Small and medium-sized enterprises (SMEs) today face a dual challenge that often turns into a major headache for executives. On one hand, companies are under pressure from unpredictable electricity prices and the necessity of transitioning to green energy. On the other hand, they are held back by persistent myths about long and complex bank financing processes. However, Marius Bačianskas, Head of Lending at SME Bank, emphasizes that new market solutions are rapidly multiplying, allowing businesses to invest in energy efficiency without collateralizing additional real estate.

“Energy efficiency is no longer just a fashionable sustainability badge for SMEs—today, it is a direct instrument for financial stability and price risk management. By installing hybrid systems with energy storage, companies shift from passive hostages of power exchange prices to active market participants. For this transformation to happen, specially created guarantee instruments successfully replace traditional real estate collateral,” says M. Bačianskas.

Waiting costs dearly

The renewable energy market in Lithuania is undergoing a qualitative leap, and it is no longer enough for businesses to simply install a solar power plant. Today, electricity market dynamics and grid capacity constraints demand smart hybrid systems with battery energy storage solutions (BESS). Rapidly growing solar generation—with national weekly records already reaching 69 GWh and meeting the country’s entire power demand during sunny peak hours—exerts strong downward pressure on daytime prices, while simultaneously causing extreme price polarization. The real challenge for businesses today is not the average electricity price, but its unpredictable intraday fluctuations—for instance, in spring, power exchange prices can swing from a few euros to over €130/MWh.

For companies operating during standard business hours, such swings become a hard-to-predict financial burden, making battery technologies a long-term hedge against price risk. They enable energy price arbitrage, allowing a company to store power during the cheapest hours or from its own solar park and consume it during peak, high-cost hours.

At the same time, these systems ensure operational continuity, acting as an uninterruptible power supply (UPS) that protects production lines from short-term grid disruptions that could result in thousands of euros in losses due to spoiled raw materials or downtime. Furthermore, businesses save on infrastructure costs, as battery storage allows them to expand available capacity or smooth grid peaks without an expensive and time-consuming physical grid connection upgrade from the distribution grid operator (ESO). On average, electricity costs account for about 8–15% of total operating expenses for SMEs, while in manufacturing this figure can reach up to 20–30%. Managing this expense directly generates a competitive edge.

How to prepare for financing

To secure financing quickly and avoid bureaucratic hurdles, executives must understand how risk underwriters evaluate green applications. The bank highlights three key criteria that ensure a project gets funded:

1. Stable and predictable cash flows. A clear business model supported by long-term contracts or realistic energy cost saving projections that directly cover loan installments.
2. Technical readiness. The project must have secured grid connection permits, valid approvals, and technology from a reliable supplier with long-term warranties.
3. Realistic risk management. Conservative financial forecasts demonstrating the company’s ability to service the debt even during market downturns.
4. The business plan, financial statements, and technical certificates should be fully prepared prior to applying to the bank.

Guarantees – easing the financing burden

The biggest barrier preventing SMEs from investing in energy efficiency remains a lack of free capital and the requirement to pledge additional real estate (RE). In partnership with the European Investment Fund (EIF), SME Bank offers dedicated green project financing that completely eliminates this hurdle. This guarantee model enables the bank to provide loans of up to €6 million with a minimal equity contribution—starting at just 20%. Because loan terms can extend up to 10 years, periodic payments can be covered directly out of energy savings, while the equipment being acquired serves as the primary collateral.

Realized projects clearly illustrate the benefits of these financing tools. For example, SME Bank funded a large-scale project where the total investment exceeded €7.57 million, providing 80% financing over a 9-year term. In a smaller €800,000 project, the developer contributed 30% in equity, with the bank financing the remaining 70% over a 5-year term.

The bank as an SME advisor

Many entrepreneurs still worry that applying for international guarantees will lead to months of paperwork. In reality, the bank handles all communications with the funds, acting as an advisor to help assemble the most beneficial guarantee package. To ensure maximum speed, the traditional bureaucratic triangle between the contractor, designer, and bank is successfully eliminated. By combining our partners’ engineering expertise with digital banking, businesses receive an end-to-end service under one roof – from the initial energy audit to final funding. Today, the energy transition is not only sustainable, but also technically simple to execute.