TASK AREA 2
FACILITATING PRIVATE PROVISION OF LONG-TERM FINANCING FOR ENERGY EFFICIENCY PROJECTS

The objective of this Task is to increase the availability of locally obtainable financing (sustainable long-term, short-term or other innovative financing mechanisms) for energy efficiency (EE) projects.  The long-term goal is to assure the availability of such financing in the longer run at the point when CEEP activity and USAID funding terminates.

CEEP team understands constrains existing in this area - unsupportive financial environment, lack of knowledge among banks on EE and lack of adequate business skills among SMEs - and is prepared to work with both local financial institutions and SMEs to reduce existing barriers and to equip banks with appropriate knowledge and skills necessary to evaluate EE projects and associated risks. To this end, CEEP will offer consultations and training to both local finance institutions and SMEs to facilitate effective business collaboration between these two groups.

Based upon CEEP team experience in this sector, although many “bankable” EE projects exist, the application of traditional conservative lending techniques by banking and finance entities will result in only a limited number of projects being considered feasible for financing in Armenia. To help make the transition from donor support to full private sector financing of EE activities, the CEEP team will perform the analysis needed to help USAID to develop a Development Credit Authority (DCA) action package. Subsequently, CEEP will provide technical assistance to develop viable EE projects to be supported with the use of the DCA guarantee mechanism. In addition, CEEP will assess and use, as appropriate, other existing financial instruments practiced by local banks such as regular commercial credit, private equity finance, capital leasing, factoring, and other tools in order to facilitate commercialization of the Energy Efficiency market in Armenia.

Expected results for this Task include: 

Increased private sector lending for EE projects
Increased transparency of ESCOs towards the LFI’sIncreased knowledge of the LFI’s about the EE sector;
Increased access to finance for ESCOs.