Sustainable Transition through Energy Efficiency in Moldova Project (STEEM)

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The Project will support interventions under the following components:Component 1 – EE investments in public buildings: (a) Sub-component 1.1. EE renovation in education buildings. This sub-component will finance the retrofit of public buildings focusing on educational facilities, which will include: (i) standard energy efficient retrofit measures, such as thermal insulating of wall and roof, replacing windows and doors, renovation of internal heating system, and replacement of lighting using well-proven technologies and equipment for energy efficiency improvements in end-use application, and (ii) installation of heat pumps, solar thermal collectors and rooftop solar PV if technically feasible and economically viable. Beneficiary and sub-project eligibility criteria: Beneficiary eligibility criteria for subcomponent 1.1, which will be used at the screening stage, include: (i) full ownership by a governmental agency and primary used for public services; (ii) preliminary confirmed structural soundness of the buildings (in terms of structural durability and safety of the construction); stability of the building, no seismic and construction damages; (iii) secured prospective use of the facility, and absence of plans for closure or downsizing or privatization; (iv) no other users occupying the building or parts; and (v) the building has been constructed between 1950 and 2013, as it is expected that relatively new buildings have lower demand for retrofit. Subproject eligibility criteria, which will be confirmed after completion of the energy audit of each subproject, include: (i) the energy audits confirm at least 20 percent energy savings after renovation compared to real consumption and normative demand baseline, an economic payback period of less than ten years, and (ii) no significant capital repairs or mayor renovation over the last five years, to avoid renewed EE intervention for buildings with already better energy performance. In addition, buildings which may trigger ESS5 (land acquisition) will not be eligible for funding.(b) Sub-component 1.2. District heating upgrades. This sub-component will finance improvements in the heat supply by central district heating (DH) in education facilities and public administration, including the buildings selected under sub-component 1.1. Public buildings will be enhanced through installation of individual DH substations at building level and DH network upgrades using well proven technologies and equipment. The implementation of about 350-400 individual heat substations (IHS) will be implemented under the supervision of the public utility Termoelectrica. DH network up-grades comprise minor DH distribution pipeline replacement (few hundred meters, including valves) from the old central DH heating point to the new building-based HIS. (c) Sub-component 1.3. Initial operationalization of sustainable financing mechanism for EE. The sub-component will support on-going Government’s efforts to operationalize a USAID-led SuperESCO scheme, including an initial pilot phase through 2026 by financing: (i) operating costs and marketing activities of the mechanism, and (ii) energy audits, detailed designs and technical specifications, technical reviews, construction supervision, energy performance certificates and other technical studies. Disbursements for this sub-component will be subject to the legal establishment of a sustainable mechanism in terms and conditions acceptable to the Bank. This mechanism will initially support public buildings but could potentially be used for residential and industrial or commercial buildings in coordination with other mechanism under development. In the medium- to long-term it is expected to contribute to leverage private financing for EE. Component 2 – Implementation support and technical assistance. This component will include: (i) MEPIU staff and operational costs; (ii) capacity building for staff at Ministry of Energy (MoE), National Center for Sustainable Energy (CNED), Termoelectrica SA (TE) and MEPIU; (iii) supply and installation of Energy information system at CNED EEA; (iv) Detailed energy audits in education buildings selected in sub-component 1.1.(v) other technical assistance, study tours and workshops. This component is expected to contribute to the creation of new incentives for EE and increase private sector participation in EE projects and helping Moldova to reach scale in EE investments in a sustainable manner.Component 3 – Contingent emergency response component. This component would have zero allocation of financing to allow for rapid reallocation of proceeds of uncommitted financing in the event of an eligible crisis or emergency. For the CERC to be activated, and financing to be provided, the Government of Moldova will need to (a) submit a request letter for CERC activation and the evidence required to determine the eligibility of the emergency, as defined in the CERC manual; (b) have an Emergency Action Plan, including the emergency expenditures to be financed; and (c) meet the environmental and social requirements as agreed in the Emergency Action Plan and related environmental and social instruments.