|
 Lack of established commercial financing markets is a common
barrier to the development of robust, renewable energy and energy efficiency
markets in developing countries. To address this key market barrier, the GEF
and the IFC have partnered since 1996 to engage and equip local commercial
banks to develop new lending businesses to finance sustainable energy projects.
After being successfully piloted in Hungary, a GEF-IFC sustainable energy
financing program is being replicated in seven countries: China, Czech
Republic, Estonia,
Latvia, Lithuania, Russia, and Slovak Republic. Using a combination of dedicated
credit lines, partial guarantees, and technical assistance tools, the GEF-IFC
partnership has leveraged $33 million in GEF-sponsored guarantees to support
a target of $560 million in bank financing in the above countries.
One of the project’s main impacts has been the development of self-sustaining
lending markets for commercial sustainable energy projects. In Hungary, independent
evaluations indicate that commercial banks participating in the GEF- IFC project
have directly financed as much as $120 million in sustainable energy projects.
As the Hungarian market has evolved, so has the degree of leverage and impact
provided by the program’s guarantee facility. Most recently, a GEF-IFC
partner, OTP Bank, has committed $250 million to upgrade the energy infrastructure
of school facilities across Hungary. This effort is supported by $125 million
in IFC-provided commercial guarantees, while relying on only $2.5 million in
GEF guarantees. In the Czech Republic, a bank participating in the program
has financed the first ever commercially financed wind power project, opening
up that market for follow-up projects.
Equally importantly, the GEF-IFC partnership has been steadily improving
program effectiveness. Although the first programs required as much as
50 percent guarantees
to leverage third party financing by a factor of two to one, more recent
programs (such as in Russia) are providing as little as 2 to10 percent
guarantees, while
leveraging third party resources by a factor of over 12 to 1. Because
of these results, the IFC and the GEF are considering adapting this model
to other markets
in Asia and Latin America, beginning with the Philippines in fall 2006.
Building on the IFC-GEF experience, the IFC will be hosting a workshop
for eligible GEF-funded program teams supporting sustainable energy
finance in
Central Europe. The workshop focusing on common challenges encountered
and share lessons learned is scheduled to be held in September 2006
in Budapest.
Interested project team staff can contact Beatrix Von Heintschel, IFC-Budapest:
bvonheintschel@ifc.org.
For more information on GEF’s work in renewable energy, please see: www.theGEF.org/energy
|
