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Cover Page for CTF Program Approval Request

1. Country/Region Ukraine 2. CIF Project ID# PCTFUA110A

3. Project/Program Title

Ukraine Residential Energy Efficiency Finance Facility (UREEFF)

4. Terms and Amount Requested in million USD equivalent

Public sector No Total amount: n/a

Private sector Total amount: USD 24.152 million consisting of:

USD24 million in second-loss UAH/FX risk-sharing participation and/or portfolio guarantee for sub-loans to housing collectives USD0.152 million in MPIS/KM grant

The funds break down as follows: USD equivalent of EUR11.5 million and USD 9.152 million of which:

New Approval o USD 9 million in second-loss UAH/FX risk-sharing participation

and/or portfolio guarantee for sub-loans to housing collectives1 o USD 0.044 million for Knowledge Management and Evaluation

activities o USD 0.108 million in fees

Transfer from PCTFUA086A

o USD equivalent of EUR 11.5 million2 for a second-loss UAH/FX risk-sharing participation (transfer of EBRD investment allocation from PCTFUA086A)

o USD 0.17 million of KM and USD 0.1 million of MPIS grant converted to second-loss UAH/FX risk-sharing participation (transfer of EBRD MPIS/KM allocation from PCTFUA086A)

5. Implementing MDB(s)

European Bank for Reconstruction and Development (“EBRD”)

6. National Implementing Agency

Local Financial Sector

7. MDB Focal Point Andreas Biermann, CTF Coordinator (biermana@ebrd.com)

1 The actual allocation to be determined at Final Review stage reflecting actual lending market conditions and availability of other Donor

funds. 2 The CTF TFC Decision allocated EUR 11.5 million for investment, USD 100,000 for KM, and USD 170,000 for management fees to the

EBRD for project PCTF086A. It is proposed that i) the new allocation is made the USD equivalent of EUR 11.5 million, and ii) that USD170,000 from the KM grant and USD100,000 from the fees are being converted to investment. For ease of this application, the USD equivalent of the total of EUR11.5 million plus USD 270,000 is presumed to be USD 15 million, based on the communication received from the CIF-AU on 02 Sept. 2014

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8. Brief Description of Project/Program (including objectives and expected outcomes)

Fit with Ukraine Country Investment Plan: The proposed project will require a minor amendment to the Ukraine Country Investment Plan to increase the allocation to residential energy efficiency by transferring funds from the renewable energy allocation. All of the project funding will come from the EBRD’s allocation for the renewable energy programme, as outlined under item 4. above. A note in Annex A explains the minor revision to the Ukraine CIP This is outlined in a separate document attached to this application. The proposed amendment has been developed in close co-operation with, and is fully endorsed by the Ukraine CTF Country Focal Point. The investment plan results framework has been amended accordingly. Project Summary Establishment of the Ukrainian Residential Energy Efficiency Financing Facility (“the Facility”, “the Framework” or “UREEFF”) of up to USD 100 million. The funds will be made available to qualifying Participating Financial Institutions (“PFIs”) in Ukraine, including new and existing clients, for on-lending to eligible private sector sub-borrowers for sustainable energy (“SE”) investments in the residential sector. Credit lines to PFIs will be provided in US Dollars (USD) indexed to Ukrainian Hryvnia (UAH) using a donor-supported financing structure under which the EBRD will provide PFI’s with a sufficient (albeit partial) hedge against devaluation of UAH up to a predefined maximum devaluation ceiling, as a second-loss guarantee.The first loss guarantee will be provided by the FX risk premium charged.. This structure will allow the PFIs to minimise their Foreign Currency (FX) risk from conversion of the loan proceeds into local currency and on-lending it to the end-borrowers (lending to individuals in FX is banned in Ukraine). Annex B has more detail on the structure and the call on donor funds that is expected for a range of scenarios. The UAH/FX risk-sharing participation cost is currently estimated to amount to approximately USD 15-20 million (see in Annex B); and the final amount will be confirmed at Final Review stage when the exact terms and conditions of the EBRD loan product to local banks will be finalised. Once confirmed the CTF Trust Fund Committee will be informed of the final allocation.

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9. Consistency with CTF Investment Criteria - For Private Sector Projects/Programs

(1) Potential GHG Emissions Savings 50,000/tCO2/yr over 20 years lifetime, equalling 1,000,000 mtCO2

(2) Potential energy savings 130 GWh in reduced electricity and natural gas consumption.

(3) Cost-effectiveness CTF: USD24/tCO2 reduced over the lifetime of the programme Total project cost: USD160/tCO2 reduced over the lifetime of the programme. The marginal abatement cost will be above USD 100/tCO2. This is normal for residential energy efficiency programmes (see e.g. IDB’s Mexico Eco Casa programme), and is excluding the expected market transformation impact.

(4) Demonstration Potential at Scale The facility will be the first residential credit line product specifically aimed at energy efficiency in the Ukrainian market. Experience from other markets shows that there is substantial demand for such facilities, and that they are likely to continue once established, since they provide a profitable new product for local banks. Furthermore, in the Ukrainian CTF context, the lending product will interact very well with the EBRD/IBRD District Heating interventions, by providing demand-side finance to complement the supply-side investments undertaken in district heating networks. EBRD will ensure that PFI training to loan officers will fully cover cities participating in either of the EBRD or the IBRD projects.

(5) Development Impact The project will have a good development impact through the provision of finance for energy efficiency improvements, which will reduce fuel poverty and increase comfort levels.

(6) Implementation Potential High. The recent tariff increases drive the need for increased investment in energy efficiency in all sectors, and in particular in the residential sector.

(7) Additional Costs and Risk Premium High. Foreign exchange risk is high in Ukraine, and needs to be mitigated in order to facilitate this facility.

(8) Financial Sustainability High. Once the crisis abates forex risk will decline, while the increases in energy tariffs will continue to drive the need for further investment.

(9) Effective Utilization of Concessional Finance High. The use of a FX risk-sharing participation is a key attribute of CTF concessionality.

(10) Mitigation of Market Distortions High. The facility is open to all Ukrainian banks with which the EBRD can work.

(11) Risks The main risks related to: 1. Political instability and stability of the financial sector 2. Market potential and attractiveness of the Facility to PFIs

3. Implementation Risk related to the performance of PFIs and the speed of the implementation (12) Risk Mitigation. The risks outlined above are mitigated by:

1. Careful timing and selection of PFIs 2. Comprehensive TC and incentive support 3. Comprehensive marketing and project preparation support, and close MRV oversight.

