IFC SOLUTIONS 94893 Housing Finance Stories of Impact This series provides examples of our impact, expertise and lessons learned working with clients and partners. Helping Russia’s Residential Sector Improve Living Standards and Save Energy The residential housing sector in Russia consumes 20 RESULTS & IMPACT percent of the country’s electricity and 60 percent of its IFC provided investment and advisory heat. As the second-largest end-user of energy after support to Center-Invest bank operating in the South of Russia: manufacturing, the housing sector holds the greatest opportunity for energy savings: the market potential for  Invested $10 million equivalent in Russian rubles in Center-Invest in new financing of capital repairs is estimated at $4 2009 to pilot residential energy billion to $13 billion. efficiency financing. In 2010 IFC launched Russia Residential Energy  Advised the bank on product design, outreach, and assessment of Efficiency Project, which works through Russian banks residential energy efficiency projects to finance the energy efficient modernization in the through Russia Residential Energy Efficiency Project. housing sector. The project aims to stimulate investment in green renovation, reduce CO2 emissions, As of December 2012, Center-Invest bank has: and create enabling environment for residential energy  Extended loans totaling $2.2 million to efficiency finance in Russia. homeowners associations. These With support from the project, local Center-Invest bank loans have benefitted 63 apartment buildings housing 4,300 families. pioneered lending to homeowners’ associations and  Issued loans totaling 280 million rubles individual home owners to finance repairs and energy- ($8 million) to 1,300 individual home saving measures. owners. “Thanks to the newly installed modern windows and light bulbs, our home is now cozier. We are very happy.” — Resident of one of the residential multifamily buildings in Rostov-on-Don, which benefitted from energy efficiency upgrades In partnership with the Ministry for Foreign Affairs of Finland, the Ministry of Employment and the Economy of Finland, and Global Environment Facility IFC SOLUTIONS HOUSING FINANCE The Opportunity Our Approach The residential housing sector in Russia consumes 20 percent IFC Russia Residential Energy Efficiency Project works of the country’s electricity and 60 percent of its heat. As the through Russian banks to stimulate investment in the energy second-largest end-user of energy after manufacturing, the efficient renovation of residential multifamily buildings and housing sector holds the greatest opportunity for energy reduce CO2 emissions in Russia. The project also focuses on savings. The market potential for new financing of capital creating an effective legal and institutional platform to support repairs in that sector is estimated at $4 billion to $13 billion. local homeowner associations and housing management companies in accessing finance for energy efficiency The majority of the Russian population lives in multifamily improvements. buildings, many of which are in need of renovations and repair. Yet Russia lacks mechanisms for financing energy In 2009, with support from Russia Residential Energy efficient renovations in the residential sector, as well as the Efficiency Project, Center-Invest bank operating in the South legal and institutional framework to support it. of Russia created a special loan product for homeowners’ associations. The product was designed to finance repairs and other energy-saving measures in multi-family apartment buildings. As of December 2012, Center-Invest had issued loans totaling $2.2 million benefitting 63 apartment buildings, where 4,300 families live. Building on the initial success, in 2011 Center-Invest launched another lending program for individual home owners to finance energy saving in individual houses and apartments. Since the start of the program, Center-Invest has extended loans totaling 280 million rubles ($8 million) and benefiting 1,300 families. One of the projects financed by Center-Invest is at the apartment building No. 39 on Tekucheva Street in Rostov-on- Don city. The building used to be much like its shabby neighbors, with old windows, loose doors, and outdated electrical wiring. The building management company used the 5 million rubles ($167,000) loan from Center-Invest for a variety of energy-efficient measures such as installing new windows, energy-saving light bulbs, gas and water meters; repairing the roof, water supply systems, heating systems, and sewage systems. As a result, savings on heat reached 16 percent, or more than $9,000 a year. The modernization also provided electricity savings of 20 percent, and building management company used that money to repair the entrance of the building. Resident of No. 39 on Tekucheva Street in Rostov-on-Don in Southern Russia, where the building management company IFC, a member of the World Bank Group, is the largest global implemented a number of energy-efficient measures using a development institution focused exclusively on the private loan from Center-Invest Bank. sector in developing countries. REGION: EUROPE AND CENTRAL ASIA | COUNTRY: RUSSIA | STRATEGIC PRIORITY: CLIMATE CHANGE | THEME: HOUSING FINANCE, SUSTAINABLE ENERGY FINANCE | BUSINESS LINE: ACCESS TO FINANCE CONTACT Friedemann Roy | Washington, DC Katerina Levitanskaya | Moscow FRoy@ifc.org | +1 202 473 9838 KLevitanskaya@ifc.org | +7 495 411 7555 ifc.org/gfm October 2013