Commercial Finance for Sustainable Energy Projects by mmo13137

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									                                                 CF-SEP
                                             Commercial Finance
                                             for Sustainable Energy Projects


                                     Project no. EIE/05/205/Si2.419687




                   Commercial Finance
             for Sustainable Energy Projects

                                    Result Oriented Report




                                                August 2007


   Project coordinator:
   Bohuslav Málek
   SEVEn, The Energy Efficiency Center
   e-mail: bohuslav.malek@svn.cz
   phone.: +420 – 224 252 115
   Project website: www.svn.cz/CF-SEP




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     CF-SEP
Commercial Finance                              Result oriented Report
for Sustainable Energy Projects




Contents
1         Introduction ..................................................................................................................... 3
    1.1         Project objectives ..................................................................................................... 3
    1.2         Participating countries .............................................................................................. 3
    1.3         Outline of activities and results ................................................................................. 3
2         Project outputs ................................................................................................................4
    2.1         Financial Resources Manual .................................................................................... 4
    2.2         Best Practice Manual................................................................................................ 4
    2.3    Case Studies ............................................................................................................ 6
      2.3.1 Development of concrete projects ........................................................................ 6
      2.3.2 Case Studies – project summaries ..................................................................... 14
    2.4         Bank training........................................................................................................... 15
    2.5         Project web pages .................................................................................................. 16
3         Conclusions .................................................................................................................. 17
4         Contact information ....................................................................................................... 18




Authors:
Czech Republic
Bohuslav Málek
Slovakia
Bronislava Herdová
Lithuania
Giedre Streckiene
Latvia
Claudio Rochas
Estonia
Toni Pärn




The project CF-SEP, Commercial Finance for Sustainable Energy Projects, has obtained financial support from
the European Commission under the contract no. EIE/05/205/SI2.419687 Intelligent Energy – Europe (IEE) -
SAVE, ALTENER, STEER and Horizontal Key Actions -Type 1 Actions
The sole responsibility for the content of this report lies with the authors. It does not represent the opinion of the
European Communities. The European Commission and the authors are not responsible for any use that may be
made of the information contained therein.




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1 Introduction
1.1 Project objectives
The general aim of this project is to improve the cooperation between project developers in
the field of energy efficiency (EE) and renewable energy sources (RES) projects on one side
and financial institutions (FIs) on the other side resulting in substantial expansion of availabil-
ity of commercial lending.
The CF-SEP project was designed to expand availability of commercial lending to EE and
RES projects with the special attention to SME sector by transforming the market with com-
mercial finance.

1.2 Participating countries
A total of five companies participated in the project:


 Partner name                                        Partner short name         Country
 SEVEn, Stredisko pro vyuzivani energie, o.p.s.      SEVEn                      Czech Republic
 Energy Center Bratislava                            ECB                        Slovakia
 Joint Stock Company Eksergija                       Eksergija                  Lithuania
 Ekodoma                                             Ekodoma                    Latvia
 OU Energiasaastuburoo                               ESB                        Estonia

1.3 Outline of activities and results
The work was arranged in six Work Packages (WP leaders are in brackets):
WP 1: Management (SEVEn)
WP 2: Market Analysis (Ekodoma)
WP 3: Development of Projects (SEVEn)
WP 4: Bank Training (ESB)
WP 5: Best Practice Dissemination (ECB)
WP 6: Common Dissemination Activities (SEVEn)
The main public outputs are the following:
            Financial resources manual
            Best practice Financial Manual
            Project case studies

Materials for bank training have been prepared for participating banks.
        Bank training curricula
are not publicly available but selected parts of them can be provided upon request.

A number of supportive activities and events took place during the project period.
            Dissemination seminar presentations
are available at the project web pages www.svn.cz/CF-SEP.




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2 Project outputs
2.1 Financial Resources Manual
The Manual contains information necessary for potential project developers on the financial
markets in each participating country. It is written in each of the project languages with spe-
cific information relevant for each respective country and in English with a summary of all im-
portant information from national versions.
The manuals are available on an interactive CD. The respective language versions can be
downloaded from national project web pages.1
These financial resources manuals are written with specific attention to the implementation of
energy efficiency (EE) and renewable energy source (RES) projects and are meant to be a
link between project developers with and financial institutions. They explain different types of
financing and how to access them and provide also useful links for finding more information.
The manuals describe how a EE and RES projects can be financed, give information about
local and international commercial financial institution, funds for energy efficiency and re-
newable energy and other sources of financing, like for example Joint implementation, EU
Emission Trading Scheme or third party financing.
The table of contents of the English version is the following:
  Introduction                                                                          5
  1. Project cycle                                                                      6
  2. Conventional types of financing                                                    8
  3. Commercial financial institution                                                  10
  3.1 Slovakia                                                                         10
  3.2 Czech Republic                                                                   12
  3.3 Lithuania                                                                        15
  3.4 Latvia                                                                           16
  3.5 Estonia                                                                          17
  3.6 International                                                                    18
  4. Funds for Energy efficiency and renewable energy                                  20
  4.1 Slovakia                                                                         20
  4.2 Czech Republic                                                                   20
  4.3 Lithuania                                                                        21
  4.4 Latvia                                                                           21
  4.5 Estonia                                                                          22
  4.6 International                                                                    22
  5. Overview of other sources of financing                                            23
  6. Literature – information sources                                                  25


Since the full text of the manuals is publicly available, no further information is repeated in
this report. Manuals can be sent upon request or can be downloaded from project pages
(see the links in the footnote).

