EIB and the Energy Sector European Investment Bank – 3 rd MEDREG-IMME Seminar – 11-12 September...

EIB and the Energy Sector

European Investment Bank – 3rd MEDREG-IMME Seminar – 11-12 September 2013 - Tunis 1

EIB and the Energy Sector


1) Policy context Inside the European Union Outside the European Union

2) Portfolio Inside the European Union Outside the European Union

3) Perspectives for RE and EE in the MED region Challenges Instruments EIB eligibility parameters

Policy priorities since 2007 => 2012:

Renewable energy – RE

Energy Efficiency – EE

Security of energy supply => energy networks

RDI

Outside the EU: Supporting climate action (RE, EE, mitigation / adaption) Supporting economic growth Contributing to security of energy supply

significant increase in funding for RE and EE

EIB Lending to the Energy Sector - Context


Energy Lending: Portfolio

European Investment Bank – 3rd MEDREG-IMME Seminar – 11-12 September 2013 - Tunis


EIB Energy Lending by Area2007-2012 Signatures

2007 2008 2009 2010 2011 201202468

101214161820

inside EU outside EU

EUR bn


EIB Energy Lending by Sector2007-2012 Signatures

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2008 2009 2010 2011 2012

EE RE Energy Grids FF Power generation Others

The EU bankRE Signatures by Sector 2007 – 2011 (%)

3%

10%

6%

2%

8%

3%

6%

29%

7%

2%

25%

Geothermal

Hydro

Biomass

Biomass MFG

Solar PV

Solar CSP

Solar MFG

Wind

Wind offshore

Wind MFG

Other


EU: EUR 53 bn

RE34%

EE10%

ENERGY NETWORKS

40%

THERMAL POWER

11%

OTHERS6%


Cumulative EIB Energy Lending 2007-2011Breakdown by Area and Sector

Outside EU: EUR 10 bn

RE40%

EE10%

ENERGY NETWORKS

34%

THERMAL POWER

15%

OTHERS1%

Key energy objectives:

Supporting climate action Supporting economic growth Contributing to EU security of energy supply

Specific Initiatives (e.g.. MSP), Instruments (e.g. GEEREF) and TA


ACCESSION & PRE-ACCES-

SION25%

SOUTHERN NEIGHBOURS

32%EASTERN

NEIGHBOURS & RUSSIA

6%

ALA28%

ACP & RSA10%

EIB Energy Lending Outside EU, 2007-2011Regional breakdown and objectives

EUR 10 bn cumulative 2007-2011 signatures

Perspectives for RE/EE in the FEMIP region



EIB in MENA => “FEMIP”

• “Facility for Euro-Mediterranean Investment and Partnership” (FEMIP) is the EIB financial arm in the Mediterranean partner countries*

• FEMIP supports the modernisation and opening-up of Mediterranean partner countries economies

• FEMIP has two broad priorities: 1 Provision of direct support to the private sector 2 Creation of an enabling, investment-friendly environment

*Algeria, Egypt, Gaza/West Bank, Israel, Jordan, Lebanon, Morocco, [Syria] and Tunisia


Energy challenges in the FEMIP region

MPCs: Algeria, Egypt, Jordan, Israel, Lebanon, Morocco, Syria, Tunisia, West Bank/Gaza

• Energy Challenges in the Mediterranean region• Growing urban population• Growing energy consumption• Inefficient use of energy

• Investing in EE and RE as a “Strategic” goal

The EU bank

FEMIP - Breakdown of energy loans

Electricity generation

38%

Renewable energy8%Electricity

transmission and distribution

14%

Liquefied natural gas production

20%

Gas transmission and distribution

20%

Electricity generation

Renewable energy

Electricity transmission anddistribution

Liquefied natural gas production

Gas transmission anddistribution


Building and upgrading national energy infrastructure Strengthening regional energy interconnections and

developing new energy routes Exploiting the region’s exceptional renewable energy potential:

sun, wind and hydropower Optimising sustainable energy development in a way that

meets environmental concerns

Last 10 years: EUR 5 bn +to energy sector

The EU bank

Mandates from the EU for external lending: broad range of instruments from senior loans to equity Direct lending for large individual projects: e.g. wind Global & Framework loans to finance small and medium sized projects

Advisory services TA resources available for FEMIP from the EC, and country Donors

(FEMIP Trust Fund) Specific instruments

GEEREF, etc. Support to specific initiatives: Mediterranean Solar Plan (MSP)

MSP-PPI – Advanced project preparation (since March 2012)

Financial Instruments

The EU bank

15

EIB Projects Eligibility Criteria

1. Benefit from appropriate regulatory framework and permitting processes

2. Be relevant to EU energy objectives & be technically sound Renewable energy, energy efficiency, security of supply, external

mandates

3. Be economically and financially viable

4. Comply with EIB’s Procurement Policy

5. Comply with EIB’s Environmental and Social standards

The EU bank“Benefit from appropriate regulatory framework and permitting processes”

A clear and stable RE support framework is key Limit exposure to energy price volatility Regulatory changes should not create regulatory uncertainty (e.g.

changes in PV tariffs) RE moves from marginal to mainstream:

How will regulations change to accomodate it?

Predictability and transparency of permitting process and other regulatory frameworks Experience shows that financing is flowing when RE regulatory

frameworks are clear and stable

The EU bank

“Be relevant to EU energy objectives & be technically sound”

Fit with NREAPs and overall national / regional RE strategy in MT/LT

Mature or emerging technologies Financing easier for technologies with proven long term track record (on-

shore wind, PV) More difficult for biomass, technologies in the early market penetration, or

innovative or new RE markets Resource modelling and (feasibility) studies to be conducted by

qualified specialists with proven experience For example for on-shore wind: at least one year on on-site wind

measurements, preferably hub height

The EU bank

“Be economically and financially viable”

Cost of energy to be economically competitive with the fossil fuel alternative Incl. environmental externalities and security of supply benefit

Project to be financially bankable Impact on profitability from:

Regulatory changes to RE support systems Constraints

The EU bank

“Comply with EIB’s procurement policy”

Obtain the economically most advantageous offer (best value for money) in purchasing the works, goods and services necessary to implement a project

Principles: Competition as a basis to obtain attractive offers Fairness vis-à-vis competitors Appropriate selection process

Most logical criterion: net present cost of constructing and operating the project component over its lifetime

Transparency and accountability (well defined and documented)

http://www.eib.org/attachments/thematic/procurement_en.pdf

http://www.eib.org/attachments/thematic/procurement_en.pdf

The EU bank

“Comply with EIB’s Environmental and Social standards”

Comply with EU policy Principles, standards and practices, including the requirements of local

legislation for the protection of the environment Satisfy social safeguards

Potential impacts need to be acceptable incl. Public consultation Natural habitats Forestry Indigenous people Involuntary resettlement Child and forced labor Cultural heritage Waterways Climate change

The EU bankConclusions


EIB is ready to contribute significantly to the financing of EE, RE and energy projects in the Mediterranean region

Three key criteria for financing (good) RE projects Regulatory framework and permitting processes E&S (& procurement) guidelines Economics and financials

EIB and the Energy Sector European Investment Bank – 3 rd MEDREG-IMME Seminar – 11-12 September...

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