European money – financing for SMEs

Problems find solutions

Safe, clean and sustainable energy is a major challenge for the 21st Century - as we strive to meet our needs for heating, cooling, electric power and transportation without causing harmful repercussions for future generations. We need solutions that displace fossil fuels – on which we are today overwhelmingly dependent.


There are three main problems with reliance on fossil fuels - mounting costs  – as we need to dig deeper and travel further to find oil, coal and gas; geopolitics – as lowest cost fossil fuels are far from energy markets, which can lead to crises and conflicts; and environment – as evidence mounts of negative impact the health of both humans and our planet.


There are also three main solutions to lower our fossil fuel dependence.  They are energy efficiency – doing more with less; renewable energy – capturing inexhaustible resources from the sun, earth, wind and water; and behavioural change – finding ways to avoid energy use without adversely impacting our quality of life.


Addressing SMEs sector


The European Bank for Reconstruction and Development has a range of Sustainable Energy Finance Facilities (SEFFs) operating in more than 20 countries, which provide a combination of loans through local banks and free technical consultancy for energy efficiency and renewable energy investments.


There are two SEFFs for private sector companies in Romania - RoSEFF - which helps SMEs invest in energy efficiency and/or renewable energy; and EEFF which is for energy efficiency only for private sector companies of any size. A third SEFF - MFFEE - supports public or private investments for municipal beneficiaries.


The Romanian SEFFs feature financing  from Romanian high-street banks; non-reimbursable EU grants of up to 15% which are paid when the investment is installed and saving energy - in the case of energy efficiency investments; or producing energy in the case of renewable investments.  The SEFFs all incorporate EU-financed free technical consultancy from Tractebel Engineering.


Less Bureaucracy


An important feature of the SEFFs is that they are really, really fast. For small and simple investments - (up to 250,000 Euro) investors may generate a Certificate of Technical Eligibility online for pre-approved categories of energy efficient technologies and renewable energy equipment.  If a participating bank lends for that equipment, the borrower is automatically eligible to receive an EU grant.


Large or complex investments take longer to prepare, typically three to six weeks, depending on the complexity of the investment.  Energy efficiency and renewable energy specialists from Tractebel Engineering prepare a free technical study to demonstrate that the investment saves energy, and is eligible for the EU grant.  This work is financed by the EU as an integral benefit of RoSEFF, EEFF or MFFEE.  Of course, studies are only prepared if the three main stakeholders agree - meaning the investor is ready to borrow; the lender is ready to lend; and the consultant confirms that the investment meets minimum energy-saving criteria set by the EU and EBRD.



Fast procedures


It takes about 10 minutes to generate a Certificate for Technical Eligibility for defined eligible measures such as electric motors with variable speed drives, solar hot water systems, energy management systems, biomass and biogas systems, building insulation materials, windows and doors, heat pumps, boilers, burners, LED lighting systems, compressors, tractors - and more.  Installation and related materials are also considered eligible costs, within defined limits.


Financing in Romania for SMEs: 104 projects, EUR 65 million


So far, EEFF has financed 104 investments using credits totalling 65 million Euro from BCR, BRD, Banca Transilvania, CEC Bank, OTP Bank and Raiffeisen Bank.  RoSeFF which is newer, involves BCR, BRD and Banca Transilvania so far - with a fourth bank expected to join soon.


A wide range of counties, sectors and technologies financed so far are described in online case studies and presentations.   An excellent example is that of Comcereal, Vrancea - who used both EEFF and RoSEFF to invest in its business - growing crops and operating bakeries.  The company first used EEFF at the bakery, lowering energy consumption per loaf of bread by more than 50%.  Then the company used RoSEFF to replace six small, old tractors with one large, modern tractor - cutting diesel fuel used by more 50%.  Hence the company not only strengthened its business by slashing costs across the production chain - but also received 15% EU grants for investing in sustainable energy solutions.


As well as financing investments, RoSEFF features a 'capacity building' element - to raise SMEs' awareness of the benefits of incorporating sustainable energy solutions into their investment plans.  Free one-day training courses are available for groups of SMEs whose financial decision-makers would like to better-understand how energy efficiency and renewable energy can improve their businesses.


The training course, entitled Financing Sustainable Energy, addresses practical approaches to meet SMEs day-to-day energy needs, enabling the companies and their financiers to identify solutions that work.  The course covers equipment–based investment decisions, typical financial solutions – balance sheet financing, project financing, third-party financing, as well as common technical solutions to power, equip, light, heat and cool factories, offices and buildings.