Mediterranean Investment Facility (MIF)

The MIF finances renewable energy and energy efficiency projects throughout the Mediterranean region, including Solar Water Heating (SWH) systems, CFLs and other efficient end-user energy solutions.

In addition, the MIF will engage in policy enhancements in two components:

1. Energy Efficiency Policy Enhancement will address the present lack of specific policy on energy efficient lighting and Renewable Energy. In Morocco, MIF will design and implement regulations and fiscal incentives that promote CFLs and establish a roadmap for phasing-out of ILs, including introducing progressive taxation on IL sales.
2. Technology and Standards/Quality Improvement directed by the MIF, UNEP and its implementing partners will launch a public call for SWH suppliers to assess the compliance of the equipments to the tender, based on the international and national standards.

The MIF is a cooperative effort under the direction of the following authorities:

• Ministry Of Environment, Land And Sea of the Republic of Italy (IMELS)
• United Nations Environment Programme (UNEP)
• Global Environment Facility (GEF)
• New and Renewable Energy Authority in Egypt (NREA)
• Moroccan Ministry for Energy, Mines, Water And Environment
• National Office Of Electricity of Morocco (ONE)
• Moroccan National Agency for Renewable Energy and Energy Efficiency (ADEREE)
• Montenegrin Ministry of Economy (ME/SEE)
• Macedonian Ministry of Environment and Physical Planning

The objectives of the MIF are to lower the charged interest rates to the customers, to ensure financial institutions’ participation by reducing the risk in entering a new market segment, to support the development of partnerships between commercial banks and suppliers of (SWH), as well as to lower the up-front cost for Energy Efficient appliances.

In Morocco, MIF is helping to transform the market for energy efficient lighting, paving the way for phasing out incandescent lighting and huge energy savings. The project is working to boost policy incentives, establish standards for compact fluorescents and other energy efficient lighting stimulate end-user financing, and raise consumer awareness. Thanks to an innovative financial support mechanism, 2 million households will be able to switch from ILs to CFLs. Customers will repay the cost of the lamp through their electricity bill over 21 months. The suggested incentive under the Project is set to 3 MAD per CFL (35 US cents per CFL) for customers that will use the proposed scheme for ILs disposal. This incentive will lower the cost of each CFL by 12.5%.

In Egypt, MIF is encouraging the hotel sector to install SWH systems through a combination of subsidies (25% capital cost subsidy and maintenance program for the SWH installations over 5 years), awareness raising, and training workshops, and by establishing quality standards for SWH suppliers. Of the 300 hotels contacted, 100 have declared their intention of participating in the programme. Two projects have been already implemented with a total 130.46 m² of solar collectors installed; corresponding to more than 100,000 kWh of energy produced every year.

In Macedonia, the aim of the MIF is to address investment barriers hampering SWH market development in Macedonia and to remove them through the implementation of an innovative financing mechanism able to create a long-term stable market environment by catalyzing and scaling up commercial investment and financial sector participation. The feasibility study to address these investment barriers in ongoing, the results of the feasibility study will help tailoring an appropriate financial mechanism.

In Montenegro, MIF is allowing local banks to finance SWH end-users through preferential terms such as direct subsidies and low-interest loans and thus activate the SWH market. These incentives will permit end-users to spread the cost over up to seven years. The incentive mechanism is to provide a free loan to end-users to install solar panels over a period of 3, 5 or 7 years to the be repaid to lending institutions (NL bank and HypoAlpeAdria bank).

More specifically, end-users can request a loan amount of 1350, 1850 or 2250 Euros, depending on the cost and size of the installation of 2, 4 and 6 m2. If the cost of the system exceeds the amounts of the loans given above, the customer will pay the remaining difference.

MIF funds will subsidize the interest rate for the entire duration of the loan. The end user will pay a monthly installment equal to the net value of the loan divided by the number of payments selected. For each installation, between 180 and 697 € of interest rate cost will be subsidized, depending on the length of the loan and the amount requested.

It should be noted that the mechanism of the subsidized credit has already successfully spread the use of solar water heating systems in other Mediterranean countries. The success of this financial mechanism is based on the substantial compensation between the cost of the installment and savings on electricity bills and gas, so end-users perceive the cost of investment as minimal. The Montenegro project also includes capacity building and consumer awareness raising activities.