EBRD to invest EUR125million in eastern European wind power

The EBRD, a London-based international financial institution that supports projects in 29 countries from central Europe to central Asia, said it would acquire 25% stakes in the Hungarian and Polish subsidiaries of the Spanish wind power Iberdrola.

The EBRD will invest a maximum of EUR125million for the stakes and will also evaluate the possibility of collaborating with Iberdrola in the Romanian market.

Iberdrola currently has four operational wind farms in Poland with total capacity of 160.5 MW as well as a 50 MW wind farm operating in Hungary.

The Spanish firm is now constructing additional capacity of 98 MW in these two countries. In a similar transaction in 2008, the EBRD acquired a 25% stake in Iberdrola’s Estonian arm.

The EBRD also agreed to provide a EUR 60 million syndicated loan to Eolica Bulgaria, the Bulgarian subsidiary of Spanish renewable group Enhol, for the development of the 60 MW Suvorovo wind farm, located 25 kilometres inland from the Black Sea.

The project is expected to be operational by end-2010. Total costs for the project are EUR108million, and the project is being co-financed by a EUR11million loan from the Black Sea Trade and Development Bank and by Enhol Group’s equity investment.

The Suvorovo project is the second Bulgarian wind farm for which the EBRD has provided funding. It also provided financing for the 156 MW Saint Nikola wind farm of American energy giant AES, which should be commissioned in the first half of 2010.

The EBRD is supporting the development of renewable energy in Bulgaria with a €60 million syndicated loan to Eolica Bulgaria to finance the development of the Suvorovo wind farm, in the north-eastern region of the country.

Similar to many countries in the region, Bulgaria relies significantly on thermal and nuclear sources to satisfy its power needs, with less than 10 per cent of its electricity generated from renewable sources, of which just one per cent from wind power. The project will help Bulgaria meet its EU set target to increase its renewable energy production to 16 per cent by 2020.

Located 25 km inland from the Black Sea, the Suvorovo wind farm will comprise 30 wind turbines and will have a capacity of 60 MW. It is expected to start its operation by the end of 2010.

As part of the project, Eolica Bulgaria, majority-owned by the Spanish Enhol Group, focusing on development of renewable energy in Spain, central and eastern Europe, will develop and operate the wind farm, build a new substation at the project site and a line to interconnect the wind farm to the national power network.

Structured under the Bank’s A/B scheme, the EBRD will offer €17.5 million for syndication, retaining €42.5 million on its account.

With total cost of €108 million the project is co-financed by a €11 million loan from the Black Sea Trade and Development Bank and by Enhol Group’s equity investment.

"Promoting generation of renewable energy is one of the EBRD’s core priorities in countries of its operations, and we are pleased to support this important project at a time when securing the necessary financing remains a challenging task”, said Nandita Parshad, Director of EBRD’s Power and Energy team.

“The Suvorovo wind farm will have a strong demonstration impact, outlining the commercial viability of such projects and will help Bulgaria in meeting its green energy objectives”, added Nandita Parshad.

“It has taken a while to achieve the full development of a project in Bulgaria, but certainly, Suvorovo project consolidates Enhol Group’s presence in the country where we anticipate the construction of several wind farms with a total installed capacity of 200-250 MW in the next few years”, said Antonio Oliver, Enhol Group’s CEO.

In the recent years Enhol Group’ has been focusing on extending its activities internationally, particularly in eastern Europe, Latin America and India. The Group’s total portfolio of projects at different stages of development, including the wind farms in Spain, Italy and Portugal, represent close to 1000MW of nominal capacity.

This is the EBRD’s second wind farm project in Bulgaria. In 2008 the Bank and the International Financial Corporation provided a €198 million investment for the construction of the St. Nikola wind farm.

Overall, since the beginning of the EBRD’s operations in Bulgaria, the Bank has committed €2 billion in more than 120 projects in key sectors of country’s economy, mobilising additional investment worth more than €6.7 billion.