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10. Stakeholder Engagement

Stakeholder engagement will be carried out at the level of the sub-projects.

11. Gender Considerations

Gender considerations will be assessed at the sub-project development stage and operational recommendations will be provided. More detail can be found in Section 4 below.

12. Indicators and Targets (consistent with results framework)

Core Indicators Targets (by September 2018 – 4 years)

(a) GHG emissions avoided 50 ktCO2e per annum

(b) Energy Savings Achieved 130 GWh final energy consumption per annum reduced

(c) Households Improved 55,000 households3

Development Indicator(s): See core indicator (c) Social Impacts

Energy Bill Reductions

Increased comfort levels

Gender assessments

13. Co-financing

Please specify as appropriate Amount (in million USD)

Government n/a n/a

EBRD Loan 100

Project Sponsors Equity 10

Bilateral co-finance and technical assistance

Grant 26

Total Co-Financing 136

Total Finance including CTF CTF share 15.15% 160

14. Expected Date of MDB Approval

The project is concept reviewed approved – EBRD Board approval is expected for Q4/2014/Q1/2015. Sub-project signing will occur over 15 months following EBRD Board approval.

15. Document Structure Main Sections:

1: PROJECT OVERVIEW 2: PROJECT SPECIFICS 3: RESULTS MEASUREMENT, ADDITIONALITY, MARKET TRANSFORMATION POTENTIAL, AND RISK 4: GENDER AND SAFEGUARDS 5: SECTOR OVERVIEW

Annexes:

A – Note on Proposed Change to Country Investment Plan B – Proposed FX Risk Sharing Structure C – Policy dialogue and preparatory technical assistance D – Abbreviations and Currency Conversions E – Administrative Budget F – Technical Assistance Budget G – Knowledge Management and Evaluation Activities

3 Calculated using extrapolated data from similar credit lines where the average size of the sub-loan was USD 1,800. Actual results might

differ.

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CTF Private Sector Proposal

Name of Project or Program

Ukraine Residential Energy Efficiency Facility (UREEF)

CTF amount requested

Total: USD 24.152 million 1. UAH/FX second loss risk-sharing participation and portfolio guarantee – up to USD

24 million

2. Grant (evaluation and knowledge management) – USD 0.044 million (see Annex G).

3. Implementation and supervision budget – USD 0.108 million (see Annex E)

Country targeted Ukraine

Indicate if proposal is a Project or Program

Program

1. OVERVIEW

Fit with the Investment Plan The provision of CTF finance for the residential sector is foreseen in the Investment Plan. This programme requires a minor change, allocating USD24.152 million (6.9% of the investment plan volume) from private sector renewables to private sector energy efficiency. Please see Annex A for details relating to this change. Rationale for Use of CTF in Sector Cr redit lines to PFIs will be provided in US Dollars (USD) indexed to Ukrainian Hryvnia (UAH) using a donor-supported financing structure under which the EBRD will provide PFI’s with a sufficient (albeit partial) hedge against devaluation of UAH up to a predefined maximum devaluation ceiling, as a second-loss guarantee. The first loss guarantee will be provided by the FX risk premium charged. This structure will allow the PFIs to minimise their Foreign Currency (FX) risk from conversion of the loan proceeds into local currency and on-lending it to the end-borrowers (lending to individuals in FX is banned in Ukraine). Annex B has more detail on the structure and the call on donor funds that is expected for a range of scenarios. The CTF is the only possible provider of this UAH/FX risk-sharing participation.

2. PROJECT SPECIFICS

Overview UREEFF will be the first residential SEFF operation in Ukraine and will provide an effective financing mechanism for residential sustainable energy investments by bundling technical assistance, medium-term funding, risk participation and financial incentives to end-users and PFIs into a one-stop-shop structure. Project Objectives and Design Despite substantial decrease in energy intensity during the last ten years, the Ukrainian economy has one of the highest energy intensities among EBRD’s countries of operation and is highly dependent on fuel imports (up to 50% of primary energy needs) which create huge pressure from energy security point of view. By consuming one third of Ukraine’s energy, the residential sector is the second largest energy consumer (after 36% share in the final energy consumption by industry) facing energy prices that have been recently on the rise (the Government increased natural gas and heat tariffs for the population by approximately 50% from May 2014) and are expected to continue to increase over the next four years. A more detailed energy sector analysis is provided in section 5 of this document. It is important to note that there is currently no programme in place to provide energy efficiency support for low-income households, such as the US weatherisation programme, or the UK Warm Homes programme. A donor-funded project preparation consultant hired by EBRD (see annex C for further details) will support project design. It’s tasks will be to:

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investigate the extent to which Ukrainian consumers are confronted with fuel poverty and will report on economic incentives/disincentives for poor and vulnerable consumers that are currently available in Ukraine;

evaluate the impact of recent and projected energy tariff increases on affordability indicators and will estimate additional needs for targeted social support for low income groups, paying special attention to the rehabilitation of block of flats where there is a high risk that low income groups would ‘block’ the investments from going ahead due to the inability to afford their contributions towards the cost of a complex refurbishment; and

make recommendations for a governmental support scheme that would enable collective decisions/actions and stimulate investments in residential energy efficiency (a social safety net) and will outline the proposed delivery/implementation mechanism.

Market Barriers Based on the previous SEFF experience in the country, energy efficiency (EE) investments in some sectors have been solidly financed by the PFIs. Nevertheless, many EE projects in complex sectors remain unfinanced and unimplemented because of key barriers, despite large potential. These include:

Inadequate awareness of the benefits of EE projects and perceived technical and/or financial risks. In some cases energy efficiency projects are perceived to be technically, commercially risky (e.g. complex rehabilitation of residential buildings, municipal energy efficiency and/or off-balance sheet financing) and not bringing about commensurate financial returns, particularly when compared to green field or industrial expansion investments.

Insufficient capacity for evaluating specific energy efficiency projects among banks. Particularly true for the above-mentioned, less conventional sectors such as residential and building energy efficiency, ESCO development and small scale renewable energy (RE) investments. Moreover, the internal capacity for identification and business development of such projects, their evaluation and further processing is also low as a result.

Lack of dedicated long-term financial resources for small scale EE and RE investments. In the context of the current political and economic crisis, local banks are reluctant to provide loans with maturities longer than 2-3 years, particularly for non-mainstream investments such as EE and RE. These investments typically require long term funding, therefore facing lack of funding due to, among other things, a maturity mismatch.

