INOGATE is evaluating the financing facilities for energy efficiency (EE) and renewable energy (RE) that are currently available in its Partner Countries with a special focus on Ukraine, Georgia and Moldova. The study was carried out in October and November 2015, with a final report to be published at the end of January 2016. The report will increase awareness among Partner Countries (PC), international financial institutions (IFI) and bilateral donors of the overall RE power and EE support mechanisms that can implement their national energy efficiency action plans (NEEAP) and national renewable energy action plans (NREAP). The study maps out to what extent PCs are fulfilling their commitments to RES and EE under the Energy Community Treaty (ECT) and assesses the level of funding required within a given time frame. It will also identify gaps and provide a list of financial mechanisms and tools that are available in other EE/RE markets that could be developed in PCs to mitigate investment risks and attract private capital.

Among the main conclusions from the study mission were that IFI financing and donor grants have helped open markets, but an enabling environment and more affordable financing is needed. Among the IFIs evaluated are the European Bank for Reconstruction and Development, the World Bank Group, the European Investment Bank and bilateral development banks that finance small and medium-sized enterprises.

The three countries highlighted – Ukraine, Georgia and Moldova – all understand the need for energy efficiency, although financing remains an obstacle. All three share weak currencies which increase financing risk and lack affordable local currency financing. Due to a more clement climate, EE in Georgia is perceived as being less critical than in Ukraine and Moldova where financing has been largely driven by the public sector. Georgia has the best potential and investment climate for financing RE, whereas it is still modest in Ukraine and Moldova despite some potential RE investments.

Preliminary conclusions before the publication of the final report provide some future directions: IFI financing is still needed but must be well targeted; the municipal sector continues to rely on soft IFI lending; EU grants through the Neighbourhood Investment Facility (NIF) and the Eastern Europe Energy Efficiency and Environmental Partnership (E5P) are helpful; the injection of national EE funds in Ukraine and Moldova are crucial and there is a need for increased EU guarantee instruments to expand public sector lending and boost local currency financing.