EBRD to lend up to EUR48.8 million to build Donetsk region wind farm

The European Bank for Reconstruction and Development will provide a loan of up to EUR 48.8 million to Novoazovsky Wind Farm LLC to build the second phase of a wind farm in Donetsk region.

EBRD Principal Advisor for External Affairs Anton Usov told Interfax-Ukraine on Wednesday that the decision was made by the bank’s board at a meeting the day before.

The European Bank for Reconstruction and Development is making its first ever investment into wind power generation in Ukraine by organising a €13.3 million financing package to Eco-Optima, a Ukrainian-Italian joint venture company, which will operate a wind farm in Staryy Sambir region of western Ukraine. The loan will consist of two parallel tranches: a 10-year EBRD loan of €9.5 million and a 15-year loan of €3.8 million from the Clean Technology Fund (CTF).

The loan proceeds will be used to construct and operate a wind farm with a total capacity of 12.5 MW. It will consist of 5 wind turbines and is expected to generate at least 25.5 GWh every year. The project will improve the quality and reliability of power supply in the Lviv region and will secure electricity supply to more than 10,000 households. The wind farm, which will be operational by the end 2012, should bring total annual reduction in carbon emissions to about 26,000 tonnes.

This is the first project to receive funding under the EBRD’s Ukrainian Sustainable Energy Lending Facility (USELF), an investment facility of €70 million (€50 million from EBRD and €20 million from the CTF) designed to provide finance to private local enterprises wishing to invest in renewable energy projects in Ukraine. Technical assistance on projects preparation, regulatory framework development and strategic environmental review is funded by the Global Environmental Facility.   It helped the Ukrainian authorities introduce necessary regulatory changes to make renewable energy projects commercially viable and attractive for investors.

Olivier Descamps, EBRD Managing Director for Turkey, Eastern Europe, Caucasus, and Central Asia, said: “Ukraine has a great potential in developing renewable energy generation and this project is our contribution to this good cause. We are committed to support the development of wind, solar, small hydro and biomass energy projects in Ukraine through our own funds and by providing technical assistance to them”.

Maxim Kozytskyy, Eco-Optima Director, added: “We appreciate EBRD’s catalyst role in the Ukrainian renewable energy sector. Our project was made possible thanks to the USELF programme which combined both the EBRD and the CTF financing as well as consultants’ support”.

Monique Barbut, CEO and Chairperson of the Global Environment Facility, said: “This new investment is a stellar example of how public private partnerships can leverage public funds and encourage private sector investment in clean energy and other environmentally sound technologies. We are committed to working with EBRD and other financial institutions to create many more of these successful partnerships.”

CTF was established to provide developing countries with positive incentives to adopt technologies that have a high potential for minimising long-term greenhouse gas emissions. The CTF finances programmes in 12 countries and one region.

The EBRD’s Sustainable Energy Initiative (SEI) was launched in 2006 to address the challenges of energy efficiency and climate change. In an attempt to make Ukraine more energy efficient and energy independent, the Bank has already invested €1.3 billion in 60 sustainable energy projects for the total value of almost € 6 billion.

The EBRD is the largest financial investor in Ukraine. To date, the Bank has committed over €7.4 billion (US$ 9.76 billion) through 293 projects.