Prevailing market risks attached to FX borrowing: The instability in the political and economic environment in Ukraine provides to be a major obstacle for financial institutions to borrow in foreign currencies while lending to sub-borrowers can only be done in local currency.

Regulatory barriers preventing commercial financing of residential energy efficiency projects. Legislation did not provide until recently for establishing of a legally viable homeowner client base, and national banking regulations were extremely unfavourable towards home owners associations (HOA) as borrowers. Furthermore, IFIs were not given an option to provide funds to Ukrainian banks in Hryvnia; and secondary regulatory basis was insufficient for introduction of market-based financial instruments for energy efficiency.

Low energy tariffs not conducive to rational investment decision making. While this is a current barrier, the recent tariff increases, and the expectation of further increases in the future, will lead to increased interest in residential energy efficiency finance products.

A more detailed market barriers analysis is presented in the energy sector background section of this document. Given the context presented above, it is concluded that awareness raising and capacity building efforts through technical assistance alone would not be sufficient to unleash the potential for investment in residential EE in Ukraine, because the TA does not directly address financial barriers faced by sponsors. By adding elements of concessionality (grants, guarantees, risk-sharing) from Donor resources, PFIs will be incentivised to actively pursue these investment opportunities and scale-up this business-line while energy end-users will be incentivized to prioritise the investment decision and choose more efficient technologies

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than they would choose otherwise. Project Activities and Policy dialogue In the recent years, the Bank has engaged in Policy Dialogue with the authorities in Ukraine that has resulted in the adoption of three technical regulations to support Ukraine’s transportation of Energy Performance of Buildings Directives (further detailed in annex 2). The proposed Framework follows on these efforts while making available a financial instrument to support the investments on residential energy efficiency sector. Investment Component UREEFF is proposed to have a flexible structure to support sustainable energy investments undertaken by both individual households and the housing collectives such as housing associations/condominiums, housing management companies and ESCOs. It is expected that most of the uptake would come from individual sub-borrowers. However, future phases of the Facility are expected to move towards lending to housing collectives. Depending on the actual market response/demand, PFIs will be encouraged to finance housing collectives on the best effort basis (no predefined allocation of funding will be reflected in the loan agreement). Facility Loan proceeds shall be on-lent by the Participating Financial Institution (PFI) for energy financing energy efficiency refurbishment, component replacement or installation of eligible measures in residential properties which will be subject to Sub-project eligibility criteria as set forth below. Eligible Sub-borrowers shall be individuals, households or groups of individuals and households registered under the laws of Ukraine as residents or owners in the properties for which they intend to perform eligible Sub-projects. Associations/condominiums of apartment owners formally registered under the laws of Ukraine as well as housing management companies, ESCOs and any other commercial construction services providers, licensed for provision of construction and installation services according to Ukrainian corporate regulations which are undertaking implementation of eligible measures will also be eligible for financing on a pilot basis. In order to facilitate project implementation, EBRD Consultants will define the technical eligibility criteria and energy performance requirements for types of eligible individual measures and packaged solutions and will list them on a publicly available List of Eligible Materials and Equipment (LEME). Eligible Measures will include:

Energy efficient windows and glazing of permanently occupied areas;

Additional glazing of balconies and loggias or windows/glazing of common areas in multi-storey apartment Buildings (staircases, basements, technical rooms, etc);

Thermal insulation of walls. This measure is not applicable for individual apartments in multi-storey apartment Buildings;

Thermal insulation of roof. This measure is not applicable for individual apartments in multi-storey apartment Buildings;

Thermal insulation of floor;

Energy efficient biomass stoves/boilers with or without associated controls, space heating and domestic hot water (DHW) storage systems;

Solar water heaters with or without associated space heating and DHW systems;

Energy efficient gas boilers with or without associated controls, space heating and DHW storage systems;

Electricity-driven heat pumps including air-to-air, ground-to-water or water-to-water installations;

Roof-top integrated grid and off-grid application of solar photovoltaic installations up to 2.0 kWp;

Balanced mechanical ventilation with heat recovery for permanently occupied premises;

Up-grade of building-level central space heating installation including building-level heat exchanger stations with associated controls, pipes, machinery and emitters as well as hydraulic balancing of entire installation.

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High-efficiency appliances The FX/UAH risk sharing component is believed to be necessary for the engagement of PFIs in the residential EE sector. The portfolio guarantee component is envisaged to be provided to only a few pilot projects undertaken by housing collectives, which is currently a sector unserved by the market. Terms of the CTF Investment

Proposed CTF Investment: USD 24 million

Instrument: Two instruments are proposed, the final allocation between them will depend on negotiations with participating financial institutions:

Second loss cover through a partial UAH/FX Risk-Sharing Participation

Portfolio Guarantee for a portfolio of sub-loans to housing collectives

Tenor: 5 years

Seniority / security: n/a

Pricing: A Forex Risk Premium will act as first-loss cover against FX losses. The remaining of the funds, after covering exchange rate losses up to the ceiling agreed with each participating bank, will be passed back to the EBRD CIF Special Fund, and returned to the Trustee.

Implementation Progress and Pipeline The first group of PFIs will be identified at the time of the Structure/Final Review. The facility is expected to be Board approved by the beginning of 2015, with signings to follow in H1/2015. The technical assistance component will begin implementation early 2015. Technical Cooperation, Grants, and Policy Dialogue Component The framework would be the first ever residential SEEF operation in Ukraine (among all IFIs). It is expected that an incentive mechanism (Technical Cooperation (“TC”) and non-TC incentives) would be needed to ensure successful implementation addressing specific barriers to investment. Based on the preliminary discussions and understanding of the Ukrainian energy efficiency market and financial sectors, as well as taking into account EBRD experience in residential EE in other countries the following incentive mechanisms are anticipated:

o TC to support implementation and verification: TC cost will be around 4% of the Facility volume (ir about USD 4 million to cover technical cooperation services to PFIs and sub-borrowers;

o Investment grants to sub-borrowers: Sub-borrower investment incentives in the range of 10-30% of sub-loan amount depending on the nature and performance of sub-projects;

o FX risk sharing: The UAH/FX risk-sharing participation cost will be covered from donor funds and is estimated to amount to approximately USD 15-20 million (more details in Annex B); and

o Guarantee mechanism aimed at unlocking lending to housing collectives: To be provided for the first 10 pilot projects/total of USD 3 million worth of investments undertaken by housing collectives. The cost of the guarantee is estimated at USD 2.4 million, assuming a guarantee ceiling of 80% at the level of the eligible portfolio (subject to revision based on the results of the market study).

