Interviews Bookmark and Share

Bulgaria’s success in implementing energy efficiency credit lines is a model
Terry McCallion, Director Energy Efficiency and Climate Change, EBRD
AUTHOR: Lyudmila Zlateva

Mr. McCallion, what were the main goals of the BEERECL program?

If we go back ten years, which is quite a long time, the goal at that time when we started was to try to deal with the energy intensity in Bulgaria which was obviously rather high and thereby presented a lot of opportunities for improvement. At the time we thought a lot about how to approach this and we realised it would be quite difficult for the EBRD to reach out to the smaller projects directly. So we had on one hand a good relation with financial institutions, and on the other, with Kozloduy International Decommissioning Support Fund (KIDSF) which was prepared and willing to put some money into supporting this new and, at the time, unproved modelling product for financing energy efficiency. The idea was to implement energy efficiency projects and pilot at that stage something that did not exist yet.

One of the main achievements is that we have created the “one-stop-shop” (integrated) approach which allows companies to get access to financing, technical assistance and grants as well, all under the one roof. The success of this model in Bulgaria enabled us to have a track record that we have been using for other countries.

It seems that the business in Bulgaria is still reluctant to invest in energy efficiency. What are the reasons for this?

There is a bit of a conundrum about energy efficiency. Everyone knows it is good to invest in energy efficiency from a financial point of view, yet it does not seem to be a top priority in any country or company. Without a doubt, one of the biggest drivers to encourage people to invest in energy efficiency is the price of energy, because the cost-effectiveness of the investment grows with the cost of energy.

Nevertheless, the investment focus is more often on day-to-day activities or business expansion rather than on energy efficiency. This is why we took such a hands-on approach offering a package of measures that included the advice and support to partnering banks and the clients. Some of the obstacles in investing in energy efficiency are rather universal and have been experienced in the U.K. and other markets as well.

Another factor that had a significant impact in slowing not just energy efficiency investments, but investments in principle, was the financial and economic crisis. It is probably one of the reasons why the implementation period for BEERECL was longer than expected.

Do you see improvement in the services provided by the Bulgarian banking sector during the term of the energy efficiency programs?

I am very impressed by the way Bulgarian banks embraced something that is not a standard banking product and the way they worked with us for turning this available financing into a product which can be sold and distributed through their branch network. Through my perspective there has been a huge engagement and commitment from the banks from the very start. Even today I see this still exists – to find ways of doing more and moving into new areas of energy efficiency. I can say that I have seen a strong initial commitment and improvement throughout the process.

February marks the 10-th year since we started in Bulgaria and I am glad to see that many of the people from the banking sector with whom we started back in the day have kept their interest in the energy efficiency developments. From my point in view climate finance and energy efficiency financing could not only bring fresh air into banking but also work towards supporting a positive image, especially after the effects of the crisis.

What are the current results of the other EBRD energy-related activities and programs in Bulgaria?

I think we had some great achievements in Bulgaria, both in terms of providing an innovative service and palatable results. Under BEERECL some 200 energy efficiency projects were carried out, as well as 100 renewable energy ones.

The statistics show that just under BEERECL, the equivalent of the annual residential electricity consumption of Varna, Plovdiv and Burgas put together has been saved. This is how 1 terawatt hour translates into a current example and the comparison with the residential electricity consumption of three of the largest Bulgarian cities demonstrates better the scale of the programmes effect than raw data.

Since the launch of the Sustainable Energy Initiative in 2006, the EBRD has provided over €643 million for energy efficiency investments in Bulgaria with a total project value of close to €2.4 billion.

EBRD manages sustainable energy financing facilities in other countries from Central and Eastern Europe. What is their performance and are there some good practices that we can implement in the Bulgarian energy efficiency policies?

Given that BEERECL was the first such product we developed starting in Bulgaria, your country should be regarded as a source of influence on the other EBRD countries of operation. The EBRD operates this model in 20 other countries of operation. We provided 2 billion euros of financing committed across these countries and we have about 80 participating banks, nine of those in Bulgaria.

