European Bank for Reconstruction and Development (EBRD) has sanctioned a €20m loan to energy service company (ESCO), Fenice Rus to promote energy efficiency in Russia.

Fenice Rus, promoted by EDF Fenice, Italy, will utilize the proceeds in designing, funding and implementing measures to improve energy efficiency and reduce costs through long term performance contracts with Russian industries.

The company customizes energy efficiency measures to suit the client’s needs besides undertaking the operations and maintenance services during the period of the contract.

Once the modernized assets commence operations, Fenice is paid as a share of savings accrued to the clients, which provides additional incentives to both participants to maximize energy and cost savings.

Commenting on its business model, Fenice Rus general director Vincent De Rul said, "Energy performance contracting is an effective solution for clients as it allows them to modernise equipment, as well as reduce energy and maintenance bills without making costly investments themselves."

EBRD director of energy efficiency and climate change team Terence McCallion remarked, "Fenice Rus is the first ESCO in Russia to operate on a fully commercial basis, assuming all investment and performance risks and this is why the EBRD is ready to back it financially and promote the viability of a business model designed to appeal to many industrial plants in Russia."

EBRD director for industry, commerce and agribusiness for Russia Lindsay Forbes said, "Few local financial institutions are familiar with the ESCO model, which is still at an early stage of development in Russia, and loans of over five years are not readily available in the country, hence the additional need for an institution such as the EBRD to step in."

Fenice Rus intends to target the client’s auxiliary plant systems including compressed air, lighting, heat supply systems, water treatment and distribution systems, which commonly require upgrades and provide the highest potential for energy savings.

The company has already implemented three such projects with Russian car manufacturer AvtoVaz, enabling the latter save over $9m each year on energy costs.