The European Bank for Reconstruction and Development (EBRD) is lending €11mn to help set up the Romanian Industrial Energy Efficiency Company, one of Romania ‘s first energy services companies (ESCOs) to develop and finance energy efficiency investments in the industrial sector.
The new company, known as RIEEC, is predominantly owned by the Romanian-American Enterprise Fund (RAEF), an equity fund in Romania established in 1994 by the US Congress as a private US corporation to promote free enterprise and entrepreneurship across Romania .
The EBRD loan will be used to finance investments in modern on-site co-generation systems of creditworthy Romanian industrial companies in order to produce cheaper, more efficient and reliable electricity and heat with low technological risks. Moreover, these systems will be more environmentally friendly than traditional sources of electricity. The investment, operating and financing costs will be repaid out of the resulting energy savings. The financing is off-balance sheet.
Jacquelin Ligot, head of the energy efficiency team at the EBRD, says the project is an example of the bank’s mandate to support industrial energy efficiency schemes in Eastern Europe , where there is significant scope for such investments. These investments tend to provide a “win/win” solution for clients, as the resulting energy savings are used to finance the cost of making the investment, while the reduced operating costs directly enhance the companies’ competitiveness. Ligot added that the success of RIEEC has the potential to encourage private-sector financing of other industrial energy efficiency projects.
Horia Manda, senior vice-president of RAEF, says that the EBRD loan is crucial for the establishment of RIEEC and for the success of its innovative approach to industrial energy efficiency services. The bank’s unique experience in setting up ESCOs and other energy efficiency financing schemes in several eastern European countries has been very helpful adds Manda.