It is easier when you have a track record which shows clearly that something works. So Bulgaria has been quite influential in shaping what has been happening on other markets where EBRD operates. What we have done here has evolved overtime to suit the particularities of the other countries.

In terms of transferring good practices, what Bulgaria could probably borrow is one facility that we have through the banks from Slovakia aimed at financing housing associations for energy efficiency in communal buildings. It works well not so much from a technical point of view, but from a legislative one. Slovakia has a good legislative background which regulates how housing associations form legal entities, so that their members contribute for a building maintenance fund. It also allows for these associations to obtain more readily loans and grants for building improvements. This has been the most successful residential energy efficiency programme that we have put in place.

In order for it to be transferred successfully to Bulgaria, the respective legislative changes should be undertaken in order to scale up financing for housing associations. When launching the Residential Energy Efficiency Credit Line programme in Bulgaria, we set certain incentives for the individuals to come together in making decision, such as a possibility for a grant of up to 35% of the cost for a comprehensive energy efficiency plan for the entire building rather than for individual units. Nevertheless, this does not work in practice, since banks have to work with all the individuals in a block of flats rather than having one counterpart which speaks for all the residents of a block.

There are changes to be made but overall Bulgaria should be recognised as both innovative and piloting for being the development ground for something that had such positive impact in many other countries.

The European Commission proposed new energy and climate goals for 2030. Do you think that they could spark new energy efficiency investments in Central and Eastern Europe? Is EBRD going to be part of this process in the next decade?

The new EU climate guidelines are not so much for binding country targets but for stimulating a business-driven approach and cost-effective energy efficiency. We believe there is much more to do in the industrial sector on energy efficiency. It remains as a challenge and we may want to think how to operate in coherence with these EU programmes and work towards particular results, especially using the “one-stop-shop” approach.

The residential sector is also an area where we have done some financing but it seems to be largely undeveloped and we will need to see strong focus on energy efficiency in residential dwellings and also public buildings. It is probably going to be driven by some legal changes and developments in legislation regarding the formation of housing collectives and how the private sector envisages providing services to the public sector for improving the energy performance of buildings.

In addition to this, we will continue to work closely both with the banking sector and industrial companies directly. We can offer an energy audit and advisory services to companies borrowing from EBRD in order for them not only to choose the right technologies that will make their operations more energy efficient, but also to see what would be the cost-benefit advantage from investing in them.

There is quite a lot work to be done on the demand side as well. Energy intensity has reduced over the period in which we have been working in Bulgaria, partially as a result of the EBRD’s activity. There is still room for more efficiency improvement. In the end of the day, if you invest in energy efficiency, it gives you an advantage regardless of the way you produce energy. Also, even if it is not directly related to carbon emissions curbing, as a result of energy efficiency implementation CO2 mitigation will be easier.

Terry McCallion is the Director of the EBRD Energy Efficiency and Climate Change Team in the Banking Department, based in London.  He previously was a banker in the EBRD’s Financial Institutions Team working on transactions with banks, insurance companies and mortgage finance clients.

Prior to joining the EBRD, Terry was Finance Manager at MMT, an environmental technology business in the United States.  He started his career as an engineer in the oil and gas business with Bechtel before attending business school and moving into banking and finance.  He has B.Sc. in Chemical Engineering from Queens University and an MBA from Columbia Business School.

BEERECL draws to a close after 10 successful years

In 2004, Bulgaria was three years away from its long-awaited EU accession. Ahead of this, it was set to be the Union’s most energy intensive economy, with a level of final energy consumption per unit of nominal GDP more than 4 times higher than that of Germany. Prior to accession, the country also shut down the oldest units of the Kozloduy Nuclear Power Plant which produced 40 per cent of the country’s electricity.