Technical Co-operation The proposed Facility will be supported by a comprehensive TC package which is anticipated to be funded from the EBRD-Ukraine Stabilisation and Sustainable Growth Multi-Donor Account, or the German Federal Ministry for Environment, Nature Conservation, Building and Nuclear Safety (BMUB). A Project Consultant (PC) will be hired following a procurement process to support EBRD, the PFIs and the Sub-borrowers in the successful implementation of the programme, in particular in the following areas: (i) development of technical operational tools, templates and forms for the Facility, (ii) marketing and general

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awareness raising, (iii) support with pipeline development, (iv) capacity building for PFIs, (v) Sub-projects preparation including energy audits, conceptual design of residential building-level projects, legal advice on housing regulations for Housing Associations/Condominiums and identification of optimal investment plans, (vi) administration and monitoring of the Facility and (vii) verification (desk-based and spot-checks) of correct implementation and confirmation of the correct level of incentives for which each sub-project qualifies, including general MRV activities for climate finance. No cost sharing is envisaged apart from PFIs’ in-kind contribution by dedicating financial and human resources to marketing and monitoring/administration of the Facility. The TC support planned to be provided to Sub-borrowers and the PFIs is fully consistent with the Policy Review on Arrangements for Cost Sharing Between Donors and Clients (BDS10-249 (Rev2)), on the basis that the Policy Review explicitly provides for projects aimed at tackling challenges in the priority sectors of energy efficiency and climate change, that no presumption of cost sharing will be sought, recognising the particular barriers to investment and externalities in this area, where project development assistance is key to catalysing investment decisions. Grants In line with the incentive scheme applied in recent SEFFs, investment grants to sub-borrowers of 10-30% of sub-loan amounts depending on the nature and performance of sub-projects are envisaged. The final structure, level and mechanism of awarding such incentives are to be determined based on the result of the market study that is currently underway. However, the design of the incentive package for sub-borrowers will follow EBRD principles of using smart, performance-related incentives, providing more reward for more complex investment packages and will constitute an interim solution in the absence of a well-functioning market for residential energy efficiency. Policy dialogue See Annex C Co-Operation with other IFIs EBRD has throughout its work on residential sector energy efficiency closely collaborated with other IFIs and donors, especially the IFC. This close collaboration will continue, especially with IFC expected to develop a similar, complementary programme. Further background on the activities from specific donors and IFIs in Ukraine in this sector can be found in Section 5.

3. RESULTS MEASUREMENT, ADDITIONALITY, MARKET TRANSFORMATION POTENTIAL, AND RISK

Results Measurement Framework Monitoring will be fully in line with the most recent version of the CTF Results Measurement Framework, of 6 December 2012. Market transformation objectives at the sub-project level will be monitored through the normal EBRD process for each transaction under the framework. In addition, there are aggregated targets that are expected to be achieved under this framework. The benchmarks below aim to capture these aggregated objectives and will partly be monitored through the EBRD's close engagement with the PFIs and periodic reporting from the clients. Also, each new project document submitted under this framework will include a brief progress report on the benchmarks below and update on remaining challenges.

Impact Objectives Monitoring Benchmarks Timing

Environmental Improvements

Expected energy savings per USD of investment

Expected carbon emission reductions per USD of investment

2018

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Demonstration of ways of successfully restructuring companies and institutions

Number of participating financial intermediaries

Volume and number of loans appraised and extended by the PFIs

Sustainable capacity building in PFIs (for example number of trainers trained and loan officers trained by trainers or existence of an on-line training programme )

2018

Market Transformation Potential The Project is consistent with the overall strategy of the CTF to achieve market transformation through scaled-up finance. It will achieve this by investing in commercial banks or other financial intermediaries to establish dedicated financing mechanisms for energy efficiency projects. Specific and quantifiable Transformation Impact monitoring benchmarks will be further refined during the development of the operation, based on the impact indicators outlined below.

I) Demonstration effects of sustainable energy investments

Transformation Impact

As the first residential SEFF in Ukraine, the project will generate TI by demonstrating the benefits of rational energy utilisation in the light of the rising energy costs and unreliability of energy supply. Financial institutions can become effective channels to educate their clients and enable wide scale uptake of EE technologies.

In the crisis recovery environment in Ukraine, the Facility will generate TI by providing medium term funding to PFIs for on-lending to private sector borrowers to finance EE investments. UREEFF will generally support PFIs maintain lending to the retail segment and will allow them to expand financing to market segments which have not been tapped before. This in turn will support the expansion of the market for SE equipment and services resulting in increased competition among the suppliers/installers/vendors.

Demonstration effect complementing the Bank’s policy dialogue on building EE legislation by providing practical demonstration of the effect of implementing new policies and regulations transposing the EU Energy Performance of Buildings Directive. This is particularly important as the government is preparing new legislations with the assistance from the Bank.

Benchmarks Number of sub-borrowers reached

Number of financial intermediaries

Energy savings achieved

Carbon emission reductions achieved

Due diligence Evaluation of lending appetite and the business pipelines of the PFIs and their commitment to targeted client segments and energy efficiency lending.

II) Market-based behaviour patterns, skills and innovation

Transformation Impact

UREEFF will also generate TI through dispersion of skills to PFIs. The project will support PFIs in learning how to tap into less conventional sectors such as residential EE and to evaluate the risks and benefits associated with small scale EE investments. Incremental impact will be achieved by building long-lasting internal capacity in the PFIs via the ‘train the trainers’ approach as well as by requiring that a) consultants’ team is structured to incorporate a strong local expert base and b) the involvement of international experts is gradually decreased over the lifetime of the TC assignment.

The Project will ensure transfer of skills to sub-borrowers and project specifiers (i.e. local engineers/architects/designers) by assisting them to acquire the necessary SE skills through energy management training courses (part of the TC) and gain expertise in identifying EE opportunities.

The Facility is expected to encourage innovation in market behaviour by marketing to vendors new product-purchase finance instruments for selected technologies and

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providing associated finance.

Benchmarks Number of loans appraised and extended by the PFIs

Sustainable capacity building in PFIs (for example number of trainers trained and loan officers trained by trainers or existence of an on-line training programme )

Due diligence Selection of Technical Consultants as per the standard EBRD procedures.

TC TC is envisaged to support marketing, training and capacity building efforts, facilitate implementation and ensure verification and monitoring.

