New Funding Opportunities for Sustainable Energy Projects

A new investment platform “Tvarių išteklių plėtros skatinimas” (TIPS) (English: Promoting Sustainable Resource Development) for the funding of sustainable energy projects has been launched in Lithuania. The capital of this funding platform established by UAB Viešųjų investicijų plėtros agentūra (VIPA) (English: Public Investment Development Agency) in cooperation with the investment company European Energy Efficiency Fund (eeef) already totals EUR 24.5 million. The plan is to raise another EUR 12.5 in investments in the future, so the total loan portfolio will amount to EUR 37 million.

Private and raised investments of the main investors have become the initial capital of TIPS: VIPA has invested EUR 2 million in the platform, the eeef has contributed EUR 10 million and the European Investment Bank – another EUR 12.5 million. This measure is intended for supporting investments in renewable energy and energy efficiency and can be used by organizations operating in the public and the private sector.

Investments for a greener future

The main objective of the TIPS is to promote investments that can help to reduce the need for energy resources and increase their energy efficiency, also increasing the supply of green energy. These investments are crucial in light of the current economic and geopolitical trends – skyrocketing prices of energy resources and increasing risks of their stable supply.

Lithuania’s National Energy Independence Strategy stipulates that there shall be at least 30% of consumers using energy produced from renewable energy sources for their own needs by 2030, and at least 50% of them by 2050. Currently, there are about 9 000 of such consumers, which is almost 7.5 times more than three years ago, but the goal pursued is still a long way off. This is why investments in green energy development have been increasing.

Promoting energy efficiency is important in pursuit of the goals of the European Union’s Green Course. When renovating public buildings, such as schools, hospitals, kindergartens, etc., and upgrading other infrastructure, such as lighting networks, reduces the need for energy resources, thus reducing energy costs, CO2 emissions and air pollution. Moreover, increasing energy efficiency in companies allows businesses not only to contribute to the goals of the Green Exchange, but also to increase competitiveness by saving costs.

Sees the potential of Lithuania

“We want to encourage more private investors to get involved in funding projects for small and medium-sized renewable energy and energy efficiency projects. We believe that Lithuania has the potential to lead in the field of clean energy in the Baltic region, therefore we aim to contribute to investment and funding alternatives aimed at increasing energy security and competitiveness,” says Lada Strelnikova, Lead Investment Manager of the eeef.

The aim of the eeef set up by the European Commission in cooperation with the European Investment Bank is to support the European Union’s climate change objectives: to promote a sustainable energy market and contribute to climate change mitigation by combining private and public capital for climate-related investment

According to L. Strelnikova, the cooperation with VIPA is an excellent example of a public-private partnership: the Fund contributes its experience in financing energy efficiency and renewable energy projects, while VIPA shares its knowledge of the local market. “Together, we aim to create a sustainable investment portfolio in Lithuania,” says the representative of the eeef.

The platform is open for applications

The TIPS loan portfolio of EUR 25 million is open to public and private sector companies that plan to implement energy efficiency and renewable energy projects. Funding will be provided in three directions: for the modernization of public buildings and street lighting networks, for solutions that increase energy efficiency, and for the development of solar energy.

The first direction – public building and lighting network projects – requires significant investment, which is not easy to obtain. Borrowing opportunities for municipalities are limited, while banks do not always lend willingly to private entities implementing such projects or do that on less favourable terms.

“The TIPS platform may offer funding for projects that are unlikely to receive funding due to excessive risk or unacceptable funding conditions in the banking sector. We work with each customer personally, put together a funding structure acceptable to both parties and offer the project promoter an attractive solution,” says Justinas Bučys, Business Development Officer at VIPA.

Municipalities or legal entities that have won public tenders announced by municipalities for the implementation of projects of modernization of street lighting or renovation of public buildings through a public-private partnership may apply for funding under this direction. The essence of this model is the borrowing of the funds by private companies that have won municipal public procurement, which not only provide modernization services of buildings or street lighting, but also maintain renovated facilities for an agreed period of time and provide their management services, which are paid for by municipalities.

Private and public legal entities can also apply for funding to implement various energy-saving solutions. “This can be the renovation of technological processes and equipment, as well as investments in the modernization of buildings, renovation of lighting, advanced heating, cooling, ventilation systems and the like,” says Asta Gladkauskienė, Head of Private Customer Department of VIPA.

She notes that projects for the renovation of public buildings and lighting networks, and for increasing energy efficiency must provide for a reduction in energy consumption and greenhouse gas emissions of 30% at the least, both in terms of energy savings and reduced CO2 emissions, calculating from initial consumption.

The third direction of TIPS funding is support for the development of solar energy. “Both public and private legal entities can apply for it, regardless of whether they are installing solar power plants for their own needs or developing solar parks for sale to consumers producing electricity,” says Asta Gladkauskienė.

All three instruments are typically used to fund up to 80% of the value of the project investment for a period of up to 10 years, while the borrower’s contribution should be about 20%. Applications for TIPS funding can already be submitted now.