2.2 Best Practice Manual
The manual is intended as a guide for project developers for the preparation of typical docu-
ments required by banks to be submitted with the application for project financing.


1
  for English version see http://www.svn.cz/CF-SEP/Downloads/1_FRM_English.pdf and the entire
contents of the CD is also available at http://www.svn.cz/CF-SEP/Downloads/CD_FRM.ZIP

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The first chapter describes the different types of EE and RES project.
The following part contains suggestion for the preparation of basic documents identifying the
project from the economic and financial perspective, i.e. the Feasibility Study and the Busi-
ness Plan.
For individual project types the typical risks are described and recommendations are given
for their minimization.
Next chapters provide information on legislative support of EE and RES in individual partici-
pating countries and on the situation in implementation of these projects.
The content of the English version of the manual is the following.

     Introduction                                                                       5
     1. Energy efficiency and renewable energy projects                                 6
     1.1 Energy efficiency projects                                                     6
     1.2 Renewable energy projects                                                      7
     2. Suggestions and examples for preparation of the EE and RES project proposals   10
     2.1 Project identification and scanning                                           10
     2.2 Hints on how to prepare a good feasibility study                              10
     2.3 How to prepare a good business plan                                           13
     3. Risks of EE and RES projects                                                   17
     3.1 Typical risks associated with project development                             17
     3.2 Project specific risks                                                        20
     4. Legislative support of EE and RES projects                                     26
     4.1 Czech Republic                                                                26
     4.2 Slovakia                                                                      27
     4.3 Lithuania                                                                     28
     4.4 Latvia                                                                        29
     4.5 Estonia                                                                       30
     5. Lesson learnt in financing EE and RES projects                                 32
     5.1 Czech Republic                                                                32
     5.2 Slovakia                                                                      33
     5.3 Lithuania                                                                     35
     5.4 Latvia                                                                        37
     5.5 Estonia                                                                       38
     6. Conclusions                                                                    41


The Manuals in national project languages and in English are available on a CD and can also
be downloaded from the project pages.2




2
    www.svn.cz/CF-SEP/Outputs.htm

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2.3 Case Studies

2.3.1 Development of concrete projects
The core activity of the CF-SEP project was to identify and present to financial institutions
concrete EE or RES projects and help the investors and developers with the applications for
the commercial financing.
The following overview gives the basic technical and economic information on 5 selected
projects in each participating country with the history of their preparation.

2.3.1.1 Czechia

2.3.1.1.1 Modernization of energy system at CNM Textil, a textile plant in Oskava,
          North Moravia.
The fist part of a complex project comprising energy efficiency measures at textile processing
technology has already been realized. The second stage will include upgrade of the boiler
plant, including installation of two new steam boilers: a 3,2 MW boiler fired by biomass and a
2 MW natural gas fired boiler. They will replace existing obsolete heavy fuel oil boilers 2 x 5,5
MW – one of them will be dismantled and the other left as a cold reserve. Thanks to savings
at the demand side, the biomass boiler operated as base load source should cover most of
the demand diagram, so that using the expensive natural gas for the peaking gas boiler
could be minimized.
Estimated costs for the boiler plant modernization are about 1,4 million Euro. The project re-
ceived a government subsidy. The loan for financing the project has been promised in 2006
by the local branch of the current investor’s bank but then it was not approved by the bank’s
headquarters due to the fact that the client falls into the textile industry sector. The investor
continued in negotiations with other banks and finally a loan agreement for has been signed
with HVB Bank in early 2007. .

2.3.1.1.2 New small hydro power plant at Štětí, Central Bohemia.
A new hydro power plant is planned to be built on the Labe river. The project includes instal-
lation of two turbines with the total capacity of 5,3 MW and the complete construction of the
civil part in the river bank next to an existing weir. The turbine capacity was optimised with
respect to annual power production and installation costs. The selected Kaplan-type turbines
have the rotor diameter of 5,3 m; both units will be in operation for about 300 days/year, then
at lower water flow rates in the river one unit only. Average annual power production will be
over 30 GWh/a.
Total estimated costs are about 20 million Euro. The investor will apply for subsidy and
search for commercial financing to cover the remaining portion of capital costs.

2.3.1.1.3 Biogas project in Třeboň, South Bohemia.
A new biogas plant with total power generating capacity of 1 MW and heating capacity 0,85
MW. Biogas will be produced from agriculture products such as maize, hay and pork ma-
nure, electricity will be supplied to the grid and heat delivered to the spa facility in the town.
The biogas plant will be situated about 2 km to the north form the town next to an existing
wastewater treatment plant and a big pork breeding plant. The cogeneration plant will be in-
stalled in a spa facility located at the southern border of the town; biogas will be brought
there by a new 4,3 km long piping from the biogas production plant. A smaller cogeneration
unit will be installed also at the biogas plant serving primarily for coverage the biogas plant’s
own heat consumption. Practically all power production and the cogeneration plant in the



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spa and about 2/3 of power production at the biogas plant will be supplied to the grid. Heat
will be supplied to the spa hot water system and also to a nearby hotel.
The total estimated project costs are about 120 M CZK (4,3 M EUR). Total electricity volume
sold to the grid will be about 7,9 GWh/a, heat volume sold to clients about 6 GWh/a.
The investor will apply for the subsidy from the EU structural funds administered by the
Czech Ministry of Industry and Trade. Commercial loan is in negotiation with several banks.

