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Promoting Energy Efficiency and Market Development in Europe and Central Asia

The Scaling Energy Efficiency in Europe and Central Asia (E3) MPA is a regional program aimed at strengthening energy security and affordability across the Europe and Central Asia region through improving technologies and practices to provide the same¡ªor better¡ªlevels of production and/or service quality with lower energy inputs.

Considered the "first fuel" in the clean energy transition, energy efficiency offers cost-effective solutions to curb energy demand and reduce carbon emissions. Because the region hosts some of the most energy intensive economies in the world, and the recent energy crisis re-emphasized the urgency and opportunity to achieve energy efficiency at scale, many countries in the region have adopted National Energy Efficiency Actions Plans and National Energy and Climate Plans.

The E3 program supports these commitments and will build on the World Bank¡¯s decades of experience and rich energy efficiency portfolio across the region to seize the substantial opportunities that exist in the region to reduce energy inefficiencies in the heating, industrial, and building sectors.

The energy efficiency program (E3) is a $1.5 billion initiative with a seven-year commitment period. It will harmonize energy efficiency project designs in Europe and Central Asia, define trajectories and sequencing of interventions to promote market development, and build economies of scale. The program is projected to save more than 63 TWh and 18.7 MtCO2e over the investments¡¯ lifetime and will leverage about $2.4 billion in co-financing.

National programs will prioritize inclusion and gender. Investment programs will encourage commercial financing for larger and wealthier municipalities and direct public support to target poorer ones. The program will encourage female representation among its contractors. E3 operations will be developed with strong public consultation.

ECARES: Achieving results for country needs

The Europe and Central Asia Renewable Energy Scale-up (ECARES) program will support a diverse portfolio of country-tailored projects. Participating countries can access a wide range of tools and financing solutions, supporting a diverse portfolio of projects tailored to national needs. Countries are invited to participate in ECARES.

Confirmed ECARES projects

In °Õ¨¹°ù°ì¾±²â±ð, a $1 billion World Bank will create a commercial market for distributed solar and battery storage (to produce and store electricity near consumers), which will support the country in meeting its energy demands. °Õ¨¹°ù°ì¾±²â±ð has set targets of (1) installing 52.9 GW of solar capacity and 7.5 GW of battery storage by 2035 and (2) achieving carbon neutrality by 2053. The Distributed Energy Program-for-Results¡ªthe first of its kind in °Õ¨¹°ù°ì¾±²â±ð¡ªaims to create 1 GW of distributed solar and battery storage. This is equivalent to a large power station and would provide a net reduction in greenhouse gas emissions equivalent to 4 million metric tons of CO2.

Prospective ECARES projects

In Armenia, ECARES will support strengthening transmission infrastructure and improving the commercialization of state-owned enterprises.

In Azerbaijan, transmission infrastructure will be strengthened to enable integration of renewable energy into the grid.

In Kosovo, ECARES will focus on wind resources and private sector participation.

In the Kyrgyz Republic, transmission infrastructure will be modernized and expanded to enable integration of renewable energy into the grid.

In Uzbekistan, ECARES will boost renewable energy capacity through private sector participation.

E3: National energy-efficiency projects

Two projects¡ªin Moldova and °Õ¨¹°ù°ì¾±²â±ð¡ªare in the first phase of advanced preparation:

• In Moldova, $54.5 million of World Bank funding will be used to renovate public buildings, focusing on the education sector.
• In °Õ¨¹°ù°ì¾±²â±ð, $300 million of World Bank funding will be used to renovate eligible central government buildings with high energy use.

Pipeline operations include second phases in °Õ¨¹°ù°ì¾±²â±ð and Moldova as well as operations in Montenegro and Uzbekistan. Other countries are expected to join in the coming years.

Frequently Asked Questions (FAQ)

1. How can countries join ECARES and/or E3?

Any World Bank client country in the Europe and Central Asia region is eligible to join either, or both, of these programs. Countries are selected based on their readiness, level of project innovation, and potential for replicability.

2. What is the World Bank¡¯s Multi-Phase Programmatic Approach (MPA) and what advantages does it offer?

ľ¹ÏÓ°Ôº¡¯s Multi-Phase Programmatic Approach (MPA)¡ªwhich allows countries to structure a long, large, or complex engagement as a set of smaller linked operations (or phases), under one program¡ªis uniquely suited to addressing the vulnerabilities exposed by the energy crisis in the region and ensuring long-term sustainability due to its focus on speed, scale, and impact.

In contrast to business-as-usual approach with individual projects, an MPA implies a cohesive continuous strategy that promotes replicable and scalable engagements. This is particularly beneficial for client countries facing the challenge of attracting private investment for their energy transition.

The MPA also allows the use of diverse instruments, including Program-for-Results (P4Rs), Investment Project Financing (IPFs), and guarantees, thereby enabling our client countries to better navigate their energy transitions. Critical policy and institutional reforms will also be necessary to remove investment barriers and enable scale up. Multi-year initiatives spanning several countries, the MPAs will also emphasize knowledge sharing and capacity building.

3. Why the emphasis on a regional approach?

A regional approach can help governments to scale up renewables and energy efficiency more effectively than individual country operations by creating a longer-term strategic vision and commitment, fostering greater ambition and momentum, building partnerships, and promoting economies of scale. The two programs will generate knowledge and best practices that can be replicated and scaled up across the region. The ECARES and E3 Programs will each establish Regional Support Networks made up of diverse partners to provide finance and technical assistance and to build capacity. This program will also attract private investment by developing regional connectivity and common procurement approaches along with greater harmonization of technical standards to develop local and regional supply chains. In time, the World Bank aims to bring together other regional programs to leverage global synergies.

4. How will ECARES leverage climate and carbon finance?

The ECARES program aims to leverage up to $200 million in grants and concessional and climate finance through the (ESMAP), the (CIF), and the (GCF). Doing so will incentivize and de-risk investments. The program will leverage additional financing by monetizing emission reductions associated with renewable energy under the program that are aligned to specific results.