Revolving EU structural fund means to promote energy efficiency in housing - the Estonian example

Workshop on energetic building rehabilitation in Jelgava, 03.11.2009

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KfW Bankengruppe in brief

● Promotional bank of the Federal Republic of Germany

● Founded in 1948

● Shareholders: Federal Republic of Germany (80%), German federal states (20%)

● Headquarters: Frankfurt am Main; branch offices: Berlin and Bonn

● Representative offices: around 50 offices and representations worldwide

● Balance-sheet total at the end of 2008: EUR 395 billion

● Financing volume 2008: EUR 70,6 billion

● 4.228 employees in 2008

● Rating: AAA/Aaa/AAA

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KfW Bankengruppe Environmental and climate protection

Environmental and climate protection is a major promotionalpriority!● Total commitments in this

sector in 2008: EUR 19.5 bn

Förderbank and Mittelstandsbank EUR 14.5 bn KfW Entwicklungsbank EUR 1.7 bn KfW IPEX-Bank EUR 2.6 bn DEG EUR 0.7 bn

● Commitments in 2008 for:

renewables EUR 5.3 bn energy efficiency EUR 8.1 bn

KfW Bankengruppe is one of the world's biggest financing institution for energy efficiency and renewable energy

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In the 1990s Implementation of the TRANSFORM Programme on behalf of the German Government1

Since 1991Support of CEE governments regarding the set up of national promotional banks and support of promotional banks and other partner banks in the design of promotional financial instruments e.g. for SMEs and energy efficiency in housing

Since 1995Funding of promotional loan programmes issued by promotional and commercial banks in Europe Total commitments in Europe (outside Germany) since 1995: 14 billion Euro

Since 1998 KfW IPEX-Bank committed about EUR 3 bn to TEN financing in Europe, frequently in cooperation with EIB

KfW‘s experience in Europe/CEE

Since 2000Since 2005Since 2007

EU mandates together with CEB:

1 A German technical assistance programme for the benefit of institutions and enterprises in CEE

EU SME Finance Facility EU Municipal Finance Facility Energy Efficiency Finance Facility since 2007

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Promotion of energy efficiency in the housing sector: KfW-Efficiency House Standard and financing schemes in Germany

Abbreviations:NL = New Building Level according EnCO (German law)

Primary Energy

Demand

ca. 108-63 kWh/a

ca. 94-55 kWh/a

ca. 80-47 kWh/a

= 100% of NL

= 85 % of NL

= 115 % of NL

= 130 % of NL

= 70 % of NL

ca.121-72 kWh/a

ca. 66-39 kWh/a

KfW-130

KfW-100

KfW-115

KfW-85

KfW-70 Be

tte

r co

nd

itio

ns

of

fina

nci

al s

che

me

s

Promotional financing schemes: Subsidized loans, partial debt relief, grants

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Promotion of energy efficiency in the housing sector: Results of KfW‘s housing schemes in Germany

Commitments From 1990 until 2008 a loan volume of more than 51 billion EUR was committed;

efficiency measures in app. 2.9 million homes were financed

Effects regarding

CO2-reduction

The investments financed from 2006 until 2008 achieved a permanent reduction of 2,4 million tons per annum in CO2 emissions1

Effects on the labour

market

In 2008 about 221,000 jobs could be safeguarded for at least one year, especially in the construction industry

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Promotional Institution

On-lending bank

Long term loans Low interest rates

Fund

management

Revolving loan fund

Funding agreement

On-lending bank

GovernmentGlobal loan

Broad scale financing scheme for building renovation – Project idea

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Loan programme with a revolving fund versus grants to promote energy efficiency investments

● The substance of the fund remains for future investments (money flows back to the fund)

● Structural fund means invested into financial instruments count as “disbursed”

● Development of the “loan market” (e.g. maturity)

● One-stop finance

Complete financing of the planned investment Possibility of stable long term financing conditions Usage of favourable refinancing conditions of promotional banks Possibility of risk takeover Possibility of a partial dept relief which combines the incentives of

a grant and a promotional loan without the disadvantages of a grant

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Broad scale financing scheme for building renovation – Best-case model from Estonia

KredEx2

On-lending bank

Long term loans Low interest rates

Fund

management

Revolving loan fund

Funding agreement

On-lending bank

Government

CEB1 Global loan

Global loan

EUR 29 Mio.

EUR 17 Mio.

EUR 3 Mio.

Objective: At least20-30% of energysavings

Energy audit is obligatory

Renovation according to the audit

Loan Maturity up to 20 years

1 Council of Europe Development Bank

2 Estonian promotional institution