Hungarian Energy Efficiency Co-finance Programme

The HEECP programme was launched by the International Finance Corporation (IFC) Environmental Projects Unit with a total of US$ 5 million funding for the pilot phase from the Global Environmental Facility (GEF).The funds are allocated: US$ 4.25 million for guarantee reserves, US$ 300 000 for technical assistance and US$ 450 000 for programme administration and operations over a four-year period. After successful termination of the pilot phase, the guarantee facility has been expanded to US$ 16 million. Under the guarantee programme, participating local financial institutions execute Guarantee Facility Agreements with the IFC.HEECP provides partial guarantee support to credit provided by the financial institutions for energy efficiency projects (50% in the pilot phase and 35% under HEECP-2). The rationale is to overcome barriers to energy efficiency project financing, which are due to credit risk barriers. These include weak or uncertain end-user credit, the gap between perceived and real credit risk and lack of properly structured and credit-worthy projects, coupled with the relatively high transaction costs and risks associated with energy efficiency projects. The guarantee programme addresses the problems associated with credit risk.The technical assistance component aims to provide expertise and to make small grants available for marketing of services by participating financial institutions, project identification, development and investment preparation, general energy efficiency market promotion activities, and programme evaluation activities.Technical assistance funds are also provided to ESCOs. HEECP also seeks ways to promote expanded energy efficiency markets in Hungary in co-operation with other commercial, governmental and NGO agencies. Other GEF-financed programmes include the UNDP/GEF Public Sector Energy Efficiency Programme and the IFC/GEF.