Additionality Additionality is achieved by providing support to local PFIs to continue retail lending, a segment with difficult access to funding especially under the current market conditions. There are no other private investors that can combine the Bank’s relationship with local financial institutions and the donor community and its energy efficiency mandate and tailored technical consultant services into a financing scheme such as the proposed Facility. Even among all IFIs present in Ukraine, this is the first attempt so far to use the financial intermediation model to support residential EE investments. While the ongoing Policy Dialogue of the Bank is paving the way for establishing residential sustainable energy investments, adding elements of concessionality (grants, risk-sharing, guarantee) will incentivise PFIs to pursue investments in energy efficiency for households and the unserved sector of housing collectives. In addition, the medium term tenor of the EBRD financing is not generally available to Ukrainian financial institutions and will enable them to offer longer tenor loans to sub-borrowers to implement sustainable energy efficiency investments.

Additionality Dimension

Verification and/or counter factual results Timing

Terms No adequate financing instrument targeted for the residential energy efficiency sector in Ukraine exists

Throughout implementation

EBRD attributes Development of a LEME list, restrictions in use of proceeds, technical support to e.g. develop more challenging refurbishment projects

Throughout implementation

Risks Risks to market transformation impact The main risks to the transformation impact are related to: political risk, uptake by PFIs and uptake by end borrowers Sensitivity analysis / risks

Risk Effect/

Probability Mitigation/Comments

Political instability and vulnerability of the financial sector

High/ High

The recent political and economic crisis in Ukraine is a key risk to the successful implementation of the Facility. The launch of the Framework will be carefully timed (currently expected in H1 2015 when PFI risks and strategies can be adequately assessed). The PFIs will be carefully selected based on their creditworthiness and capacity to implement EE lending product.

Market potential and attractiveness of the Facility to PFIs

High/ Medium

Residential EE finance has not yet been tested in Ukraine and PFIs may be reluctant to take the risk of “first mover” in such untested markets. Comprehensive TC support and smart incentive mechanisms under the Facility should encourage PFIs’ involvement in SE financing.

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Implementation Risk related to the performance of PFIs and the speed of the implementation

Medium/ High The risk of slow uptake and utilisation of loans by PFIs and sub-borrowers will be mitigated by i) appropriate timing of the launch of the facility, ii) careful selection of PFIs, iii) TC support, and iv) smart incentive structure / mechanisms.

4. GENDER AND SAFEGUARDS

Gender Impact Issues that will be addressed during the implementation of the facility may include among others:

Develop a better understanding on supply and demand factors influencing women’s access to and use of finance for building level energy efficiency improvements and home appliances.

Develop operational recommendations to enhance women’s access to finance for the purchase of both energy saving business equipment and domestic appliances.

Increase awareness on possibilities on and finance for the purchase of both building level energy efficiency improvements and domestic appliances. This will be carried out as follows:

o Gender analysis in order to map out supply and demand factors influencing women’s access to and use of finance for building level energy efficiency improvements and home appliances.

o Through an analysis of relevant secondary data and reports, as well as through interviews, and focus groups with male and female clients and bank officials, the consultants will identify the main challenges that women and domestic borrowers find in accessing finance, including both financial and non-financial obstacles faced by women.

o The study will include analysis of supply and demand factors affecting access of women in different income groups and different social categories (e.g. rural/urban, married/FHHs, etc.).

Provide operational recommendations to enhance women’s access to finance for the purchase of both building level energy efficiency improvements and domestic appliances. The report will provide operationally relevant recommendations to inform the EBRD’s dialogue with its partner Bank(s) in order to adapt its own practices and/or develop its own products. Recommendations should build upon successful models of financial institutions that offer tailored service to women. Specific changes to the design of the FI products and practices are expected to be included in the report.

Approval is hereby requested to use some of the funds allocated to gender assessments in district heating in Ukraine for gender work under this framework, should another donor not be found. Safeguards Environmental Categorised FI. Participating financial institutions will be required to comply with the EBRD's performance requirements 2 and 9 and submit annual environmental and social reports to the Bank, including reporting on sub-projects. Sub-projects will be required to comply with national standards for environment, health and safety and labour. Integrity All actions required by applicable EBRD procedures relevant to the prevention of money laundering, terrorist financing and other integrity issues have been taken with respect to the project, and the project files contain the integrity checklists and other required documentation which have been properly and accurately completed to proceed with the project. Due diligence on integrity and AML policy will be conducted on each selected PFI in accordance with standard EBRD due diligence process, prior to the presentation of PFIs at FRM / SAF approval stage.

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5. SECTOR BACKGROUND

Ukraine faces the following key challenges related to the energy sector:

High energy intensity. Ukraine’s energy and carbon intensity are remarkably high. Ukraine uses three times more energy per unit of GDP than an average EU member state; carbon intensity of Ukraine’s economy is four times higher. This is a result of a legacy of energy infrastructure in obsolete condition, the waste of energy at demand-side and low market penetration of new technologies.

Energy security. Ukraine relies heavily on imported fuel - up to 50% of primary energy needs. Natural gas supplies account for more than 60% of all energy imports and come from one source – Russia. Residential sector consumes 31% of all Ukraine’s natural gas supplies.

High energy subsidies. The government’s natural gas-related subsidies paid to households totalled 6% of GDP in 2012. Together with regulated electricity prices, these subsidies significantly distort energy use patterns in Ukraine. Nevertheless, actions to reduce energy subsidies are complex. In particular, any consequent gas price or heat tariff increases will have an undue impact on low income families.

Energy prices on the rise – affordability concerns. Recent events have already affected the energy prices for both industrial and residential consumers with serious implications on businesses’ competitiveness and households’ disposable income. However, end-user gas and electricity prices remain well below European averages and future price reforms are expected to bring further increases with significant impact on energy bill affordability. The Government of Ukraine has already increased natural gas and heat tariffs for the population by 40-50% (depending on consumer group) from May 2014 and announced further annual increase by 40% in 2015 and annual increase by 20% in 2016 and 2017 (as agreed with the IMF).

Residential sector is the second largest energy consumer in Ukraine which accounts for 31% of the country’s total energy consumption (after 35% industry share).

