFC was instrumental in drafting the Albanian families often lack funds to implement these new Energy Efficiency Law and improvements. corresponding by-laws, incorporating international best practices and IFC is working with Albanian banks to introduce European Union Standards into the financial products for homeowners to popularize energy legislation. efficiency improvements and unlock energy saving  To increase awareness on economic potential across the country. benefits of energy efficiency loans, IFC developed a comprehensive web “The loan officer at Credins Bank helped us understand the benefits resourse, the first of this kind in of energy efficiency in our home. With the money borrowed from the Albania bank we fixed the windows and insulated our apartment. Our home is more comfortable now and we spend less on energy bills.” — Public employee in "Nene Tereza" hospital in Tirana and client of Credins Bank In partnership with IFC ADVISORY SERVICES HOUSING FINANCE Our Approach The Opportunity To help Albanian residential sector reduce energy According to McKinsey Quarterly, capital constraints, consumption, IFC launched the Albania Residential Energy particularly for low-income households, prevent developing Efficiency Project in 2010. The project works with local countries from fully realizing their energy saving potential. financial institutions to introduce loans for individual homeowners implementing energy efficiency improvements. Albania’s economy is no exception. The country, like many of its neighbors in Eastern Europe, is undergoing a transition The project supported four Albanian financial institutions - to a competitive market economy. Yet Albania’s development Credins Bank, Besa Fund, NOA, and Societe Generale is constrained by an insecure energy supply and consequent Albania Bank. IFC helped them: frequent power shortages. One of the ways to address this  Design and launch an Energy Efficiency Loan product; issue is to optimize energy consumption, especially in those  Develop marketing plans and outreach campaigns; areas where electric power is used most inefficiently.  Connect with suppliers of energy efficient products and A study conducted by IFC ascertained that the country’s services in Albania; residential sector, consuming 54 percent of all electricity in  Develop a methodology for assessing cash flows from Albania, has substantial potential for energy saving. Overall, energy savings; the potential market for financing capital repairs in residential  Train staff in residential energy efficiency finance. buildings is estimated at $300 to $700 million. IFC also invested $13.3 million in Credins Bank, the fifth While the benefits from energy efficient renovations are largest bank in the country. At least 20 percent of this loan obvious, few Albanian families can afford a large upfront was allocated for residential energy efficiency finance. investment in home improvements. To finance capital repairs, local homeowners need access to capital and yet only about 30 As of June 2013, Credins Bank, Besa Fund, NOA, and Societe percent of the population has a bank account, and even less Generale Albania Bank have disbursed over 2.500 loans for people can get a loan. residential energy efficiency improvements totaling $10 million. These loans have benefited 2,500 households and In addition, local banks have little experience in financing 11.000 people, and helped save over 13 million kWh of energy efficient improvements in the residential sector. energy. Combined with growing energy tariffs, the situation presents a challenge for the Albanian market and opportunities for Albania Residential Energy Efficiency Project also made a financial institutions and citizens alike. significant contribution to creating a better enabling environment for energy efficiency investments. IFC experts were instrumental in drafting the new Energy Efficiency Law and corresponding by-laws. The new legislation has incorporated international best practices as well as compliance with the European Union Standards. To raise public awareness about benefits of energy efficiency finance, the project works with various stakeholders:  Organizes workshops for municipalities, banks, construction companies, architects, suppliers of energy efficient products, to create critical market linkages;  Has launched a comprehensive web resource on energy efficiency finance to educate homeowners on the benefits of energy savings; distributes leaflets and other materials Anila Hazizaj, Head of Consumer department at Credins Bank, on energy efficiency finance. presents the energy efficiency loan product (Photos: IFC) IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries. REGION: EUROPE AND CENTRAL ASIA | COUNTRY: ALBANIA | STRATEGIC PRIORITY: CLIMATE CHANGE CONTACT Bajame Sefa | Tirana, Albania BSefa@ifc.org | + 355 4 231 401 ifc.org/gfm January 2014