In this challenging context, the EBRD inaugurated a new model of targeted private sector credit lines in Bulgaria. These aimed to make businesses and households more energy efficient and to replace the lost generation capacity with renewable energy production. This was the concept of Sustainable Energy Financing Facilities (or SEFFs) which combine EBRD credit lines to local partner banks with technical assistance and financial incentives for the final borrowers and partner banks.

The Bulgarian Energy Efficiency and Renewable Energy Credit Line (BEERECL) was EBRD’s first SEFF and targeted industrial and commercial borrowers. Launched in 2004 and subsequently extended in 2006 and 2008, it combined €155 million of EBRD funds on-lent to eight participating banks with a €35.2 million grant fund from the Kozloduy International Decommissioning and Support Fund (KIDSF).

The grant component had three uses. First, it supported consultants who raised market awareness of the benefits of sustainable energy investments, promoted the facility and advised borrowers on their sustainable energy projects. Secondly, it supported an independent verifier to confirm the completion of the funded projects. Upon confirmation, the grant would fund an incentive payment to the final borrower worth 15-20 per cent of the sub-loan granted by a partner bank.

BEERECL concluded its operations at the end of February. In the 10 years since its launch it has financed nearly 300 projects mobilising €230 million of total investments. These projects are estimated to save nearly 1.1 million  MWh per year. This is equivalent to the residential electricity use of 893,000 Bulgarians, i.e. more than the residential electricity use of the cities of Plovdiv, Varna and Burgas put together. The annual CO2 emission reduction of 710,000 tons is equal to the emissions from 390,000 cars.

All interviews

No published comments
Login to comment


20.03.2022  Teodor Bobochikov, Managing Partner, V-Ridium
Energy Transformation – Trends and drivers
Full text


No records in this category!


What kind of transport do you use to get to work?


We use cookies to ensure we give you the best browsing experience on our website. Find out more on how we use cookies and how you can change your settings.


What are cookies ?

A cookie is a small text file that a website saves on your computer or mobile device when you visit the site. Cookies are widely used in order to make websites work, or work more efficiently, as well as to provide information to the owners of the site.

How do we use cookies?

Website use Google Analytics, a web analytics service provided by Google, Inc. ("Google") to help analyse the use of this website. For this purpose, Google Analytics uses"cookies", which are text files placed on your computer.

The information generated by the cookies about your use of this website - standard internet log information (including your IP address) and visitor behaviour information in an anonymous form - will be transmitted to and stored by Google including on servers in the United States. Google will anonymize the information sent by removing the last octet of your IP address prior to its storage.

According to Google Analytics terms of service, Google will use this information for the purpose of evaluating your use of the website and compiling reports on website activity.

We not use, and not allow any third party to use the statistical analytics tool to track or to collect any personally identifiable information of visitors to this site. Google may transfer the information collected by Google Analytics to third parties where required to do so by law, or where such third parties process the information on Google`s behalf.

According to Google Analytics terms of service, Google will not associate your IP address with any other data held by Google.

You may refuse the use of Google Analytics cookies by downloading and installing Google Analytics Opt-out Browser Add-on. The add-on communicates with the Google Analytics JavaScript (ga.js) to indicate that information about the website visit should not be sent to Google Analytics.

Cookies are also used to record if you have agreed (or not) to our use of cookies on this site, so that you are not asked the question every time you visit the site.

Google Analytics Opt-out Browser Add-on

How to control cookies?

You can control and/or delete cookies as you wish. You can delete all cookies that are already on your computer and you can set most browsers to prevent them from being placed.

All about cookies

Managing cookies in your browser

Most browsers allow you to:
  • see what cookies you have got and delete them on an individual basis
  • block third party cookies
  • block cookies from particular sites
  • block all cookies from being set
  • delete all cookies when you close your browser

If you chose to delete cookies, you should be aware that any preferences will be lost. Also, if you block cookies completely many websites (including ours) will not work properly and webcasts will not work at all. For these reasons, we do not recommend turning cookies off when using our webcasting services.