Figure 1 - Share of Total Final Consumption in Ukraine, 2011

Source: IEA statistics As of January 2009, the housing stock comprised 10,148,900 houses (building structures), including 598,700 unoccupied houses. On average, the habitable space is 22.5 m2 per inhabitant which is comparable with other post-socialist countries (27 m2 for the Czech Republic and Slovakia, and 23 m2 for Latvia and Lithuania). Housing stock in urban areas represented approximately 64% of the total housing stock; the number of buildings that have more than 5 stores is 79.3 thousand, 78.3 thousand of which are located in urban areas. The age of building stock in Ukraine is similar to the building stock in the EU countries (with more that 50% of buildings constructed between 1946 and 1970). Occupancy averages 2.4 persons per dwelling which is close to the European indicators (2.1 for Germany, 2.5 for Latvia). As of the beginning of 2009, more than 90% of housing stock (by floor area) was privately owned, remaining distributed to communal and state ownership. In the housing sector, average energy consumption in Ukraine is two to three times higher than in the EU.

35%

17% 31%

6% 3%

8%

Industry

Transport

Residential sector

Commercial andpublic services

14

More than 80% of Ukraine’s multi-family apartment buildings have deteriorated to the extent that they

constitute a risk to the lives and well-being of their inhabitants. According to EBRD estimates4, economic energy saving potential under the relatively low 2010 tariffs would amount 32.6 million MWh per year, resulting in monetary saving of more than Euro 600 million (in 2010 prices). Technical energy saving potential is estimated at 50% of the actual baseline consumption or around 136 million MWh. The monetary savings of this potential can be estimated at EUR 2.6 billion per annum. The poor condition of the country’s housing stock leads to the situation where the energy wasted by utility companies and the government subsidies paid to these and to domestic users accumulates to more than 6% of GDP (2012). As has been shown by the EBRD and IFC studies, there are significant regulatory barriers preventing commercial financing of residential energy efficiency projects in Ukraine. In particular, up until recently, the legislation did not provide for establishing of a legally viable homeowner client base; national banking regulations were extremely unfavourable towards home owners associations (HOA) as borrowers; IFIs were not given an option to provide funds to Ukrainian banks in hryvnia; and secondary regulatory basis was insufficient for introduction of market-based financial instruments for energy efficiency. Above barriers are being addressed by the EBRD and IFC extensive policy dialogue that has recently resulted in significant improvement in developing enabling conditions for investments. In particular, National Bank of Ukraine introduced less stringent requirements on commercial banks regarding the security of loans. IFC supported the government of Ukraine by providing assistance in drafting two crucial pieces of legislation that regulates property rights in housing sector and that would enable the residents of multi-family buildings to take the responsibility for the managerial and financial decisions regarding their property. USAID, jointly with IFC and other donors, is providing support to development and approval of the Law of Ukraine ‘On energy efficiency in buildings’ that would enable implementation of the EU Energy Performance of Buildings (EPBD) Directive. All the above laws are the part of the priority regulatory package of the government of Ukraine, and are planned to be adopted by Verkhovna Rada of Ukraine before summer break (mid-July 2014). Market Barriers Based on the previous SEFF experience in the country, energy efficiency (EE) investments in some sectors have been solidly financed by the PFIs. Nevertheless, many EE projects in complex sectors such as residential energy efficiency remain unfinanced and unimplemented because of key barriers, despite large potential. These include:

Inadequate awareness of the benefits of EE projects and perceived technical and/or financial risks. In some cases energy efficiency projects are perceived to be technically, commercially risky (e.g. complex rehabilitation of residential buildings, municipal energy efficiency and/or off-balance sheet financing) and not bringing about commensurate financial returns, particularly when compared to green field or industrial expansion investments.

Insufficient capacity for evaluating specific energy efficiency projects among banks. Particularly true for the above-mentioned, less conventional sectors such as residential and building energy efficiency, ESCO development and small scale renewable energy (RE) investments. Moreover, the internal capacity for identification and business development of such projects, their evaluation and further processing is also low as a result.

Lack of dedicated long-term financial resources for small scale EE and RE investments. In the context of the current political and economic crisis, local banks are reluctant to provide loans with longer maturities, particularly for non-mainstream investments such as EE and RE. These investments typically require long term funding, therefore facing lack of funding due to, among other things, a maturity mismatch.

Prevailing market risks attached to FX borrowing: The instability in the political and economic environment in Ukraine provides to be a major obstacle for financial institutions to borrow in foreign currencies while lending to individuals can only be done in local currency.

4 Market Assessment Study available at http://teplydim.com.ua/en/library

15

There are also significant regulatory barriers preventing commercial financing of residential energy efficiency projects in Ukraine. In particular, up until recently, the legislation did not provide for establishing of a legally viable homeowner client base; national banking regulations were extremely unfavourable towards home owners associations as borrowers and secondary regulatory basis was insufficient for introduction of market-based financial instruments for energy efficiency. The EBRD cooperates closely with the donor community on residential energy efficiency policy support (IFC, USAID, European Union, GiZ, World Bank) and is an active participant in regular donor coordination meetings in Kyiv. As a result of these coordination meetings, the donors have agreed to allocate areas of policy support responsibility as shown in the table below. The EBRD has taken leadership on the important technical area of energy efficiency regulations for buildings. It is important to note that the crucial work of tariff reforms is being led by USAID-funded work. The EBRD team interacts and supports the USAID colleagues and their consultants in this area, but it is not proposed that the EBRD duplicate work on tariff reform in the TC outlined below. Note that the other work funded by the IFC and USAID on reforms to the primary legislation is progressing well with the necessary reforms of legislation governing HOA operation and residential property-rights due for consideration by the Rada this summer.

Energy tariffs are still low despite being recently increased (the Government increased natural gas and heat tariffs for the population by approximately 50% from May 2014) and are not conducive to rational investment decision making. However, tariff increases are expected to continue in the future, as announced by the Government.

And last but not least, the lack of a social safety net for low income households translates into the homeowners associations not being able to reach consensus among homeowners or having to proceed with some low-income families excluded from the refurbishment, meaning that the poor and vulnerable groups do not have equal opportunity to participate in the comprehensive renovation of their building.

Complementarity with other IFI programmes: Above regulatory barriers are being addressed by the EBRD and other IFIs extensive policy dialogue that has recently resulted in significant improvement in developing enabling conditions for investments (Annex C provides details on EBRD Policy Dialogue and Technical Assistance). The table below shows the currently active programmes by donor organisation and area of support.

