BUSINESS
Investing in energy efficiency in Georgia
04 August, 2017
Private sector is a key driver for growth, employment and innovation in Georgia. Supporting Access to Finance for micro, small and medium sized enterprises (SMEs) and midcap companies is a top priority for the EIB (European Investment Bank) Group. With the support of the EU, the EIB Group is stepping up its efforts in improving access to finance and building capacity in order to support sustainable and inclusive growth in Georgia.

SMEs (the category of micro, small and medium-sized enterprises)
play a significant role in Georgia’s economy, accounting for over 40% of employment, but are still struggling to scale up their operations. EU4Business supports the government's ambitious plan to reform and improve the business environment. Its programmes boost SME growth by improving their access to finance and new markets as well as targeting women entrepreneurs and projects in green energy. SMEs looking to make the most of Georgia’s Free Trade Agreement with the EU can also get financial and technical help to adapt to EU standards and to move into foreign markets.

Here is what eu4business.eu says about investing in energy efficiency in South Caucasus and Georgia:

Several EU4Business programmes have been set up in Georgia to finance SMEs undertaking energy efficiency or renewable energy projects, with the goal of boosting business opportunities while reducing CO2 emissions.

Green for Growth Fund

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The Green for Growth Fund (GGF) is a public-private partnership providing financing and technical assistance for energy efficiency and renewable energy projects to SMEs (and households), primarily via local financial institutions.

Its aim is to promote energy efficiency in the six Eastern Partnership (EaP) countries, including Georgia, thereby reducing CO2 emissions. GGF investments seek to achieve a 20% reduction in energy consumption and/or a 20% reduction in CO2 emissions, by:

Refinancing financial institutions providing loans to households, businesses, municipalities and public sector for energy efficiency measures or renewable energy projects.

Providing direct financing to non-financial institutions that meet GGF energy saving and/or emissions targets, and comply with the technical criteria and GGF exclusion list.

Components
The Fund structure aims at leveraging donor funding by mobilizing funds from development banks and, ultimately, the private sector:

The "First Loss Tranche" (С-Shares) is provided by donors and different governments;
The "Mezzanine Tranche" (B-Shares) is provided by development banks;
The "Senior Tranche" (А-Shares) is provided by development banks and/or private institutional investors.
Technical Assistance which covers capacity building, awareness raising and market enabling activities and validation and monitoring of energy savings and C02 emission reductions.

Examples in Georgia include the refinancing, with an USD 11.5 million loan, of the real estate developer M2RE for the construction 1,900 new energy-efficient apartments in Tbilisi, EE financing for the construction of energy efficient housing from the Bank of Georgia and the creation of a USD 15 million subordinated loan facility with TBC Bank to expand funding for energy efficiency and renewable energies projects.

EU contribution
€13.35 million for the six EaP countries as a whole
Duration
2013-2019
Contact
KfW Development Bank
Contact person: Horst Zapf
Palmengartenstr. 5-9
60325 Frankfurt am Main
Germany
Phone: (+49) (0) 69 74 31 - 36 82
Email: horst.zapf@kfw.de
European Investment Bank
Adalisa Vladacenco
98-100, Boulevard Konrad Adenauer
2950 Luxembourg
Luxembourg
Phone: +352 (0) 43 79 85 - 151
E-mail: a.vladacenco@eib.org

South Caucasus Sustainable Energy Finance Facility (CEEP II)

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This facility assists sustainable energy policy dialogue activities, by financing technical assistance, providing capacity-building and financing the scaling up of energy efficient technologies and small-scale renewable energy projects in the South Caucasus.

Local financial institutions lend funds they receive from the European Bank for Reconstruction and Development (EBRD) to SMEs, renewable energy developers and residential borrowers.

Funding criteria
Residential loans typically range from USD 500 to USD 2 000
Industrial energy efficiency typically range from USD 100 000 to USD 1 million
Renewable energy typically range from USD 1 million to USD 2.5 million
Who qualifies/How to get the finance
All eligible projects will have to demonstrate financial viability by ensuring that the financial value of the energy savings or renewable energy produced generates an Internal Rate of Return (IRR) of at least 10%.
EU contribution
€5.1 million for Eastern Partnership countries
Implementing partner
European Bank for Reconstruction and Development (EBRD) in Georgia
Merani Business Center
31 a Griboedov Street, 6th Floor
Tbilisi 0108, Georgia
Tel: +995 32 244 7400

Neighbourhood Window of the European Fund for Southeast Europe (EFSE)

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The aim of EFSE funding is to:

foster economic development and prosperity in the Southeast Europe region and in the European Eastern Neighbourhood Region through the sustainable provision of additional development finance, notably to micro and small enterprises ( MSMEs) and to private households, via qualified financial institutions, including for energy efficiency and renewable energy projects.

attract additional investors to the region and offer them an attractive financial return.

Components
Capacity Building and Training
Financial Sector Support
Applied Research
Support Areas:
Responsible finance including financial literacy for MSEs and households
Strategy, business planning and transformation
Product development, e.g. MSE finance, mobile/branchless banking, housing finance, agricultural finance,
Credit risk and delinquency management
Operational efficiency and Impact assessment
Internal audit and internal controls
Training and staff development
EU contribution
€5.1 million for the six EaP countries as a whole
Duration
2009-2019
Who qualifies
The fund will finance:
local commercial banks, regulated and non-regulated MCOs (microcredit organisations) and other selected financial institutions
commercial banks, investment companies, investment funds or holding companies
Implementing Partner
KfW Development Bank
Contact person: Monika Beck
Palmengartenstr, 5-9,
60325 Frankfurt am Main
Germany
Phone (+49) (0) 69 74 31-0
Email monika.beck@kfw.de
Partner Lending Institutions
Bank of Georgia
MFO Credo
MFO Crystal
ProCredit Bank Georgia
TBC Bank

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