2.3.1.1.4 Wind power plant Stará Libavá, North Moravia
A wind park with the total planned capacity 14 MW. Out of the total of 7 units 2 MW each,
the fist stage of the project has been completed in May 2007. Project development included
one-year wind speed measurement on the rented 65 m high mast. Its results confirmed
good suitability of the location which can be classified as the group V in a 6-group scale as
“excellent inland location”.
The selected unit type is ENERCON E70/4 with the nominal capacity 2MW with the turbine at
the 85 m high mast. The first stage includes only one unit connected to the nearby medium
voltage switching station. The second stage was planned with additional 2 – 3 units con-
nected to the same point. However, in reality any further capacity extension has to be con-
nected via a new medium voltage cable up to 30 km long to nearest suitable connection
point.
Total capital costs of the fist stage amounted to about 2,6 M Euro (72 M CZK), of which 60
M CZK was for the unit itself, the rest represents the costs of foundations, access roads, ca-
ble connection and design.
The assessed annual electricity production is 4 630 MWh/a, after deducting the rebates for
measuring uncertainty (17%) and technical reserve (4%) a safe estimation is annual produc-
tion 3 657 MWh/a.
The Investor had preliminary talks with several banks, which assessed very positively the
project itself but were not willing to provide the loan to a newly created company with limited
own equity. In the meantime the project has been granted a subsidy of 22,6 M CZK from the
Operation program of the Ministry of industry and trade (2004 – 2006 period). Finally the
commercial financing has been concluded with the Ceska Sporitelna with the participation of
the International Finance Corporation, who provided a partial coverage of the debt.
The installation of the first unit was completed in May 2007 and the plant is in trial operation.
The formal commissioning is expected in August 2007. This second stage of the project –
additional 6 units – will comprise up to 30 km long medium voltage cable to the new grid con-
nection point. Financing is still in negotiation; if successful, the construction will start in 2008

2.3.1.1.5 Photovoltaic plant at a multi-flat residential building
For the installation an existing residential multi-flat building will be used. The building of con-
crete panel structure faces to the south with its longer side.
The southern façade and the flat roof will be provided with photovoltaic panels. For the fa-
çade a special type of panels will be used designed fro vertical orientation; 1 584 pcs with 45
W nominal capacity each, making together 71,28 kW. On the roof there will be 64 panels
with 210 W nominal capacity each, together 13,44 kW. The total nominal capacity of the
plant is 84,72 kW.
Total capital costs for the photovoltaic plant are assessed at about 350 k Euro (~10 M CZK).
This includes delivery and installation of the panel, frequency converters, cabling and con-
nection to grid.
Estimated power production is about 85 MWh/a. With the feed-in tariff 13,50 CZK/kWh valid
for 2007 the revenues will be 1,14 M Kč/a. The project can hardly be realized without an in-
vestment subsidy.

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The investor plans to use a combination of own equity, subsidy and commercial financing
(bank loan). Design documentation has been prepared and the application for investment
subsidy submitted. Further progress will depend on the decision of authorities regarding the
subsidy and agreement on the commercial financing.

2.3.1.2 Slovakia

2.3.1.2.1 Modernisation of solar collectors production process
Proposal of new, innovative press technology installation for the biggest Slovak solar collec-
tor producer Thermosolar Žiar nad Hronom. Business plan as well as application for co-
financing through structural funding has been prepared. 50% of the investment needs is
planned to be covered from structural funding (Program for support of new and existing en-
trepreneurs) and the rest of the investment is planned to be covered from commercial and
own resources. The project has been submitted to commercial bank for getting commercial
financing.
The proposed project with its aims and proposed measures contributes to sustainable pro-
duction process and modernisation of press technology, which produces collector cases, and
therefore to enlargement of solar energy utilisation as renewable energy source in Slovakia.
Total amount of investment is 225 thousand Euro, whereas simple payback is 5 years.
Emissions savings present amount of 2 409 tones of CO2/year.

2.3.1.2.2 Using of biogas on the municipal landfill in Považský Chlmec
Installation of cogeneration unit (installed capacity 500 kWel.). The communal landfill cur-
rently operates a system with 11 exhausting wells. Current landfill gas production is 200
m3/hour, with methane concentration approximately 52%. The gas collection facility should
be extended within next months by additional four wells. The total degasification capacity
should be enlarged to 300 m3 landfill gas per hour. Going out of the produced gas, electrical
efficiency of the cogeneration and gas content the achievable electrical power input has been
calculated to 385 – 577 kWel. The cogeneration electrical power output should be 526 kW,
heat power output 558 kW. Total investment is 446 thousand Euro with simple payback 1,8
years. Emissions savings present amount of 18 287 ton CO2 per year. ECB provided the de-
veloper with technical and financial assistance by project development. The project should
be implemented at latest by the end of this year.

