13 February 2012 | Linton Nightingale
Biofuel, Carbon, Climate Change, Construction, Energy, Finance/insurance, Asia, Europe

 

The Slovakian Presidential Palace, Bratislava.

The European Bank for Reconstruction and Development (EBRD) has announced this week the successful completion of Phase One of the Slovakia Sustainable Energy Finance Initiative (SlovSEFF). The scheme is said to have improved the lives of 50,000 residents of Slovakia and is a model for other countries receiving EBRD support.

The Sustainable Energy Initiative (SEI) targets private sector companies including: large scale industrial energy efficiency, finance facilities through financial intermediaries, power sector energy efficiency, renewables, municipal infrastructure and carbon market support. It has invested around €8 billion since 2006 across Eastern Europe and the former Soviet Union, with an expected emissions reduction of 45.8 million tonnes.

The EBRD have three sectors of investment through the SlovSEFF scheme: Industry, which contributes 47 percent of the reductions in carbon dioxide emissions, Renewables – contributing 31 percent of reductions, and the residential sector, contributing 22 percent of reductions under the scheme.

The funding for the projects comprise loans at competitive market rates, and are only provided to commercially viable clients. This is usually combined with an incentive payment of around 10-15 percent of the total loan amount. This is very different to loans from other organisations, which either follow the form of a grant or a standard bank loan. The problem with grants is that the money can be wasted easily, without any incentive to create sustainable projects. Instead, a cross between the two gives both an incentive to create a viable project, and an incentive to take up the loan in the first place, instead of going to a bank and taking on a more carbon intense pathway.

Slovakia has taken to the loans faster than other countries in the region. Sixty million Euros were used for phase one of the Slovseff scheme, which has been expanded to 90 million for phase two. The fast take-up of the scheme can be put down to a combination of factors. In other regions, such as Bosnia, the wide availability of grant money makes these sorts of loans less enticing, whilst legislation put in place by the Slovak government has made loaning to housing associations much easier than in other countries, whilst the partnership with the local banks, which act as intermediaries for small and medium sized schemes, has worked well.

At one particular project, a biomass power plant in the town of Trencin - Jozef Greňo, Managing Director of ‘Služby pre bývanie’ says, “Our vision is to ensure that the heat production will be 70 percent based on biomass and 30 percent based on natural gas production for the whole city of Trencin”. The project is financed with €2.25 million from the Bank under Slovseff and €650,000 from the company. The loan is likely to be repaid within eight years and in the mean time, further biomass boilers are planned on a new site. The boilers currently provide around 30 percent of the town’s heat, with three boilers providing a total of 12 MW in output. The investment means the company can lower variable heat costs, saving customers around 10-15 percent on their heating bills. It also leads to carbon dioxide emissions reductions of 8,600 tonnes per year, due to avoided natural gas consumption.

The biomass boilers in Trencin use inputs such as straw, spent corn cobs and woodchips to fuel them. This leads to a cost of energy production around a third of conventional gas boilers, which can be passed on to the customer in the form of lower bills. The inputs can also be varied according to the energy needs, as different forms of bio crop yield differing energy outputs.

Of course the prices of the waste crops used vary depending on the demand for them. Greňo pointed out that the cost of woodchips has now reached parity with gas, due to the demand from biomass boilers around the country. He has now switched to the cheaper corn and straw, which comes from farms within a radius of 30km. He notes that should another company set up a boiler in the region, this could all change, with competition driving up the prices.

Daniella Diedrich, Energy Efficiency Analyst at ERBD says, “This is a whole package for the user, combining loans, grants and technical assistance”. The technical assistance is particularly important and something the Bank has worked hard to add to the package. This comes in the form of independent energy experts and consultants.

In the residential sector, the scheme has excelled in Slovakia. It is one of the few countries where it has been possible to carry out energy efficiency measures on apartments on a grand scale. In some countries, moves to improve insulation, install efficient boilers and replace windows can be scuppered by one resident, but in Slovakia, housing associations are given the power to make decisions through a majority vote. This allows the banks to deal with each housing association and conduct energy efficiency measures on the buildings as a whole.

Toryska 1-5, in a suburb of Bratislava, is a prime example of the scheme in action. It has 48 housing units with eight storeys and 129 inhabitants. It was built around 35 years ago and is a prime example of Soviet residences; it was cold, draughty and very poorly insulated. Most buildings of this type have single concrete walls with no roof insulation. This building has undergone significant changes in a period of just a few months. Wall insulation, basement ceiling insulation and stairway shaft reconstruction are saving around 37 percent in energy bills – typical for buildings like this after undergoing the work.

The payback period is around 16 years, but this is cut to 12.7 years with a part-grant; around 45 tonnes of carbon dioxide is saved as a result every year. The buildings all undergo redecoration as well, which although superficial, make a great difference to the image of the area; it also shows up other residences that have not undergone the work, creating a form of peer pressure. The results in this suburb of Bratislava are striking. Many buildings are now undergoing the work so that the grey concrete blocks of the past are rapidly disappearing.

SlovSEFF now have 293 projects involving four banks and it is becoming a recognised brand in the country. Because EBRD are acting more like a bank and less like an aid fund, the projects deliver carbon reductions at a fraction of the cost of other schemes.

 

Image 1 | The Slovakian Presidential Palace, Bratislava - Ninane | Wikimedia Commons

Image 2 | The biomass plant at Trencin

Image 3 | Corn cobs - the cheap fuel used to power the plant

Image 4 | Bails of straw used at the facility

Image 5 | Soviet era buildings in Bratislava. The building on the right has been redevoped by the fund, the building on the left is yet to participate.

Image 6 | SlovSEFF

Images 2-6 © Alan Bouquet

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