* * EBRD leading renewable energy revolution >> New 4 Energia plant in Latvia >> New projects agreed by WGBC and EBRD >> Poland hosts EBRD meeting >> Armenia to benefit from EBRD loan >> EBRD provides loan to Kobuleti >> New sewage systems brought to parts of Slovenia >> Businesswomen receive welcome boost in Croatia >> Big boost for Lithuanian e-communications market >> Regional Energy Market should be established in Baltic Region >> Czech government announces new efficiency programme >> Renewable energy hits Croatia >> EBRD investment ensures green future >> €11 million loan to provide clean water to Bosnia and Herzegovina >> Romania set for daily fines of €38,000 >> CIMC opens production plant in Poland >> Slovenia aim to reduce building’s energy usage by 30% by 2030 >> Mapei announces HUF 1bn (€3.2m) investment in Hungary >> Mátrai Erőmű opens HUF 6.5 bln. solar power plant >> Elektroprivreda Srbije (EPS) receives €200 million loan from EBRD >> Mátrai Erőmű opens HUF 6.5 bln. solar power plant >> Hungarian government, Grundfos signs strategic partnership agreement >> GVH greenlights Veolia’s purchase of GDF Suez’s plant >>Bulgaria opens new gas transmission pipeline >> EU gives Romania a due date to close and/or restore 109 landfills > Bulgaria Expects to Choose Builder of Gas Link to Romania > EIB extends backing to SME and mid-top undertakings through BS in Slovenia >WOOD-TEC 2015: 14th International Fair for Wood and Furniture Industry in Brno > Laesti raises more capital for Sauga sawmill in Pärnu, Estonia > Poland’s BZ WBK Lease gets loan of €50 million for sustainable energy projects >Bosch invests HUF 9.3 billion in plant expansion > EBRD increases backing for sustainable energy in the Slovak Republic > EBRD targets increased energy savings in Ukraine >> EBRD and EU aim to and develop the water and wastewater services in Romania’s Ilfov County >> Enea to purchase an additional wind farm in CEE >> UPB Energy to build a EUR 30 biomass energy plant in Latvia >> REC celebrates 25 years, embarks on route for the foreseeable future >> Low-carbon city forum focuses on green development >> WIL has many years of expertise in the tyre recycling business >>EBRD and EU look to improve Kazakhstan’s long term source of water >> REC celebrates 25 years, embarks on route for the foreseeable future >> WIL has many years of expertise in the tyre recycling business > RWE to expand wind power portfolio in Poland > Environment : EU Commission brings POLAND and SLOVENIA to The court for e-waste failings >EUR 35 mln will be invested in a Romanian eco-residential complex >> Brodosplit Shipyard in the Adriatic port of Split >> EBRD Transition Report 2013: Emerging economies can break through reform stagnation >> Finish company Fiskars thanks MOL for 350% increase in sales >> Ikea largest store in Poland is completed in Wrocław >> EBRD extends extra €15 million to Raiffeisenbank (Bulgaria) for energy efficiency projects >> Growth returns to Central Europe as eurozone exits recession >> EBRD considers financing first major wind farm in Kazakhstan >> Immochan plans to build shopping centers in CEE >> Swiss electric giant LEM opened a new high-tech factory in Bulgaria >>EBRD lends Rb 1.7 billion to UniCredit Leasing Russia for energy efficiency >> Water supply and wastewater treatment in mid-sized municipalities in Serbia funded >> EBRD strengthens drive for energy efficiency >> Agreements with close Kazakhstan , Agreements with Taiwan developing >> Taiwan working closer with the EBRD on investments in Central Eastern Europe to help find Partners >> EBRD and Ministry support small business in Russian Far East >> Germany building a lead in Ukraine >> Enel Green Power builds a new interconnected PV plant in Romania >> Joint IFI Action Plan for Growth prepares emerging Europe for “competitive and prosperous future” >> China and Poland now connected by new Cargo Train links >> Poland the best economic performer in Europe during the last 20 years >> Poland:luxury goods sales increasing in Poland >> IFIs on track to deliver on investments for growth in Central and South Eastern Europe >> EBRD hails success of St. Petersburg clean river project >> EBRD channels €15.5 million to support major biomass project in Ukraine >> E-Commerce giant investing in Poland >> EBRD co-finances expansion of PEPSA wind farms