Energie-Cités, 2008 – www.energie-cites.eu
Indicate both the action and the city / site e.g. Municipal Bonds Emission for
Energy Efficient Retrofitting of Street Lighting – Varna, Bulgaria
Keywords
Selection of relevant keywords for the local action described (max. 5 keywords)
e.g. Intelligent financing scheme, street lighting
Pictures
Main photo of the city + one photo to illustrate the action described
Objectives
Short description of concrete main objectives of the action presented (max. 60 words)
e.g; Modernising the street lighting system at relatively low upfront costs and generating long
term energy savings at the same time.
Description
Background of the action described (e.g. context, main stakeholders involved, policy
background/incentives, etc.)
More detailed description of the action, description of the initiative / methods /
financing used. Photos and graphs (max. 200 words)
e.g. In 2002, Varna Municipality issued the first municipal bonds for financing energy efficient
modernisation of the City’s street lighting system. The bonds were disbursed under private
channels and the invitation to purchase them was sent out to approximately 50 potential
investors. The bonds were sold within less than 24 hours. The financing structure consisted in
municipal bonds emission - 100% municipal investment (obligation) – organised by a financial
institution.
The energy efficient modernisation of the Municipality of Varna started in 2002 and ended in
2003 with a payback period of 2 years and 9 months.
Results /
Achievements
Specific results illustrated by concrete key figures e.g. CO2 emission avoided, energy
savings obtained, money saved, energy produced, number of jobs created, etc.
Monitoring and evaluation of success and/or failure, factors of success and failure
(max. 150 words)
e.g.
- This financing type reduced the projects’ payback period to 2 years and 9 months.
- Municipal bonds’ issue proved to be a relatively cheap form of financing: the interest
rate paid by the municipality was 9% while at the moment the bank’s average interest
rates were in the range of 12% to 14%.
- The project generated good cash flow with high financial parameters.
- The annual savings when the street lighting system is working at full capacity are
almost equal to the annual expenditures before the refurbishment.
- The total annual savings amounted up to 10,035MWh, in financial terms: €512,000.
Friendly advice
for replication
Recommendations based on the experience of the city / energy agency concerning the
action described (max 200 words)
e.g. Based on our experience we would recommend to pay special attention to the following:
- Municipal bonds emission requires a long and expensive preparatory work (obtaining
the credit rating, working out an investment memorandum for the emission, waiting for
the endorsement by the State Commission on Securities, selection of an intermediary
investment broker), with a relatively precise estimation of the expected outcome.
- A major risk is also related to the sale of the municipal bonds: in case the subscription
would have been unsuccessful in implementing the conditions envisaged in the
memorandum (at least EUR 2 million collected within one month after the closure of
the subscription), any collected amounts should have been paid back to the
subscribers, together with the due interests charged by the bank.
- In case the emission has proved to be unsuccessful, the municipality would have
incurred significant losses, since all the preparation costs of the emission and
payment of the due subscription interests would be credited from the municipal
account.
Online
information
Online publications, websites, downloadable documents, etc.
e.g. http://www.landwellglobal.com/bg/html_files/newsletter1.html; www.energiecites.eu/IMG/pdf/martigny_interventions.pdf
Contact
Name / Position / Organisation
Tel / E-mail / Website