Dealing with a challenge of energy prices: VIPA finances corporate investments in energy efficiency
With the recent significant increase in energy prices, more and more organisations focus on improving energy efficiency. This not only helps control and reduce operating costs and increase productivity (and thus profitability), but also enhances resilience to energy price fluctuations, which, as we have seen this year, have occurred tens of times.
However, economic indicators are not the only reason to put energy efficiency on the agenda. Reducing negative environmental impacts is becoming increasingly important not only for large companies, but also for other organisations, as this is increasingly demanded by customers and partners. This is particularly important for providers of services or goods to the public sector, as from 2023, all public procurement will be subject to mandatory environmental and environmental impact criteria (with a limited number of exceptions).
In addition, by improving their energy efficiency, organisations contribute to reducing the country’s overall energy demand, to achieving the goals of the EU Green Deal such as climate change mitigation, and to increasing Lithuania’s energy independence. This is particularly relevant in the current context of aggression against Ukraine.
Where to start with green initiatives? Asta Gladkauskienė, Head of the Customer Service Department at the Public Investment Development Agency (VIPA), believes that improvements in energy efficiency should always start from the energy audit. “Depending on the audit results, the specific solutions are put in place: installation of high-efficiency systems, use of waste heat, modernisation of buildings, etc.”, says the representative of VIPA. Self-generated electricity from renewable sources such as solar, wind and other power, also allows reducing dependence on energy sources.
Most popular energy efficiency improvement measures
During energy audits, information about the company’s activities, the types and quantities of energy used and the costs incurred is collected and analysed. The technical and energy performance of equipment, vehicles and buildings are measured and the company’s CO2 emissions are calculated during audits. Finally, the possibilities for reducing energy costs and emissions are assessed, a report is drawn up and recommendations for saving measures are provided.
The implementation of energy management systems usually involves the use of a computerised energy management system, which can handle a huge amount of information, monitor and evaluate the status and costs of equipment and processes, and optimise their running time. Using such a system, energy savings of up to 10 % can be achieved in a short time.
– Installation of higher-efficiency lighting system (e.g., using LED bulbs that are six times more efficient than filament lamps) and automated (using light level sensors and motion detectors);
– Installation of heat pumps, i.e. heat recovery devices commonly used in air conditioning and heating systems, as well as in technological processes. They use electricity to “extract” heat from the environment and thus produce 2.5 – 5 times more heat than they consume electricity. Heat pumps are often installed in combination with renewable electricity generation facilities, further reducing electricity consumption;
– Replacement of electric engines with high-efficiency engines and automation (with variable frequency drive controller). By adjusting the operation of engines to load fluctuations, energy consumption can be reduced by up to 40 %.
The use of waste heat generated during production processes (e.g., for heating of buildings), the use of air discharged from indoors to heat air supplied from outdoors using a heat exchanger. This heat recovery process can be applied in industrial and energy production processes and can save up to 35 % of energy costs. In exceptional cases, waste energy can be sold to other consumers, generating additional revenue.
Measures applied range from insulation of building structures (walls, roofs, floors, overlays), installation of higher-performance windows and doors to improving air tightness. This can reduce heating and ventilation energy demand by 20 – 40 %, while the implementation of measures in a complex manner can facilitate up to 80 % energy savings.
Organisations usually invest in their own electricity generation by installing solar power plants, or participating in the solar farm or wind energy projects. In addition, alternative fuels (e.g., from biomass) are increasingly seen as a viable option for use in production or other processes.
TIPS funding – for energy efficiency and green energy development
“Promoting Sustainable Resource Development” (hereinafter – the TIPS) is the investment platform specifically designed for the financing of green projects (in the form of loans), which finances private and public sector organisations that intend to implement projects in the fields of energy efficiency and renewable energy. The funding for this specialised platform, which was set up by VIPA together with the European Energy Efficiency Fund, amounts to EUR 25 million and is aimed at investments that contribute to increasing energy efficiency and reducing energy demand, CO2 emissions and the cost of production.
The TIPS offers financing: for upgrading technological processes and equipment to achieve energy savings, for investments in the modernisation of buildings, renovation of lighting, advanced heating, heating, cooling and ventilation systems, solar power plants, solar farms and other similar facilities. Financing is usually provided for up to 80 % of the investment value of the project for a period of up to 10 years, and the contribution of the borrower should be at least 20 %.
In addition, as a result of the cooperation agreement signed between TIPS and the national development body Investment and Business Guarantees (INVEGA), small and medium-sized enterprises that have been granted the TIPS loan since 1 January 2020 will be able to benefit from the loan interest compensation measure. It is important that the loan agreement has not expired or been terminated. For interest compensation, enterprises should apply directly to INVEGA.
More information on the TIPS funding is available at: www.vipa.lt/tips.
Frequently asked questions about the TIPS funding
The TIPS aims at more flexible financing conditions. Typically, it is not only the financial flows of the enterprise that are evaluated, but also the project itself and its future impact on the enterprise’s operations – lower costs, higher competitiveness. In addition, the TIPS is more flexible in assessing certain financial indicators used by banks (e.g., the financial debt service ratio). In many cases, the TIPS can offer financing for projects that are unlikely to receive funding due to higher risks or unacceptable financing conditions in the banking sector.
The TIPS finances up to 80 % of infrastructure investments related to reducing energy consumption and CO2 emissions. Projects that use innovative solutions are particularly encouraged and can serve as a model for other enterprises.
Applications may be submitted for measures to improve energy efficiency or to introduce renewable energy sources, or for a combination of both.
Yes. The TIPS provides long-term loans, the repayment of which is usually deferred for the project implementation period.
A part of the TIPS funds consist of VIPA’s contribution. Given that VIPA’s funds are considered to be public funds, in the case of each project it is verified that the public support received by the enterprise does not exceed the ceilings established under the de minimis rules.
Firstly, we recommend conducting an energy audit, which helps identify the processes with the greatest potential for savings and the measures that should be implemented.
For advice on the TIPS funding conditions and requirements for project submissions, please contact VIPA team by email: firstname.lastname@example.org, phone (8 5) 203 4 898.