2.3.1.2.3 Wind power plant in Orechová Potôň
Nawitas AAE, Ltd. was found as development and operational company for renewable en-
ergy sources especially for wind power plants. The company is planning construction of wind
power plants with total installed capacity 15x2 MW near the municipality Orechova Poton.
The expected electricity production is 76.8 GWh per year. The investment costs are 36.6
mililon EUR and calculated payback period is 7 years. Predicted reduction of CO2 emissions
is calculated 38 000 tons per year. The project has already been presented to private inves-
tor and commercial bank. The expected time of project realisation is 2009 – 2010 according
to technology delivering possibilities.

2.3.1.2.4 Fuel switch from coal to natural gas in combination with infra-red heater for
          machine plant Banská Štiavnica (Štiavnické strojárne).
Installation of hot-water boiler in combination with infra-red heaters for direct heating with
possibility of sensitive zone regulation of heating. The main motivation for the developer was
to reduce emissions produced by burning of solid fossil fuels (550 tones of brown coal) in
mountain territory (Štiavnické vrchy). Heat for own consumption of the investor will be pro-
duced in new boiler with installed output 1,5 MW. Total investment costs are 419 thousand
EUR. Emissions savings are 371 tons CO2 per year.

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2.3.1.2.5 Biogas production and energy utilisation in the region of Banská Bystrica
An economic calculation has been prepared to Arca Capital (investor) for investment project
of 1 MWe installed capacity biogas plant using biogas produced from corn-silage. Necessary
capacity of digesters (fermenting tanks) together with final storages in order to have sufficient
capacity for ½ year storage of fertiliser is 12 800 m3. The main part of the electricity pro-
duced by three cogeneration units (BKG type with installed capacity 330 kWe each) firing
biogas is to be sold to the electricity grid; produced heat should be supplied to the local dis-
trict heating (DH) system of the municipality. The estimated investment is 3.4 million EUR
with payback period of 9 years.

2.3.1.3 Lithuania

2.3.1.3.1 Condensing economizer construction in Varena
JSC „Varenos siluma“ is a municipality owned district heating company which responsibilities
are heat and hot water supply for Varena city and Matuizos, Valkininkai villages customers.
In 2006 it was more than 300 district heating customers (including hospital, two secondary
schools, kindergardens etc.). Company annual production is about 65,47 GWh of heat, total
sales are 45,5 GWh (heating and hot water production). Varenas DH network has one of the
highest heat transfer losses in Lithuania. Total DH network in Varena city is 26.307 m of DH
pipelines. JSC „Varenos siluma“ plans to install new 2,56-4,64 MW (depends on network
heat demand and moisture of fuel used) condensing economizer at the existing boiler plant.
New condensing economizer will raise overall fuel transformation coefficient by 29 percent.
Main boilers are not enough to cover Varena city heat demand; that is why heavy fuel oil boil-
ers are still used to cover heat demand, especially in heating season time. In 2006 26 % of
all heat was produced in old boilers using heavy fuel oil causing high CO2 and other emis-
sions and also high expenditures, which have to be covered by higher heat tariff.
The client will implement the following modernization measures: installation of new 2.56-4.64
MW condensing economizer, construction of new chimney in the plant territory, connection of
existing boilers’ flue gas pipes to the condensing economizer and installation of condensing
economizer control panel at the company control room and electrical installation. The imple-
mented project will result in total CO2 reduction of 2747 t/a. Total estimated investment costs
are about 2,05 million Euro.
Project will be financed by a combination of European Union structural funds subsidy and
bank loan. The subsidy of 1,025 million Euro (50 %) is expected. The loan agreement for
1,025 million Euro will been signed with bank after signing subsidy contract. At the moment
project documentation is delivered to the Nord LB and bank decision concerning long term
credit is expected to be signed in the summer 2007.

2.3.1.3.2 Renovation of a 5-8-stories multi-family housing building in Vilnius
A 5-8 stories multi-family housing building was built during soviet times, in 1977. It has been
in operation for 30 years already. The building is at Seimyniskiu str. 30, Vilnius, Lithuania.
Heated area of a multi-family housing is about 5081 m2. Heat demand for normative condi-
tions (in case of normative inside and outside temperatures) is 1119 MWh. 301th Housing
owners association (HOA) is the investor of this project.
HOA will implement such renovation measures: insulation of external walls and repair of bal-
conies, replacement of windows and balcony doors, stairwell repair, repair of protective roofs
above external doors, renovation of the building base, replacement of doors of rubbish shaft
and removal dumpster railing, implementation of energy efficiency measures to improve the
comfort of apartments (thermostat valves, heat distributors, devices of remote reading of
heat meters), partial repair of roof covering and installation of control fittings in DHW and cold
water supply systems. The complete project implementation will reduce expenses for heat by


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42 %. Total energy savings will be about 466,5 MWh/a that will result in total CO2 reduction
of 116,7 t/a.
Estimated costs of the renovation are about 0,43 million Euro. The project will receive a sup-
port from Vilnius city municipality (0,071 million Euro) and a government support (0,18 million
Euro). Commercial bank loan will be 0,136 million Euro. HOA funds (at least 10 % of the in-
vestment amount) are 0,043 million Euro. HAO is under negotiations with three commercial
banks: PAREX bankas, Hansabankas, SEB Vilniaus bankas.

