The EBRD is actively promoting the use of renewable energy in Ukraine in order to reduce the country’s dependence on imported fossil fuel and to improve its energy security. The latest initiative of the Bank, which is aimed at solar power generation in one of the most energy intensive countries in the region, will help reduce the environmental impact of the traditional energy sector in Ukraine.
The EBRD is arranging a financing package of €5.7 million for the development, construction and operation of a 4.5MW solar plant owned by a local company Green Agro Service LLC, which will be located in the Vinnitsya region of south Ukraine. This first ever solar project to be financed by the Bank in the region will provide funding in two parallel tranches: an 8-year EBRD loan of €4.1 million and a 15-year loan of €1.6 million from the Clean Technology Fund (CTF).
The project is a part of the EBRD Ukraine Sustainable Energy Lending Facility (USELF) an investment facility of €70 million (€50 million from the 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 (GEF).
“The Bank has already invested over €1.3 billion in sustainable energy projects in Ukraine and it remains committed to the development of the renewable energy sector in this country. This first ever solar project financed by the EBRD should pave the way for more similar projects in Ukraine and elsewhere in the region”, said André Küüsvek, EBRD Country Director for Ukraine.
“This is our first solar energy project in cooperation with the EBRD and it marks a significant step for our company. What is more noteworthy though, is that Ukraine has become the first country to attract EBRD financing for the solar energy sector and we hope the country will continue its support for the renewables and be open for foreign investment in this important field”, commented Narek Harutyunyan, Managing Director of project developer Rengy Development.
“USELF is a unique framework which assists the government of Ukraine on the development of renewable energy legislation, helps local developers to prepare bankable projects and provides long-term financing to implement those projects. By linking together CTF soft loans, the GEF grant and the EBRD commercial financing we can make a difference in this new yet difficult market in Ukraine”, said Sergiy Maslichenko, Senior Manager at EBRD Energy Efficiency and Climate Change Department.
The CTF was established in 2008 to provide middle-income countries with support to adopt renewable and energy efficiency technologies that have a high potential for minimising long-term greenhouse gas emissions. The CTF already finances programmes in 15 countries and one region, and is the largest multilateral climate finance instrument in operation.
The EBRD is the largest financial investor in Ukraine. As of the end of August 2012, the Bank had committed over €8 billion (US$ 10 billion) through 320 projects.