16

The IFC has been active in regulatory reform that supports investments into energy efficiency in Ukraine for the last three years through the Swiss-supported IFC Ukraine Residential Energy Efficiency project. The project has recently been extended to another 3 years and focuses on awareness raising and legislative changes aimed at multi-family apartment buildings. IFC supported the government of Ukraine by providing assistance in drafting two crucial pieces of legislation that regulates property rights in housing sector and that would enable the residents of multi-family buildings to take the responsibility for the managerial and financial decisions regarding their property. USAID, jointly with IFC and other donors, is providing support to development and approval of the Law of Ukraine ‘On energy efficiency in buildings’ that would enable implementation of the EU Energy Performance of Buildings (EPBD) Directive. All the above laws are the part of the priority regulatory package of the government of Ukraine and are planned for approval by Verkhovna Rada of Ukraine this summer. GIZ supports residential energy efficiency investments through pilot and demonstration projects focusing on technologies and knowledge transfer. NEFCO has financed a small pilot project in the residential energy efficiency in Lutsk through a dedicated ESCO company. All existing IFI programmes focus on market preparation and pilot projects and the proposed Framework will capitalize on their outcomes. The Bank will explore cooperation opportunities with the IFC which is also active in this area, but mostly on the consultancy side.

Areas of Activity EBRD GTZ INOGATE

IFC

(UREEP)

USAID/

Municip

al

heating

reform NEFCO SIDA USAID WB

Amendments to The Housing Code S S P S L SHomeowners’ Association organizational,

functional and credit-worthiness aspects P S P L P S

Energy efficiency in buildings (primary laws) P P P S L P P S

Energy efficiency in buildings (secondary

technical regulations) L P S SMunicipal utilities reform and financing

(municipal finance laws and regulations) P S S

Metering law S L

Municipal utility tariff reform (laws and

secondary legislation) S L

Regulations of bank financing for residential

energy efficiency P S P S

Government sponsored programs for

residential energy efficiency financing P P S S S

Social support for low income residents S S SP - Separate

project

Education of building managers S P P S

Public awareness campaigns S P P P P

Design of finance facilities for residential

energy efficiency P

Key:

L- Lead agency

P- Area of primary interest;

S- Secondary

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Annex A

Proposed Amendment to the CTF Investment Plan for Ukraine, September 2014

The EBRD proposes to undertake a minor revision to the investment plan in order to allow EBRD to re-allocate USD24.152m of funding allocated to support of the renewable energy sector to residential energy efficiency, by expanding the sub-programme Improving Energy Efficiency under Programme 2 Improving Energy Efficiency, which was outlined in the August 2013 revision of the Country Investment Plan (CIP).

Table: Proposed Reallocation of CTF Resources within EBRD Allocation (US$ million)

CTF Program

CTF Funding (CTF Plan Revision

February 2013) CTF Funding Reallocation

by Project

CTF Funding Totals (CTF Plan Revision September 2014)

Project USD Million

Ukraine Renewable Energy Financing

Renewable Lending Facility I 27.603 0

75.792

Renewable Lending Facility II 27.500 0

Novozaovsk Wind Farm 20.689 0

Renewable Energy Programme 15.000 -15.000

Unallocated 9.152 -9.152

Improving Energy Efficiency

District Heating Modernisation 50.000 0

74.152 Residential Energy Efficiency Programme (UREEF)

0.000 +24.152

Technical Assistance

Gender Assessment Grant 0.056 0 0.056

Total 150.000 0 150

Following approval of this request, EBRD would become an implementing MDB of this programme jointly with IFC. The funds allocated to the programme would come from the approved Renewable Energy Programme (the USD equivalent of EUR 11.5m plus USD 270,000) and the currently un-allocated EBRD funds (USD 9.152 million). The shift affects 6.9% of the total CIP volume, and is therefore considered a minor shift. The project proposal is submitted in parallel with this letter. This project answers an immediate and urgent need of the country, and is highly complementary to the already approved CTF District Heating Modernisation programmes by EBRD and IBRD. The MDBs are now working together to undertake an update to the CIP which will accurately reflect the impact of this change, and which may propose additional changes. This is currently considered for submission to the November CTF Trust Fund Committee meeting. The update will reflect the changed situation in Ukraine which has affected the implementation and/or scope of some of the projects proposed in the CIP in 2013, and will provide the relevant amendments to the CIP results measurement framework that will be driven by this change. The EBRD would also like to note that the 2013 revision of the CIP has been very successful, leading to the approval of USD 245 million of projects (70% of the CIP volume) by the CTF Trust Fund Committee in the last 12 months, compared to only USD49 million in the three years preceding the revision (14% of the CIP volume). The MDBs continues to work closely with the Government to ensure 100% approval of CTF funds in the current World Bank Financial Year. Finally, the EBRD would like to confirm that at the present moment the support from the CTF is invaluable in addressing the critical energy situation of Ukraine.

18

Annex B

UAH/FX RISK-SHARING FACILITY STRUCTURE The goal of the structure is to provide Ukrainian financial institutions with a partial hedge of FX risks arising from borrowing in FX from EBRD that would effectively result in fixed interest rate funding in UAH for up to a

4-year period with full protection against devaluation of up to 40%5. Structure of the Guarantee Product

Product Senior unsecured fixed term fixed interest rate loan in USD indexed to UAH, with partial FX risk mitigation for PFI’s

Borrower Eligible Partner Financial Institutions (PFIs)

Use of funds On-lending to eligible sub-borrowers under UREEFF, in UAH only.

Loan Amount Decided individually for each PFI based on creditworthiness

Tenor up to 4 years with bullet repayment and annual repayment of interest. The option of providing longer tenors will be explored further during the development of the facility.

Interest rate The sum of the base rate, the risk margin (up to 7% p.a.), and the FX risk premium (between 2% and 8% p.a.). The risk margin and FX risk premium will be determined on case by case basis depending on risk profile, tenor, and UAH devaluation ceiling. The indicative all-in interest rate is expected to be from 9% to 15% p.a.

Currency of payments USD

Principal and Interest The loan principal amount will be determined in UAH by converting the disbursed USD amount into UAH at then prevailing exchange rate. The interest will accrue on this amount in UAH. The payments of interest and repayment of principal will be made in USD by conversion of the amounts due in UAH into USD at then prevailing exchange rate, subject to UAH devaluation ceiling.

UAH devaluation ceiling (partial FX collar)

The maximum threshold of UAH devaluation set by EBRD will be capped (up to 40%, to be determined and agreed on a case by case basis between EBRD and the local bank); beyond which any further FX loss will be borne by the PFI.

Early prepayment Not allowed or subject to fee and full reimbursement of unwinding costs

5 The final ceiling will depend on the negotiation with each participating financial institution but is currently not foreseen to be higher

than 40% on average.

