2 davor kunc wbif presentation to undp edited
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EU Enlargement
Sustainable Energy in the Enlargement
Context
UNDP Conference on Sustainable Energy in SEE9-10 December 2013
EU Enlargement
Content
• Strategy and Policy: energy acquis (4 mins)• Operations: energy project portfolio (10 mins)• Going forward (3 mins)
EU Enlargement
Strategy and Policy: Union's Energy Acquis
EU Enlargement
• Energy Community Treaty• Guiding the energy policy in SEE• Signatories: EU and the countries of SEE
• Energy Community• extends the EU internal energy (electricity and gas) market to South East Europe and
beyond• overall framework to guide the necessary reforms and promote investments• makes a significant contribution to security of supply in the wider Europe
• Energy Community Secretariat• supports the Contracting Parties in fulfilling their obligations and has established a
number of working groups and task forces to facilitate their efforts: Gas, Oil, Electricity, Investments, Energy Efficiency, Renewable Energy, Security of supply, Competition, Environment, Regional Energy Strategy.
Energy Policy in South East Europe
EU Enlargement
SEE 2020: RE and EE Targets
• Energy efficiency: • savings of 9% of final energy consumption, by 2018
• Renewable energy: • to be achieved by 2020• Albania 38 %, Bosnia and Herzegovina 40 %, Croatia 20 %, Former Yugoslav
Republic of Macedonia 28 %, Montenegro 33 %, Serbia 27 %, Kosovo* 25 %
• Energy intensity of GDP: reduce to the World average (in 2010: 0.25 tonnes of oil equivalent per 1000 USD (2005) of GDP).
• Unit cost of energy: decrease by improving average electricity thermal generation efficiency to 38% and increasing utilization rates to over 74%.
• Terms of trade in energy: improve (natural gas import price to NBP index and electricity export prices to over EEX average).
• Hydro power: create more value by increasing share of variable energy to over 45%.
EU Enlargement
• Instrument for Pre-Accession (IPA) recognises that infrastructure investments are vital for:
• socio-economic growth;
• integration of the region into the EU’s internal market for energy (ECT); and
• to facilitate diversity and security of supply for the EU
• Support has been available under national IPA and multi-beneficiary (regional) IPA
Importance of Infrastructure Investments
EU Enlargement
Projects of Energy Community Interest (PECIs)
• Priority energy infrastructure investments• Endorsed by all SEE6 beneficiary countries• Used to determine eligibility for grant support• Mirroring similar PCI list of the EU• However, SEE6 not having the equivalent Connecting
Europe Facility: available to EU MS as grants for studies, special lending, various forms of loan guarantees, risk sharing facilities, eventually project bonds
EU Enlargement
Operations: IPA Regional - WBIF, REEP, GGF
EU Enlargement
Sectoral approach • Component structure replaced by comprehensive country strategies
• Move towards a logic of (co)financing policy strategies instead of individual projects
Single pipeline• Rolling investment plans for each sectors linking to regional strategies
(TEN-T Transport, Energy)
• Coherence of assistance and IFI/donor coordination
Increased role of WBIF• High Level Meeting confirmed central role of WBIF as main vehicle to
reinforce cooperation on investments in the region
• More resources to be channelled through WBIF
Programming of IPA 2
EU Enlargement
• Total IPA budget ~€12 billion• 7 bio for TR, 5 bio for SEE6 /7 years• 715 mio for SEE 6 p.a. /6 countries• 120 mio for SEE 6 per country p.a. /2 (REG vs. NATL)• 60 mio for per country annually for regional IPA
• Estimated investments needed in energy: between € 30-40 bio over 2014-2020
IPA 2: Figures
EU Enlargement
• Western Balkans Investment Framework: overarching financial vehicle of regional IPA
• WBIF blends grants and loans to expedite priority investments in key sectors
• WBIF Stakeholders: beneficiary countries, EC, IFIs and bilateral donors
• Applications for support come from beneficiary countries
What is the WBIF?
