The Development Bank of the Republic of El Salvador (BANDESAL), with the support of the Inter-American Development Bank (IDB), launched the digital microsite of the Energy Efficiency Financing Facility for SMEs, a project supported by the Green Climate Fund (GCF).
The microsite aims to raise awareness of the benefits, characteristics and conditions of the facility, as well as to introduce a platform to bring together different stakeholders such as suppliers, Intermediary Financial Institutions (IFIs) and small and medium-sized enterprises (SMEs). The platform presents the IFIs and SMEs participating in the initiative and the technologies to be financed.
The microsite is expected to have a positive impact on the placement of energy efficiency loans through the two financing models, either in the traditional way or through the Energy Savings Insurance (ESI) model, in which entrepreneurs have a secure savings through an insurance company.
It will also seek to bring together and coordinate market players, as well as to identify a robust and bankable portfolio of Energy Efficiency (EE) projects.
To implement this innovative project, the GCF has made available USD 20 million in reimbursable resources, USD 1.7 million in non-reimbursable resources and, in addition, USD 20 million in counterpart funds from BANDESAL, for a total of USD 41.7 million. The reimbursable resources will be used to finance SMEs through a second-tier EE line channelled through IFIs, while the technical cooperation funds (non-reimbursable resources) will be used to finance strengthening and technical support activities.
The EE financing line is aimed at SMEs that wish to finance equipment modernisation projects to increase their productivity and competitiveness, reducing electricity consumption, supporting the generation of renewable energy and reducing greenhouse gas emissions. In this sense, Juan Pablo Durán concluded that it is “money that will not only improve the operation of companies, but that the final destination is to have a positive impact on the environment”.
One of the main benefits of the line is an interest rate of 6.17%, with the incentive of an additional reduction in the interest rate that is financed with part of the technical cooperation.
BANDESAL also announced that, as an incentive, annual recognition will be given to those IFIs that promote this line of financing, based on the following categories: greater positive environmental impact (reduction in CO2 generation) and greater number of credits granted under the ESI model.
In addition, BANDESAL signed an agreement with the National Energy Council to carry out activities aimed at guaranteeing financing for the development of energy savings, energy efficiency and renewable resources.
The agreement will have a duration of three years and will start its implementation with the first activity: “Technical support for the National Energy Council, through the execution of consultancies aimed at strengthening the national regulatory framework for renewable energy and energy efficiency”. This activity will be financed with non-reimbursable funds from the Technical Cooperation Agreement signed between BANDESAL and the IDB for the implementation of the project “ESI for Private Investments of MSMEs”.
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