RuSEFF: How to Make Investments Profitable

Moscow, Russia, March 19, 2014 --( RuSEFF – The Russian Sustainable Energy Financing Facility – was established by the European Bank for Reconstruction and Development. More than 700 projects were realized under the Program since July 2010 with a total investment volume of USD 200 million/RUB 6 billion. The most successful year for the Program was 2013 – at this period the total volume of financed energy efficient projects doubled.

Among the most important sectors for the financed projects are the following ones: construction (23%), machinery (13%), light industry (11%), and transport sector (9%). The focus of energy efficient investments lies in replacement of outdated production equipment (18%) and special technology (17%), the modernization of the heating and lighting systems (10%), replacement of outdated transport means (15%), and - last but not least – improvement of energy efficiency of old buildings (10%). These projects have significant regional diversification - more than 60 % of all investments have been realized in Central (15%), Volga (21%), and South Russia (25%).

The environmental effect of the realized under RuSEFF projects cannot be neglected. They led to energy savings totaling at 1 mln MWh in fuel equivalent, or the annual power consumption of approximately 120,000 households. As the result of these investments, around 250,000 tons of CO₂ were avoided, which represents the equivalent of the greenhouse gas exhaust of 125,000 cars in a year.

RuSEFF Program proved that energy savings not only make a contribution to the environmental protection, but also have a sufficient level of profitability for the investors. The average level of energy savings in realized projects is about 20% with IRR exceeding 20% and payback period of 3-5 years.

One of the examples of RuSEFF impact to the sphere energy efficiency was the project of equipment replacement at wood processing company in Siberia with the total amount of investments equal to USD 4.25 mln, and energy savings of 9,000 MWh (fuel eq.). The payback period of the Project is 5 years.

The special secret behind the RuSEFF program lies in combination of long-term funding with professional technical support through local and international experts who help to uncover energy saving potential and to safeguard that the investment into energy efficiency becomes profitable for the investor – even without the help of any state subsidies. It is also important to highlight that this support is granted free-of-charge to clients of the participating financial institutions.

There are currently nine Russian financial institutions offering long-term funding for energy efficient projects under the Program: Rosbank, UniCredit Leasing, NBD Bank, Bank Center Invest, Bystro Bank, BOT Lease, Asian Pacific Bank, Orient Express Bank, andTranscapitalbank. But RuSEFF will not become a closed shop. Three more banks are planning to join RuSEFF this year.

To sum up, RuSEFF energy efficient modernization has proven to be successful. However, it is just the first step on the way to reveal a great potential for energy savings of small and medium-sized enterprises in Russia. The Russian financial sector is invited to take advantage of this potential by financing energy saving investments.
Catherine Tarasiuk
+7 499 409 57 47