2.3.1.3.3 Renovation of boiler plants at kinder gardens and schools in Pakruojis dis-
          trict
The project includes 13 schools. All boiler plants use oil products and hard coal. The solid
fuel boiler plants are not automatic and require a lot of manual work, the boilers are worn and
their operation inefficient. The light fuel oil boiler plants are automated, however most of the
boilers are worn. The boiler plants shall be reconstructed installing the fully automated and
efficiently operating biofuel boiler plants with economizers.
The implementation of this project is beneficial not only from the economical and social view-
point but from the point of environment protection as well. The renovation of the heating sys-
tem of Pakruojis district kinder gardens and schools the main following goals and tasks shall
be achieved: secure stability, reliability, safety of heat energy production and supply; in-
creased efficiency of the primary energy consumption; reduced expenses for heat produc-
tion; reduced dependence on the imported fuel; reduced heat losses in the network and re-
duced negative impact on the environment due to lower pollution.
The demand side savings and switching the fuel to biomass will result in total CO2 reduction
of 1803 t/a. The necessary investments for the project implementation amounts to 0,963 mil-
lion Euro. The Municipality of Pakruojis district is planning to apply to Lithuanian Environ-
mental Investment Fund (LEIF) in order to receive the subsidy for the implementation of the
schools boiler plants’ renovation project. The LEIF subsidy will be about 0,7 million Euro.
Commercial bank loan will be 0,27 million. The Municipality of Pakruojis district is planning to
apply to Šiaulių bank regarding loan.

2.3.1.3.4 DH network reconstruction in Rietavas
JSC „Rietavo komunalinis ukis“ is a heat and hot water supplier for 35 living houses (1260
inhabitants) and 23 business buildings. All the pipelines were built before 1990 and are inef-
ficient and unsafe. Only 900 m of network (15 %) is renovated. Three DKVR 4/13 type boilers
are installed in central boiler house. One boiler usees biofuel (2,3 MW), one heavy fuel oil
(2,3 MW) and the third is for reserve. Maximum heat demand in 2005 was about 4,24 MW.
Local boiler house has 0,41 MW installed capacity. Boilers “Kalvis-190” and “Kalvis-220”
(190 kW and 220 kW) use firewood as a fuel. Peak load in 2005 was 200 kW.
Project is initiated in order to replace old and energy inefficient district heating network in
Rietavas city. During the project it is expected to modernise old network by installing new ef-
fective and secure pipes. New network of 302 m will be installed in order to connect new dis-
trict heating customers to the existing network. Equipment for DH pipeline condition monitor-
ing and indication will be installed. New pipes will be optimised by actual heat demand.
After project implementation security of supply in the Rietavas city will be ensured. New un-
derground pipelines will be installed. New customers will be connected to the network. Old
pipelines will be dismantled and utilised. The transmission side savings will result in CO2 re-
duction of 99,2 t/a because energy production will be reduced by 396,8 MWh/a. Total esti-
mated investment costs are about 0,243 million Euro.
Project will be financed by a combination of subsidy and bank loan. The subsidy of 0,156 mil-
lion Euro (64,11%) from the EU structural funds (through the Operation program of the Minis-



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try of industry) has been received. The loan agreement for 0,21 million Euro has been signed
with DnB NORD bank.
The project has been designed on the conceptual level in a Business plan elaborated by
consulting company in 2006. Public procurement procedures on project implementation will
be finished and contract will be signed. The modernized network will be operational in De-
cember 2007.

2.3.1.3.5 Renovation of a 5-stories multi-family housing building in Vilnius
A 5-stories multi-family housing building was built during soviet times, in 1967. It has been in
operation for 40 years already. The building is at Antakalnio str. 64, Vilnius, Lithuania.
Heated area of a multi-family housing is about 1958 m2. Heat demand for normative condi-
tions (in case of normative inside and outside temperatures) is 373,8 MWh. 202th Housing
owners association (HOA) is the investor of this project.
HOA will implement the following renovation measures: insulation of external walls and repair
of balconies, stairwell repair, replacing of hatches to the roof, repair of protective roofs above
entrance doors, heightening of parapets, hydro insulation, repair of ventilation shafts, recon-
struction of rainwater management system, making of roof pitch above the ground floor,
thermal insulation, replacement of windows and balcony doors, installation of automatic bal-
ancing valves, closing fittings and thermostatic valves, installation of a new, fully automated
heating system, implementation of energy efficiency measures to improve the comfort of
apartments (heat distributors, devices of remote reading of heat meters), partial repair of rain
drainage and sewage of the building, renovation and insulation of the building base and re-
pair of stair. Total energy savings will be about 189,5 MWh/a that will result in total CO2 re-
duction of 47,4 t/a.
Estimated costs of the renovation are about 0,35 million Euro. The project will receive a sup-
port from Vilnius city municipality (0,057 million Euro) and a government support (0,15 million
Euro). Commercial bank loan will be 0,113 million Euro. HOA funds (at least 10 % of the in-
vestment amount) are 0,035122 million Euro. HAO is under negotiations with several com-
mercial banks.