19

Calibration of FX Risk Premium and Donor FX Guarantee The table shows the donor funds required to cover an FX loss after the FX Risk Premium has been applied.

Distribution of Cover between FX Risk Premium and Donor FX Guarantee for Different Ceilings

The graphs show the distribution of FX loss cover at the ceiling rate between the FX risk premium and donor funds, for three different scenarios. This will be used to calibrate the FX risk premium.

FX premium >>

Ceiling 16,731 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%

Devaluation 20.0% 15,417 12,917 10,417 7,917 5,417 2,917 417

25.0% 19,700 17,300 14,900 12,500 10,100 7,700 5,300

30.0% 23,654 21,346 19,038 16,731 14,423 12,115 9,808

35.0% 27,315 25,093 22,870 20,648 18,426 16,204 13,981

40.0% 30,714 28,571 26,429 24,286 22,143 20,000 17,857

45.0% 33,879 31,810 29,741 27,672 25,603 23,534 21,466

50.0% 36,833 34,833 32,833 30,833 28,833 26,833 24,833

55.0% 39,597 37,661 35,726 33,790 31,855 29,919 27,984

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Annex C

POLICY DIALOGUE AND PREPARATORY TECHNICAL ASSISTANCE

In 2009, the EBRD and the Ukrainian government agreed upon a Sustainable Energy Action Plan to provide a framework for the implementation and expansion of joint initiatives during the Bank’s second Sustainable Energy Initiative phase (2009-2011). The building sector (and in particular residential buildings) was among the key sectors outlined for cooperation. As a result, since 2009, the EBRD has provided on-going policy support to the government in Ukraine on residential energy efficiency issues. The EBRD participated in the Working Group on Buildings Energy Efficiency chaired by the Ministry of Housing and Communal Services. In addition, the EBRD has provided a technical assistance to the Ministry of Regional Development, Construction and Municipal Economy. A first policy TC project (EUR 1 million) in this area was implemented during 2011-2013 and resulted in the following:

Web-based information platform http://www.teplydim.com.ua

A comprehensive market assessment “Residential Sector of Ukraine: Legal, Regulatory, Institutional, Technical and Financial Considerations”.

Three technical regulations to support Ukraine’s transposition of Energy Performance of Buildings

Directive6. Standards have been adopted by the Ministry as a part of the secondary legislation of Ukraine.

Preparatory work for a financial instrument for residential buildings: pilot pipeline of the residential projects developed.

Following on the results of the above policy dialogue work, a second technical assistance project to support investments in energy efficiency in residential buildings (EUR1 million) was launched in February 2014. The current EBRD-supported targeted technical assistance covers areas like:

Assisting the government with additional technical regulations. In particular, the Ministry of Regional Development has requested the EBRD to provide technical assistance in the development of a byelaw on a model contract between Homeowners Associations and Housing Management Companies.

Development of official software for the calculation of the energy performance of buildings requested explicitly by the Ministry of Regional Development. Such software is an integral part of the effective transposition of the EU Energy Performance of Buildings Directive.

The technical assistance work will further support the preparation of an effective financial instrument for residential energy efficiency investments. In this regard, the main activities to be undertaken by the consultants are:

Establishment of a List of Eligible Materials and Equipment and a List of Eligible Suppliers and Installers. In consultation with EBRD experts, the Consultant will establish a list of automatically eligible projects that include pre-defined categories of equipment and materials with specific minimum technical and environmental characteristics that are proven to result in fundamental and straightforward improvements in energy efficiency. The List of Eligible Materials and Equipment (LEME) will include equipment, appliances and/or materials which can be expected to achieve a minimum energy saving of 20% when compared to market norms and will be designed in conjunction with a related open List of Eligible Suppliers and Installers (LESI). Once established, the LEME/LESI lists shall be made publicly available on a dedicated website.

Analysis of households’ energy bill affordability and recommendations for a social safety net.

6 Namely: (i) National Methodology for Calculation of Energy Use for Heating, Cooling, and Domestic Hot Water, according to ISO EN 13790 “Energy Performance of Buildings – Calculation of Energy Use for Space Heating and Cooling.”; (ii) National Standard “Expression and Documentation of Energy Performance and Energy Rating of Buildings,” according to EN 15603 and (partially) EN 15217; and (iii) Regulation on “Assessment of Cost-Effectiveness of energy efficiency measures in buildings” based on the European standard EN 15459.

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Annex D

ABBREVIATIONS / CURRENCY CONVERSIONS

DSCR Debt service coverage ratio E5P Eastern Europe Energy Efficiency and Environment Partnership ESAP Environmental and Social Action Plan ESDD Environmental and Social Due Diligence EUR Euro Gcal Giga calorie – unit of heat GDP Gross Domestic Product GHG Green House Gases IFRS International Financial Reporting Standards IRR Internal Rate of Return m

3 cubic metre – unit of volume

MW megawatt – unit of power MWh megawatt hour – unit of energy PP&R EBRD’s Procurement Policies and Rules PR Performance Requirements SSF EBRD Shareholder Special Fund TC Technical Cooperation

CURRENCY CONVERSIONS

EUR 1 = UAH 15.6

EUR 1 = USD 1.41587

7 Exchange rate on 31 March 2011.

22

Annex E

Indicative Budget for Technical Assistance Program

Activity Overview Year

2015-2018

CTF

Contribution

EBRD/Donor/Sponsor

Contribution

Thousand USD

Technical Assistance work and Capacity Building

4,000,000 0 4,000,000

Policy Dialogue 500,000 0 500,000

CTF/CIF Knowledge Management and Evaluation

44,000 44,000 0

Total 4,544,000 44,000 4,544,000

23

Annex F

Administrative Budget

Based on the CTF rules (Document Clean Technology Fund Financing Products, Terms, and Review Procedures, revision of 13 November 2013), the EBRD will charge the CTF a one-off, non-refundable guarantee fee of 0.45% of the guarantee volume, equivalent to USD 108,000.

24

Annex G

Knowledge Management Activities

1) Production of a publishable case study aimed at the climate finance community covering the climate and social benefits of investing in residential energy efficiency projects through the local financial sector

Overview of the project

o Outcomes

o Barriers and challenges

Impact of key actors

o Public Authorities

Central Government

Regulatory Agencies

o Private Actors

Local Banks

o IFIs

EBRD

World Bank

IFC

o Donors

CTF

Other donors, especially EU and E5P

Specific development outputs and social impact

o Climate impact

o Loans taken up

o Investments undertaken

o Market transformation impact

Lessons learnt