Analytics, Energy, Energy Market, EU – Baltic States, Modern EU

The European Investment Bank (EIB) is a kind of EU’s “climate bank” aimed at providing assistance to the EU states in their efforts to implement SDGs and, in particular, increasing energy efficiency and reducing CO2. Actually, the EIB’s aggregate loan will amount to PLN 200m (€46,4m) for assistance to renovate and restructure existing pipes and sub-stations, as well as connecting new houses. Thus, in Bydgoszcz, the loan will also finance the installation of new highly-efficient generation sources.

The EIB-EU projects will benefit around 500,000 end-users in total and result in a better city-air quality; the EIB loans are backed by the EU’s Investment Plan.

Implementing EU’s ambitious energy efficiency program needs additional efforts to both modernising existing heating distribution systems and networks; this will result in energy savings, reduced energy losses and better air quality in cities.

Renovating Polish heating network

The EIB will lend PLN 100 mln (about €23 mln) to Bydgoszcz's district heating operator to finance the upgrade of the city's district heating network and part of its energy generation system. The neighbouring municipalities (Solec Kujawski, Szubin, Nakło nad Notecią and Koronowo) will also share the benefit.

The EIB will also lend PLN 100m (equivalent to €23,2m) to Lublin's district heating operator to finance the upgrading of the city's district heating network. In both cases, the EIB will finance up to 50% of the project costs. 

The operations are part of the Programme Loan Heating Sector in Poland, which has the guarantee of the European Fund for Strategic Investments (EFSI), the financial pillar of the Investment Plan for Europe. Before Bydgoszcz and Lublin, Opole was the first Polish city to benefit from the programme in early 2019. 

European Commissioner for the Economy, Paolo Gentiloni, underlined that the EU supports investments into energy-efficient projects in the states through the EIB facilities. The investments will lead to transformation of the towns of Bydgoszcz and Lublin for the benefit of residents and –generally – for implementation the EU’s transition to climate-neutral growth.

EIB Vice-President, Lilyana Pavlova, added that energy efficiency has been the most optimal way of bringing down national energy demands and reducing greenhouse gas emissions. She underlined that these were the EIB’s first loans to both Bydgoszcz and Lublin's heat network operators; they would add to a growing list of Polish municipal operators that receive EIB support to finance their energy efficiency programmes, leading to better air quality and the overall transition to a low carbon economy in Poland.   

Towns and cities in various Eastern and Central European states are having a lot of old houses equipped with the old-fashioned internal heating systems (mainly wooden fireplaces), which are both inefficient and polluting.  The Polish example can be a positive source of emulation for decision-makers in the Baltics. 

EIB-EU: Polish loan structure

In Bydgoszcz city's district heating network’s plan the following result of the EIB-EU loan will be achieved: general renovation and restructuring, as well as more efficient heat supply for around 250,000 end-users (about 70% of its population).

The loan will finance a five-year investment program (2018-2022), which in total includes 55 km of old lines and 96 old heating sub-stations to be retrofitted and 71 km of new lines and 416 new sub-stations will be constructed.

Moreover, five high efficiency gas CHP engines will replace the existing coal fired units, delivering primary energy savings of up to 25%. The carbon footprint of the electricity generated will be 228 g CO₂/kWh_e, below the EIB's threshold of 250 g CO₂/kWh_e.

In Lublin, plans to revamp the city's district heating network will result in a more efficient heat supply for around 250,000 end-users, which constitutes around 75% of its population. The EIB loan will finance city’s five-year investment program (2018-22). In total, 33 km of old lines and 211 old substations will be retrofitted and 28 km of new lines and 355 new substations will be constructed, contributing to an added 59 MW_th of capacity and a safer and more efficient district heating network.

The EIB signed the contract with Bydgoszcz's KPEC in December 2019 and with Lublin's LPEC in October 2019. Most of funds made available by the EIB are expected to be disbursed during 2020. The EIB Board of Directors approved the Programme Loan Heating Sector in Poland in 2018 for up to € 250m (over PLN 1bn). So far, including the PLN 120m (equivalent to €28m) loan to Opole signed in January 2019, the EIB has signed lending agreements for an aggregate sum of PLN 320m (equivalent to €74m).

About the EU investment facilities

-The European Investment Bank, EIB is the EU’s long-term lending institution “owned” by the member states. It makes long-term finances available for sound investment in order to contribute towards the EU policy goals.

- The European Fund for Strategic Investments (EFSI) is the main pillar of the Investment Plan for Europe. It provides first loss guarantees enabling the EIB to invest in more, often riskier projects. The projects and agreements approved for financing under EFSI are expected to mobilize more than €458.8bn in investment and support more than one million start-ups and SMEs in the EU states. EFSI-supported investments have increased the EU's GDP by about one per cent and created additionally over one million jobs. By 2022, the Investment Plan will increase the EU GDP by about two per cent and create 1.7 million additional jobs.