2.3.1.4 Latvia

2.3.1.4.1 DH refurbishment in Valmiera
Business plan for the refurbishment of DH pipeline system in Valmiera city. The objective of
the project is to reconstruct the DH network of Valmiera. The project includes the reconstruc-
tion of 8053 m route length of pipelines with the aim to reduce the heat losses, consumption
of natural gas and CO2 emissions as well as to improve in general the efficiency of the DH
system.
Investment costs: 2,13 million Euro
At the beginning the project will be financed by Valmieras Siltums, Ltd. that will take a com-
mercial loan in Hansabanka (loan amount 1.89 million Euro) for 10 years as well as will re-
ceive co-financing from the Valmiera city council of 25%.
Valmieras Siltums, Ltd. has applied and received approval for EU structural funds in case the
project will be implemented properly. EU financial support is 35% (0,64 million Euro).
The project will be implemented this summer 2007.




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2.3.1.4.2 Wind energy project in Vērgale parish, Liepāja region
Business plan for the installation of a 2 MW wind turbine in Liepaja region has been devel-
oped for the company Lenkas Energo. The objective of the project is to install a 2 MW tur-
bine in Liepaja region for green electricity generation.
Investment costs: 2,7 million Euro
The business plan has been submitted to Hansabanka for commercial financing. It is cur-
rently under evaluation.
The business plan has been submitted to Hansabanka (contact person Arnis Vītols and
Gunta Špengele) for commercial financing. Hansabaka decided to finance the project.
Ekodoma, in the framework of the CF-SEP project provided expertise for project evaluation
and assessment.

2.3.1.4.3 EE measures in multi-family building in Aizkraukle city
Implementation of energy efficiency measures in a dwelling building in Aizkraukle city. The
project aims to reduce heat losses and heat energy costs as well as to extend the lifetime of
the building. A public utility company “Lauma A” is one of the housing management compa-
nies in Aizkraukle city. “Lauma A” maintains 72 buildings with total area of 161 thousand m2.
According to the energy audit carried out by Ekodoma in the framework of the CF-SEP pro-
ject, only attic heat insulation of the dwelling house regarding building envelope fulfils Latvian
building standards and regulations (LBN 002-01). Characteristics of all the other elements of
the building envelope (walls, basement etc.) do not comply and perform according to the na-
tional normative. Additional the walls of the building have many cracks that will evolve in
more serious structural damage and terminate in even higher energy losses.
The main objective of the project is to reduce heat energy costs by reducing heat losses
through building envelope and to improve overall structural conditions and lifetime of the
building.
Total estimated investment costs are 130 000 Euro
Project will be financed by a combination of investor’s equity and commercial bank loan. En-
ergy audit has been submitted to SEB Unibanka (contact person: Ieva Kalniņa).

2.3.1.4.4 EE measure in multi-family building in Jekabpils city
Implementation of energy efficiency measures in a dwelling building in Jekabpils city. The
project aims to reduce heat losses and heat energy costs as well as to extend the lifetime of
the building. The cooperative of house owners "Dalija" is the housing management compa-
nies in Jekabpils city in charge of this project.
According to the energy audit carried out by Ekodoma in the framework of the CF-SEP pro-
ject, thermal resistance of the building constructions does not fulfill Latvian building stan-
dards and regulations (LBN 002-01). Characteristics of all the elements of the building enve-
lope (walls, basement etc.) do not comply and perform according to the national normative.
Partly in the building only windows have been changed.
The main objective of the project is to reduce heat energy costs by reducing heat losses
through building envelope and to improve overall structural conditions and lifetime of the
building.
Total estimated investment costs are 105 000 Euro.
Project will be financed by a combination of investor’s equity and commercial bank loan. En-
ergy audit has been submitted to SEB Unibanka (contact person: Ieva Kalniņa).




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2.3.1.4.5 Energy efficiency in the territory of Port Milgravis, Ltd Industrial area refur-
          bishment
The territory of Port Milgravis, Ltd is around 17 ha where different industrial activities are tak-
ing place like: drying of wood materials, supplying, unloading and storing of inert materials
and etc. After an energy audit carried our by Ekodoma in the framework of the CF-SEP pro-
ject the following project, consisting of 2 parts, was developed:
            Short term measures – demand side management activities (more precise data col-
            lection, training of employees etc.), installation of heat meters in one of the buildings,
            change of lighting system etc.
            Medium terms – improvement of buildings envelope in 2 industrial building
Investment costs: 34 200 Euro for short-term measures + 1,38 million Euro for mid term
measures.
Energy audit should be submitted to commercial bank for financing in summer 2007. Port
Milgravis is in contact with two commercial banks in Latvia and still has not taken a final de-
cision of project implementation.