EU Enlargement
WBIF Operating Framework - Stakeholders
EU Enlargement
WBIF Operating Framework – Application Process
Co
nst
ruct
ion
Joint Lending Facility•Loans
•EC IPA
•Government funding
Project Preparation •Feasibility studies
•Designs
•Tender documentation
•Supervision
•Assistance to PIUs
Joint Grant Facility •Technical Assistance
•Investment grants
•Interest rate subsidies
•Assistance to financial intermediaries
Beneficiaries
National and regional projects
Resources
Bilateral donors EU IPAIFI grants
EU Enlargement
WBIF Operating Framework – Governance Structure
WBIF Secretariat – DG EnlargementSupports the administration of the WBIF
Technical AssistanceInfrastructure Project Facilities I, II and IIIIFI Coordination Office
EU Enlargement
169 grants supported by WBIF 300 M€ grants allocated to approved projects More than 2.7 billion € loans signed to date WBIF pipeline contains more than 13 billion € total
estimated investments
Select achievements – WBIF grants to date
EU Enlargement
Distribution of grants by TYPE
EU Enlargement
Distribution of grants by SECTOR
EU Enlargement
Distribution of grants by BENEFICIARY
EU Enlargement
Tracking development of the WBIF pipeline
EU Enlargement
Joint Lending Facility Growth in signed loans (€ billion)
EU Enlargement
• 41 grants awarded for energy related projects• Grant support € 71.8 million, 27% of all grants• Total signed loans € 270 million; estimated total
investment € 3.6 billion• Projects include electricity transmission (11), gas
transmission (8), district heating (7), renewable energy (10), energy efficiency (5)
Energy in the WBIF
EU Enlargement
Growth in signed loans by sector (€ billion)
Data for November 2011, 12, 13
EU Enlargement
Growth in total estimated investment of WBIF pipeline (€ billion)
Data for November 2011, 12, 13
EU Enlargement
• Pipeline has grown steadily over total 10 rounds of calls for proposals
• Pipeline of loans currently 3 times larger than original target
• Project preparation is progressing• Signed loans increasing, currently at > €2,7 billion from
2,3 billion in 2012• 34 projects at tendering/construction
Select achievements – WBIF pipeline
EU Enlargement
Initiated 2013 with EBRD. Total EC contribution €23,5 mio. Window I – Policy Dialogue
• €6m for technical assistance, facilitate policy dialogue with all the authorities• regulatory frameworks, market barriers, investment in EE, ESCO markets
Window II – Credit Line (WeBSEFF II)• €75m credit line framework • to local financial institutions for onlending to smaller EE and RE projects; private, public• WBIF in addition provides €11.5m grant funding for TA and investment incentives
Window III – Direct Financing (WeBSEDFF)• €50m to replenish WeBSEDFF funding• medium scale RE and EE improvements in industrial enterprises; ESCO projects• Grants to the amount of €6.35m to fund TA and investment incentives
Investment Facilities: Regional EE Program (REEP)
EU Enlargement
Initiated 2009 with EIB, KfW. Total EC contribution €20 mio.
Difference: investment fund. EU's 20/20/20 energy targets: financing for EE and RE
projects to reduce CO2 emissions and energy consumption Credit lines via local commercial banks Direct financing TA Facility
Investment Facilities: Green for Growth (GGF)
EU Enlargement
Select achievements in EE and RE:Example 1: Plum Factory (WBIF/REEP, Serbia)Example 2: Furniture Factory (WBIF/REEP, Serbia)Example 3: Wind Farm (WBIF, Macedonia)
EU Enlargement
Select achievements – WBIF projects under construction
Wind Park Bogdanci – the Former Yugoslav Republic of Macedonia
Installation of 16 machines with a capacity of 36.8MW and an annual output of 100GWh of renewable energy
Will eventually grow to 25 machines with a capacity of 52.5MW
WBIF support: i) Feasibility study; ii) Wind measurement studies; iii) Environmental and social impact analysis; iv) Optimal machine positioning and site layout
Financesi) WBIF- IPA grant: € 400,000ii) IFI loan (KfW): € 33,000,000
Estimate total investment: € 75,000,000
Project partners: ELEM | KfW
Status: Constructed – Wind Park stated operations in Summer 2013
EU Enlargement
WBIF Going Forward: Adapting to a Changing Operating Environment
EU Enlargement
Macro-economic Outlook – Growth projections in the SEE6
• Recession in Euro area has affected growth prospects for SEE6 countries.
• IMF predicting very modest economic recovery. • Will affect:
Investments - public and private Private Consumption Scope for government activities
EU Enlargement
• Immense scale of financing required• Rising public debt, several countries nearing or exceeding 60%
of GDP• Impact of IMF programmes• Current expenditure increasing, capital expenditure being cut• Overall investment climate & competitiveness• Limited fiscal space & scarcity of grant funds
Issues Arising
EU Enlargement
Fiscal SpacePublic Debt as % of GDP 2012 (IMF)
EU Enlargement
GDP Growth (Source IMF)
EU Enlargement
Macro-economic Outlook – Implications for the WBIF
Austerity programmes were implemented mainly at the expense of public infrastructure development.
Greater emphasis on the need for proper prioritisation of investment projects (current and planned)
Enhance links with regional, national and sectoral policies and strategies (SEE 2020, ECT, Transport. CEFTA etc)
Shift of focus to expediting priority investments under preparation
EU Enlargement
•Detailed Review of the WBIF Pipeline•Assess options to use innovative financing facilities (starting with PPPs)•Recommend changes to WBIF structures and procedures to take account of lessons learnt & impact of external environment & processes
WBIF Task Force – Main Tasks
EU Enlargement
WWW.WBIF.EU