in Poland >> Is Emerging Europe becoming a “new safe haven”? >> Eastern Partnership transport ministers meet at EIB >> EIB continues to support the upgrading of Sofia’s municipal infrastructure >> EIB supports more efficient power generation and emissions reductions in Russia >>EBRD backs Russian oil-field services company’s Eurobond >> EBRD supports renewable energy project in southern Ukraine >> EBRD President seeks more Asian investment in EBRD region >>New Trade and Banking deals between China and Hungary >> Taiwan Taipei China and the EBRD >> China Invests more into Bulgaria >> EBRD steps up support for energy efficiency investments in Belarus >> Clean water for Romania’s Bihor county >> EBRD issues US$ 250 million “Green Bond” >> Water and wastewater modernisation in Dolj >> EBRD supports bottled water producer in Azerbaijan >> Report: The Waste Water Industry of Poland >> Hyundai looking to invest in Waste Treatment in Serbia >> EBRD invests in Russian IT outsourcing provider MAYKOR >> Joint investment with the Russian Direct Investment Fund and CapMan Russia II Fund >> €10 million loan for Albania’s Credins Bank >> Garbage Management Is a Problem in Russia >> Eastern Europe countries must invest in the economic upturn-GfK >> EBRD supports energy efficiency lending and trade >> Serbia’s economy reindustrialization strategy includes the development of IT >> Rompetrol wins US$1.1bn contract to modernise Kazakh refinery >> EBRD helps Ecoprod generate power from biogas >> The largest oil and gas mine in Poland launched >> Ukraine government approves Energy Strategy until 2030 >> Romania aims to raise €600m from Romgaz IPO in November 2013 >> Non-residents’ direct investment in Romania estimated at EUR 666 million >> EBRD helps Ecoprod generate power from biogas Ukrainian agribusiness firm turns waste into electricity >> US-based AECOM and South Korea’s Hyundai Engineering & Construction are interested in developing major Romanian infrastructure projects >> Energy efficiency investments to boost Podravka’s competitiveness >> Alstom was awarded a €100 million contract to supply 6 Francis turbine-generator units and auxiliaries in Albania >>> €190 million in loans for wood processor Kronospan Funding for facilities in Belarus and Russia to develop forestry sector >> EBRD boosts COSMOTE in Romania’s 4G race €225 million loan for better infrastructure in telecoms sector >> Improving the sustainability of SPAR Slovenija EBRD to provide to €40 million loan to support retailer’s development >> Germany will provide EUR 35 million in support for two energy projects of FYR Macedonian Power Plants >> New EBRD loan encourages Romanian SMEs to invest in energy efficiency €10 million to UniCredit Tiriac Bank to help the private sector cut energy bills >> EBRD finances water supply improvements in Yerevan €5.4 million to rehabilitate water supply infrastructure operated by Yerevan Djur CJSC >> EBRD 10-year loan for main city on Sakhalin island First major investment in decades for district heating system EBRD is driving energy efficiency in Moldovan households >> Romania passes law backing Nabucco gas pipeline project >> Hungary, Austria, Romania and Bulgaria back Nabucco West over TAP rival >> EDF plans €300m investment in Rybnik plant modernisation (Poland) >> Romania approves cut in green certificates and renewable incentives >> EBRD President Sir Suma Chakrabarti says corruption is deterring investment >> FYR Macedonia investment opportunities presented in Malaysia >> GE is Helping Europe to Improve Grid Efficiency, Enable Optimum Asset Management and Enhance Active Network Control >> 6 million Euro Albanian gas power plant will export 70 % of the plants production >> Serbia, Czech Republic start environmental protection cooperation >> An integrated biorefinery for processing crustacean shell waste into specialty and fine chemicals underway > Gasmet: Advanced Gas Detection Technology Supports Arctic Greenhouse Gas Research >> EBRD steps up support for Romanian SMEs >> EBRD supports Montenegro’s power grid upgrade, link to Italy >> EBRD energy efficiency funding for Russian homes >> Financing sustainable energy investments for Bulgarian business EBRD supporting energy efficiency in Slovak Republic >>> €10.3 million extra for Shymkent wastewater modernisation in Kazakhstan >>> Warsaw and