2.3.1.5 Estonia

2.3.1.5.1 Insulation project for Tartu Science Park (TSP) buildings
The building has several office blocks as well as small scale high technology manufacturing
blocks. Some of the buildings are new and in a satisfactory condition, but most of the Sci-
ence Park is in a need of total renovation.
Main project objective is to reduce energy costs and to modernize the building thus increas-
ing its lifetime. By modernizing its buildings TSP will also have a more respectful image and
hopefully it will attract more customers to its clients.
Renovating measures are following:
     •      additional insulation on the walls will be 100 mm of EPS
     •      on the roof 100mm of EPS and 30 mm of stone wool
     •      installing new windows.
Total project cost is 740 000 EUR, which should give annually 1177 MWh of savings. Work
on the object will begun end of this year and will finish summer 2008.

2.3.1.5.2 Renovation of an apartment house with 59 apartments in Tallinn.
The renovation measures include additional wall insulation, roof insulation, replacing win-
dows and renovating the heating system. The apartment building is very complex and big,
thus making the renovating process complicating and expensive compared to other buildings
in Tallinn. Total project cost is 313 000 EUR. Financing was applied from Hansabank and
from Sampo. Sampo made the best offer (6 months Euribor +1,5%) and Hansabank unfortu-
nately stayed second (6 months Euribor +2%).
Also for this project it is possible to receive irredeemable aid from KredEx, but that is certain
only after the project is finished. The irredeemable aid is up to 10% of the total project cost,
but KredEx gives them after the renovation work is done and they have their own criteria to
whom they will give it.
All the necessary permits have been organized by ESB, also bank contract has been signed
and the renovation process has already started. At the moment 60% of the work has been
done and the rest will be done before October 2007. So far the construction has progressed
according to our plan with very little problems.

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2.3.1.5.3 New 6,9 MW wind power plat in Kunda
Kunda is located on the coast of eastern Estonia. Project consists of erecting three 2,3 MW
wind turbines. At the moment negotiations are being held with the Estonian Cell, electricity
network operator. Project is unique because the energy will be sold to a “Pulp and Paper fac-
tory”. Total cost of the project is 6,6 million Euro, out of which 20-30% will be paid by inves-
tors.
Although the location is perfect for the selected wind turbines, financing is also available from
different banks (which makes it “bankable”), but local cultural activists do not think that the
location is ideal. Approximately 2500 years ago there were held burial ceremonies and a
group of cultural activists believe that the place should be left as it is and decided to sue
Oceanside, who is in charge of the project. At the moment the argument has led to Supreme
Court of Estonia and the decision should be done on the 13th of September. The Circuit
Court ruled for Oceanside, but the activist weren’t satisfied, so everything will be decided by
the Supreme Court.

2.3.1.5.4 Insulation of the roofs of the oil tanks in heavy fuel terminal
Total of 39 oil tanks near Tallinn have no roof insulation installed and very poor wall insula-
tion. Energy audit and thermal images were made and they show massive amount of heat
coming out of the tanks. The tanks have to be maintained at a temperature of at least +45oC,
otherwise the oil will congeal. Total cost of the project is 2,91 million Euro and the payback
period is calculated averagely to 6,9 years.
Project will be financed by bank and by site owners, at the moment bank and the site owners
are negotiating with the terms. Banks are interested in financing the site, because of the
positive background of the company and because of the short period of the payback.

2.3.1.5.5 New 3,6 MW wind power plant in Aseri
The site is on the coast of eastern Estonia. The project includes an erection of two Vestas
V90 1,8 MW wind turbines. Total cost of the project is 5,4 million Euro, where 185 000 EUR
(3% of the project) is irredeemable aid from Environmental Investment Centre (EIC). EIC is
also mentioned in the Financial Resources Manual. 15% of the remaining costs will be fi-
nanced by investors.
All the necessary permits have been organized with ESB’s help (construction permit, connec-
tion to the grid, also a contract have been signed with Vestas). At the moment construction
has begun at the site. Foundations are being prepared for the wind turbines. Wind turbines
should be erected and operational within 8 months
Wind turbines should annually save 7 487 tons of CO2

2.3.2 Case Studies – project summaries
The 5 selected projects in each participating country have been presented in form of short
summary. These presentations are attached to the Best Practice Manual available on CD
and can be downloaded from the project pages.3




3
    www.svn.cz/CF-SEP/Outputs.htm

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2.4 Bank training
A set of bank trainings was organised in each country for selected banks. The main objective
of the training was to provide the bank staff useful information on technical aspects and risks
of EE and RES projects, current legislative and market conditions for EE and RES project
development.
The target groups were the loan officers and credit risk managers.
The main training areas were the following :
    • General information on energy sector with clarification of relationship between different
      market shareholders, their role and responsibilities.
    • Key legislation, changes in the legislation relevant to EE and RES investment (national
      legislation, feeding tariffs and conditions for their guarantee).
    • Market conditions for development of EE and RES projects, risks and efforts of such
      investment:
         o      Project cycle in energy sector
         o      Support programmes and its future trend, effort and influence on EE and RES pro-
                jects implementation
         o      Specific technical and financial aspects of RES and EE projects (market potential,
                available technologies and their technical and economic aspects
         o      technical, economic, operational, market and other relevant risks divided into areas:
                - wind power plants
                - small hydropower plants
                - biomass projects
                - biogas projects
                - solar energy
                - EE projects in industry and communal sector
                - CHP projects
    • Available national and international support schemes for investors
    • Analysis of case studies – specific examples


The presentations in national languages were provided to the participating banks.
They are not automatically available to public dissemination, but in a generalized form can be
provided upon request. Expression of interest should be addressed to contact persons of
respective CF-SEP partner companies (see the contact information at the end of this report).




