Renewable energy

The EBRD aims to promote environmentally sound and sustainable development in the full range of its activities. One of the Bank's objectives is to improve the environmental performance and long term stability of the power sector, including supporting actions to address issues of climate change, energy security and diversification of supply.

As part of this objective, the EBRD is actively supporting the development of the renewable energy sector within its countries of operation.

The EBRD is pursuing opportunities to invest through equity, project finance and corporate debt to fund renewable energy development, construction and operation activities. The Bank is also open to opportunities to invest in renewable energy focused funds dedicated to the Bank’s countries of operation where these funds are filling a clear gap in the market or have well defined value-add propositions.

Submitting a proposal for a renewable energy project

The EBRD encourages renewable energy developers, investors and fund managers to submit proposals for renewable energy project funding. 

Challenges of renewable energy projects

The founding agreement of the EBRD requires that all of the projects it finances meet sound banking principles. Considering the generally low level of power tariffs in the countries of operation and the lack of developed legislation to support renewable energy projects, the EBRD and project developers have faced significant challenges in identifying those projects with sufficiently robust economics to make financing possible.

However, the climate for renewable energy projects in the EBRD countries of operation is improving.

As part of the accession of the first group of Eastern European countries to the EU, new members have set targets to generate a certain percentage of power from renewable sources and have put in place new legislation to support the sector to meet these goals. This new supportive environment is enabling this new sector to emerge with the inflow of capital and expertise to these markets combining with the entrepreneurship of local companies and individuals . Nevertheless, many hurdles in testing, implementing and refining the support structures for this new market still remain, and transparency and consistency is key to its successful long term development. Beyond the EU, legislation and support for renewable energy is also beginning to be put in place and EBRD is playing an active role to promote this development.

Renewable energy projects

Hydro OGK
The Bank arranged and syndicated a Rub6,300m (EUR 190m) loan to fund the rehabilitation of the 10,000MW Volga Kama hydro cascade in Russia, owned by the leading renewable company in Russia, Hydro OGK. The cascade under rehabilitation accounts for 20% of Russia’s hydro capacity and the project is expected to result in a significant offset of carbon emissions.

Armenia Renewable Energy Fund
In parallel with the World Bank and the Cafestjian Foundation, EBRD has established a EUR15m renewable energy lending programme providing project financing for small renewable energy projects in Armenia. The programme benefits from grant funding from the Global Environment Facility and expects to invest across the small hydro, wind and biomass sectors.

Bulgaria Energy Efficiency and Renewable Energy Credit Line
The EBRD has committed EUR100m to a Credit Line to Bulgarian banks specifically earmarked for on investment into renewable energy and energy efficiency projects. The credit line had funded 17 wind projects, 16 small hydro projects, 8 biomass and 5 geothermal projects as of June 07. The credit line is supplemented by grant funds from the Kozloduy International Decommissioning Fund providing technical assistance to support project appraisal and incentive payments to completed projects. See http://www.beercl.com

Mutnovsky Geothermal Power Plant
One of the first independent power projects in the Bank’s countries of operation, the project consisted of the construction and installation of a geothermal power plant located in Mutnovsky, southern Kamchatka, Russian Federation. More information can be found in the Showcase page.

How the EBRD is increasing its portfolio of renewable energy projects

The EBRD is taking active measures to expand the number of renewable energy projects which would be eligible for Bank financing and to play a proactive role in the development of the sector:

Technical Assistance to support sector development
The Bank has initiated a series of technical assistance projects to bring expertise and resources to address key issues in the creation of renewable energy markets. In Russia the Bank has sourced funding to hire consultants to advise on the development of a draft law to support renewable energy, which had its first hearing before the Duma in March 2007. In Croatia the Bank initiated a study into the implications of, and constraints upon, the integration of wind energy to the electricity grid. The report demonstrated that there was significant potential for wind integration in Croatia. The Bank is also preparing assignments to carry out Strategic Environmental Assessments for wind and for small hydro in countries such as Bosnia and Herzegovina and Bulgaria and is initiating new support programmes for legislative development in countries such as Ukraine.

Risk Capital for Project Development
The Bank is actively developing opportunities to invest equity in development stage wind energy projects where it can provide not only funding, but also the support to ensure the development process is transparent and that high standards are achieved. In order to make small size investments the Bank is reviewing the possibility of establishing a dedicated fund to focus on development stage investment.

Carbon finance
The Bank has been facilitating the development and sale of carbon credits on a project by project basis. It has also been involved in the creation of one of Europe's first carbon trading funds. More information is available on the Carbon finance page.

Renewable Energy Funds
The EBRD is open to invest alongside other co-investors in renewable energy funds dedicated to renewable energy investment in the Bank’s countries of operation. The Bank believes that there is an important role to be played by equity funds in the renewable energy sector bringing not only capital but also commercial expertise relevant to project development, facilitating the progress of projects from development into construction and operation.