Vienna exchanges discuss merging to create CEE share trading hub >>> Donor funding for environmental investments in Belarus >> EU-funded project will reduce electromagnetic field exposure by 50% >>Serbia's industrial production increases by 13% >> A snapshot of ICT in Serbia >> In the starting blocks >> Poland listed as one of Europe's windiest locations >>> AIR POLLUTION Warsaw Entry forbidden >>> Donor funding for environmental investments in Belarus >>> Chinese engage companies from Bosnia Herzegovina for Stanari power plant >>> EIB may lend $1.2 bln for Romanian projects in 2013 >>> EBRD contributes to safety of Ukraine’s nuclear power stations >>> EMS takes on eastern European auto supply busines >>> Taiwan, EBRD ink green investments pact >>> EIB supports modernisation of air traffic management infrastructure in Ukraine >>> EIB and EBRD to support completion of TES-Thermal Power Plant Sostanj project >>> EIB and BCR continue to support SMEs, midcaps and municipalities in Romania >>> EBRD President Chakrabarti visits Taipei >>> EBRD and partners explore next-generation biofuels >>> EBRD strengthens capital base of Siauliu bank >>> Bulgaria’s Biomashin attracts EBRD support 3 New Wind Farms For Romania >>> EBRD invests in Lithuanian port’s future as major hub >>> Biggest ever EIB loan in Slovenia: EUR 500 million for co-financing with EU Funds >>> EBRD adopts new Russia strategy for 2013-2015 >>> EBRD lends to Ukraine’s Coal Energy >>> EBRD boosts support for Belarus banking partner >>> EBRD channels safer drinking water to more of Tajikistan >>> Head of the EU Delegation: Serbia and EU to commence accession talks soon >>> New Joint IFI Action Plan for Growth in Central and South Eastern Europe >>> Poland to get new 53 MW wind farm in Kukinia: EBRD finances a new wind farm and supports the existing one in Tychowo EIB reinforces its support for upgrading Poland’s energy distribution network >>> EIB supports SMEs in Romania with EUR 45 million >>> Hungary: EIB continues to support smaller private companies with EUR 100 million >>> Leasings up in CEE >>> Romania has 750MW of wind farms in testing stage >>> Serbia's Energy Minister announced new incentive tariffs for the production of electricity from renewable energy sources Major new gas plant in Lithuania to replace lost nuclear power >>> EBRD funds Continental’s Russian tyre plant >>> The EU agreement on climate Polish law AAU emission units defended >>> STRABAG to build Europe’s most modern waste treatment plant in Ljubljana >>> EU greenhouse gases in 2011: more countries on track to meet Kyoto targets, emissions fall 2.5 % >>> Protected areas have increased to cover one fifth of Europe’s land >>> EBRD: world’s major waste - flaring gas - could be turned into profit >>> Valcea, Romania, to upgrade water and wastewater services with EBRD loan >>> EBRD directors visit Poland >>> EBRD to finance its first solar power project >>> EBRD unleashes energy efficiency potential of Ukraine’s district heating sector >>> New EBRD financing facility for residential energy efficiency projects in Moldova >>> Giving old tyres a new life >>> Serbia - RWE and EPS (Serbia) sign collaboration agreements >>> Two new hydropower plants in Albania >>> Poland - RAG (Austria) signs deal with GazSystem for gas storage in Poland >>> Poland - Enea signs EPC contract for 1,075 MW supercritical plant (Poland) >>> Ukraine - Ukraine starts construction of 750 kV transmission line >>> Ukraine - Ukraine receives €200m loan for 22 hydropower projects (980 MW) >>> Bosnia - RWE will develop 210 MW of run-of-river capacity in Bosnia >>> ... Slovakia spends 33 mln eur on car-scrapping subsidy ... EBRD helps boost green energy use in Poland >>> ... EBRD reiterates Poland's 2011 GDP growth forecast at 3.8% >>> Geomorphological Secrets Yana River Basin Revealed >>> Imtech: strong further growth in Poland, broad palette of new orders >>> WÄRTSILÄ INTERIM REPORT JANUARY-JUNE 2011 >>> Outotec >>> Hungary 'should focus on CO2 cuts outside ETS' >>> We cannot afford to waste energy and raw materials – the informal meeting of the EU Competitiveness Council with Minister Andrzej Kraszewski. >>> Smart meter producers report huge increase for shipments in CEE region
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Why should companies make energy savings?
2008-09-16 00:00:00

