Energy Efficiency Funding for Hungarian Municipalities

THE European Bank for Reconstruction and Development (EBRD) are providing funding to stimulate energy efficiency in Hungarian municipalities.

EBRD in cooperation with Erste Bank of Hungary have set up an agreement on the loan programme, which will be backed by EU grant funding, and was signed by the two banks yesterday.

Under the facility, the EBRD is providing Erste Bank Hungary with a €15 million loan for on-lending to Hungarian municipalities, municipal companies as well as private energy saving companies providing services to local authorities.

The financing will support the upgrade of energy efficiency infrastructure, including the modernisaton of lighting systems amongst other energy efficiency measures.

Awareness of the benefit of energy efficiency has increased in recent years, but local municipalities still rely almost exclusively on government funds and EU grants for modernisation of their infrastructure. With EBRD support Erste Bank Hungary will increase the availability of private  funding for energy conservation and/or renewable energy projects for municipalities and energy saving companies in Hungary, helping to improve the energy efficiency of this sector.

In order to further improve the financial efficiency of projects, the EBRD loan facility is supplemented by a European Commission subsidy that helps municipalities assess energy savings opportunities originating from infrastructure rehabilitation projects and evaluate financial feasibility of the projects. The subsidy is based on estimated levels of energy savings, and could be as high as 20 percent of debt portion of total project costs.

“The EBRD is continuing to finance the economies of countries within its area of operation especially at a time of continued economic uncertainty. We are confident this loan facility will contribute to strengthening trust in the Hungarian economy and the further development of the municipal sector”, said Ülle Müürisepp Gutierrez, Head of Budapest Resident Office of the EBRD.

Károly Redling, Head of Municipal Division at Erste Bank Hungary added, “The loan facility agreement with the EBRD will enable municipalities to have the chance to launch energy savings investments that have been put off for a long time and reducing expenses in the long term at a considerable rate. The loan and the related non-refundable subsidy were designed as an efficient response to an increasing demand for energy savings on the part of municipalities. Energy costs represent a considerable bulk in the annual budget of Hungarian municipalities.”

Picture of The Buda Castle in Budapest and the Széchenyi Chain Bridge by SF Brit

Friday 20th May 2011


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