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2.5 Project web pages
The project web pages are located at the company web pages of participating partner com-
panies and also at public servers to ensure a broader publicity. The respective links are
summarized in the following table:

 Country            Partner         Partner web site       Project web site
 Czech              SEVEn           www.svn.cz             www.svn.cz/CF-SEP
 Republic                                                  www.biom.cz/cf-sep

 Slovakia           Energy Centre   www.ecb.sk             http://podnikanie.etrend.sk/financovanie-v-energetike
                    Bratislava
 Lithuania          Eksergia        www.stp.lt/eksergija   www.stp.lt/eksergija/energ_europ_en.html

 Latvia             Ekodoma         www.ekodoma.lv         cf-sep.ekodoma.lv/CF-SEP

 Estonia            Energiaaudit    www.energiaaudit.ee    www.energiaaudit.ee/new2/sisu.php?artID=79&lang=eng

The web pages give the basic information on the structure of the project and activities per-
formed and also provide links for downloading all publicly available project outputs.




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3 Conclusions
The five countries that participated on this project have much in common. They all came
trough a similar political and economic development in the last two decades from a central-
ized to market oriented economy and they all joined the European Union in 2004. The EU
membership on one hand includes the obligation to harmonize the national legislation with
the EU directives, which in the energy sector means adopting the targets for improved en-
ergy efficiency and increased share of the renewable energy sources, on the other hand
opens significant financial sources from EU structural funds to co-finance the projects.
The first conclusion drawn from the experiences gained during the development of a num-
ber of concrete projects is that getting an investment subsidy for the EE and RES projects
is the highest priority for most of project developers. The initial phase of project develop-
ment serves usually for elaborating a well prepared application for subsidy. Obtaining the
subsidy means improved economic results of the project and thanks to it, in most cases,
passing the threshold of economic feasibility, which in turn is the basic precondition for com-
mercial financing. The decision on granted subsidy is also a strong leverage for negotiating
the conditions of a bank loan. For the banks it represents taking away a significant share of
the risks.
Most of the banks are still deciding based on assessing the client rather than assessing the
project. This is especially true for small and medium sized enterprises, which have difficul-
ties in accessing the necessary financing. A frequent situation with a RES project is a newly
founded company with no financial history. To be able to provide financing for such projects,
the banks need a profound analysis of the technical and economic aspects including the as-
sessment of the risks involved. The banks do not have sufficient experience and staff ca-
pacities to perform these analyses. Second conclusion: Bank training courses helped to
better understand the situation from the legal and technical perspective but the banks
will need continued assistance from experts to assess concrete projects. This repre-
sents a large potential field for qualified consultants. Even for well prepared applications with
all aspects of the project addressed and commented, the banks will need an independent
verification of the facts presented in submitted business plans.
Recommendations to potential investors/developers can be summarized as the third con-
clusion: Start to prepare the financing in parallel with the technical project develop-
ment. Preliminary consultations with the banks might help to better structure the project in
terms of realization stages, business entities involved and future contractual relations. Do
not hesitate to engage experts in assisting to prepare the concept and details of the technical
design and economic evaluation.
The 18 months’ duration of the CF-SEP project was too short to be able to initiate, develop
and follow the implementation of larger projects to a successful completion. However, sev-
eral concrete projects have been supported in various stages and many of them, as we
hope, will end up in success thanks to participation in CF-SEP.
Dissemination of information showing the special features of EE and RES projects and over-
coming the barriers between project developers and financial institutions is a continuing
process. The situation is slightly improving and will continue to do so also thanks to efforts
and outputs prepared under the CF-SEP project.




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4 Contact information


Partici-        Participant       Address                Family name,        Telephone N°         Fax N°               E-mail
pant N°         Short name        of Participant         first name
                                  Americká 17,
                                                         Málek,
1               SEVEn             Praha 2, 120 00                            +420 221 592 523     +420 224 247 597     bohuslav.malek@svn.cz
                                                         Bohuslav
                                  Czech Republic
                                  Ambrova 35,
                                                         Herdová,
2               ECB               831 01 Bratislava,                         +421 2 59 30 00 91   +421 2 59 30 00 97   Herdova@ecb.sk
                                                         Bronislava
                                  Slovakia
                                  A. Gostauto street
                                                         Martinaitis
3               Eksergija         11-354, 01108,                             +370 5 2626738       +370 5 2626738       ex@eksergija.stp.lt
                                                         Vytautas,
                                  Vilnius, Lithuania
                                  Zentenes Str. 12-49    Rochas
4               Ekodoma                                                      +371 6 7323212       +371 6 7323210       Claudio@ekodoma.lv
                                  Riga, LV1069 Latvia    Claudio
                                  Tartu mnt 80j, Tal-    Pärn
5               ESB                                                          +372660 66 56        +372660 66 53        toni@energiaaudit.ee
                                  linn, 10112, Estonia   Toni




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