Russian companies consume on average a significantly higher amount of energy per unit of production as compared to their Western peers. High ‘energy intensity’ can pose a threat to growth prospects of Russian companies, especially in light of the rapidly rising energy prices (which have historically been well below the world prices and which are now set to become liberalized by 2011 in Russia). Timely investments into energy efficiency will prevent energy costs from eating into companies’ profit margins and will help companies maintain their competitive edge.

Energy efficiency investments are also becoming increasingly profitable as energy prices continue to increase. For example, a recent energy audit conducted by the EBRD at one of its industrial clients helped to identify a mix of energy efficiency improvements with total investment cost of €50 million. These investments, if implemented, could reduce the company’s energy bill by nearly 30 per cent, with payback of individual projects (primarily from the achieved cost savings) ranging from one to four years.

Finally, high energy consumption and inefficiency may become a bottleneck for future capacity and production growth, as companies are faced with high charges for new power grid connections and tight limits on energy consumption.

How much more competitive could energy savings make a company?

Let’s assume a company with energy representing 20 per cent of total production costs, which can be typical for many of the energy intensive sectors. Cutting its energy consumption by 25 per cent (which some EBRD clients were able to achieve) through investments into more efficient energy and process equipment will allow the company to reduce its total production cost by 5 per cent. Such a reduction can significantly improve the company’s profitability or competitive power. More importantly the risks of these investments are low and returns easily predicted, in contrast to many other types of investments. It is also important to note that investments into efficient equipment and processes often bring other positive “side effects,” such as improved product quality or increased productivity.

Could it make Russian companies more competitive and attractive to investors?


Leading companies around the globe become increasingly aware of the need for environmental protection, rational energy use and climate change. They respond to these challenges by raising environmental standards in order to minimise the negative impacts of their economic activity on the environment. An increasing number of companies participate in voluntary carbon emissions trading schemes to offset the ‘carbon footprint’ of their business.

Russia becomes increasingly integrated into the world economy, with Russian companies increasing their exports and acquiring assets abroad, creating JVs with foreign sponsors and listing stocks on foreign stock exchanges. Having ambitions to become global players, Russian companies need to adhere not only to high international standards for corporate governance or transparency, but also high environmental and social responsibility standards. Poor energy utilisation practices, such as coal mine methane venting or associated gas flaring can poise substantial environmental, reputational and technical risks for investors. The attention to the issues of energy efficiency and rational energy use will certainly be an essential value driver going forward.

How energy efficient are Russian companies at the moment? If they aren't efficient, what problems does this cause?


Most of the inefficiencies prevailing in the Russian industry were ‘inherited’ from the Soviet times, when energy was cheap and plants were designed with little consideration given to rational energy use. Moreover, this inefficient equipment is still in use: out of 100 industrial companies surveyed by the EBRD in 2007, 32 per cent used equipment installed more than 20 years ago. This explains why most Russian companies are far below international benchmarks for energy consumption levels.

High-energy intensity and inefficiency reverberates negatively through the whole Russian economy:

  • Energy demand is outstripping supply, thereby constraining further economic growth.
  • The lack of energy efficiency also presents a threat to Russia’s energy security i.e. the ability to meet export obligations while satisfying the growing domestic demand for energy.
  • Such energy deficit creates a need for costly investments in additional energy generation capacities and infrastructure upgrades.
  • ‘Wasting’ energy domestically minimises the amount of energy resources available for exports at world prices.

