AIB has launched a €100m fund aimed at improving energy efficiencies among SMEs, which has the potential to stimulate the economy and create thousands of jobs, it said.
The bank also said it will make available €1bn in funding for energy projects over the next three years.
The €100m fund coincides with a major research project carried out by Amarach found SMEs on average spend 9% of total revenues each year on energy bills. This ranges from €114,000 for companies in the manufacturing sector; €50,000 in the retail sector; and €70,000 for remaining SMEs.
As part of the fund, AIB will take into account future estimated savings arising from energy conservation if that company is applying for a loan in relation to capital expenditure on energy conservation projects.
The report found that a reduction in energy bills had the potential to improve a company’s competitiveness because it lowered the overall cost base and improved margins.
AIB said that up to 50% of the companies that apply for funding under this scheme could qualify for a special discount, which is 1.25% below the standard variable rate if the project meets certain criteria set out by the European Investment Bank.
AIB’s director of personal, business and corporate banking, Bernard Byrne, said energy is one of the key lending areas on which AIB will now focus. The bank also said it is making €1bn available to the renewable energy sector to finance wind farms, biomass and other green energy projects.
“Our policy is informed by substantial market research which identifies clients’ needs, leading us to design a method of costing projected savings from energy efficiency projects into the borrower’s repayment capacity,” he said.
“It is also clear that the economic downturn has prompted businesses to focus on energy savings as a way of cutting costs when revenue growth is slow. On the broader canvas, that in turn should help Ireland achieve its 2020 targets of reducing energy consumption by 20% by 2020.”
© Irish Examiner Ltd. All rights reserved