The European Bank for Reconstruction and Development (EBRD) will lend €4 million to the Latvian Baltic Energy Efficiency Facility (LABEEF) to help finance energy efficiency in Latvia’s ex-Soviet buildings.
Around 70 percent of Latvians live in apartment blocks built in the Soviet era, most of which suffer heat losses of over 50 percent and require substantial renovation. Energy efficiency improvements are often combined with structural repairs, such as the addition of wheelchair access, to extend the life of Soviet-era buildings.
“This project with LABEEF addresses several EBRD priorities: supporting sustainable energy and developing non-banking financial services, which makes our countries of operations greener and more resilient,” said Terry McCallion, EBRD director for energy efficiency and climate change.
LABEEF provides Latvian energy service companies with long-term financing for energy efficiency improvements in residential and public buildings, though local service companies currently only have access to short-term financing.
LABEEF works by purchasing receivables, or a stream of future revenues, from completed and certified projects, based on its guidelines and contracts. Under this model, resident associations and managers of public buildings can engage a service company to carry out upgrades, while the service company can get financing for those upgrades from a company like LABEEF. This allows the companies to finance more energy-saving projects.
Such a structure means that residents will not have to pay extra for refurbishment and insulation works. Instead, the costs will be covered from future energy bills.
Energy efficiency projects in Latvia are also supported by the European Union (EU), which has provided grants, including structural fund grants, for a number of years. However, the EU grant programme finishes in 2020, so the EBRD-LABEEF agreement provides some long-term security.
Nicholas Stancioff, co-founder of LABEEF, added: “Our approach offers a sustainable flow of finance for energy efficiency projects which does not rely on grant funding and does not put a financial burden on homeowners and occupants of public buildings. Once the programme is established in Latvia, we hope to offer it in other eastern EU countries as well.”
The Dutch company Funding For Future will also invest €1 million to become a shareholder in LABEEF.