All of the above problems can be addressed as Russia is believed to be able to save 35-40 per cent of its current annual energy consumption through enhanced efficiency.

Are firms reluctant to become energy efficient? If so, why?

It is not proper to say that Russian companies are reluctant to become energy efficient. Over 70 per cent of companies surveyed by the EBRD plan capital investments in process plant modernisation, which will naturally lead to improved energy efficiency. However, most of them overlook the vast potential for further efficiency improvement or do not prioritise additional investments that can be made to lower energy consumption. This relates, for instance, to the upgrading of energy infrastructure and auxiliary equipment (compressors, boilers, etc.).

This happens because: companies in the growth phase tend to focus on production expansion and market share growth, as opposed to cost cutting and energy saving; and financial resources are limited while external borrowing for energy efficiency projects is not widespread. For this reason investments into energy efficiency are usually not a priority; Historically, energy in Russia was abundant and cheap and little attention was given to rational energy use. This culture prevails and most companies have not put in place policies and organizational structures to systematically address energy efficiency (whereby technical departments are often times focused on operations, maintenance and ad-hoc improvements). Some 80 per cent of companies surveyed by the EBRD have rated themselves very low in terms of their energy management practice and capacity, which means that many energy saving opportunities are simply not being looked at and evaluated.

What role does the EBRD have in making firms more energy efficient?


Energy efficiency is a key priority for the EBRD in all countries of operations. The EBRD works with large energy users across all sectors in Russia to promote best practice and encourage companies to implement energy efficiency investments. Our role is to help bridge the gap that exists between technical expertise and financial decision making. To achieve this, EBRD combines financing with free technical support such as energy audits to provide companies with an objective assessment of energy saving opportunities, identify and select viable energy efficiency projects. We then discuss the benefits of implementing these projects with the top management, thereby raising priority of projects which might otherwise not be implemented. EBRD then suggests including the selected projects in the broader investment programme which the Bank considers financing. EBRD also encourages energy conservation by promoting energy management systems and training.

EBRD strives to build a case for energy efficiency and develop projects with a strong demonstration effect on the business community. One such example is providing a €600 million loan (the first portion of which was signed in 2007) to the Russian steelmaker Severstal to support what was dubbed the largest energy efficiency investment programme ever undertaken by an industrial company. This transaction is expected to send a strong signal to the business community that energy efficiency is a crucial issue CEOs should focus on and that these investments are commercially viable.

The EBRD also develops dedicated financing facilities with local partner banks to promote energy efficiency in small and medium-sized enterprises (SMEs). This approach was piloted by the EBRD in Russia in 2007 when a US$ 10 million credit line enabled “Center-invest,” a Russian bank based in the southern city of Rostov-on-Don to offer loans for small-scale energy efficiency projects. Those loans were complemented with free technical assistance to companies to support project development.

All this work is core to the EBRD’s Sustainable Energy Initiative (SEI), launched in May 2006 and aimed at doubling investments into sustainable energy to €1.5 billion from 2006-08. In Russia, the EBRD has provided cumulative financing of €594 million for energy efficiency projects since the launch of this Initiative, with a total project size of €2,38 billion.

What effect could efficiency improvements have on the environment? Would this improve the image of Russian companies?


Energy efficiency contributes to a more rational use of diminishing energy resources. Energy efficiency also results in reduced emissions of greenhouse gases – which are widely believed to be among the main causes of climate change and global warming.

Energy saving is hence a vital part of being a ‘socially responsible’ company, which entails minimising the negative impacts of economic growth on the environment and responding to the global challenges of diminishing energy resources as well as the climate change. Increased attention to the issues of energy efficiency will certainly improve the image of Russian companies as environmentally conscious and socially responsible ‘corporate citizens.’ However, these challenges still need to get a wider recognition as climate change, for instance, is not placed very high on Russia’s corporate agenda.

This feature by Pavel Teremetsky, Business Development Manager for Energy Efficiency at the EBRD first appeared in the Moscow News on 12 September 2008.