Supporting green energy generation in the Baltic states

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The EBRD has provided a €34.4 million loan to build two biomass-fuelled CHP plants.

AS Graanul Invest is one of the largest wood pellet producers in Europe. Located in Estonia, the company operates six factories with an annual total production capacity of 490,000 tonnes. As part of its business development strategy, the company is currently expanding its operations by constructing two new combined heat and power (CHP) plants. The plants will also help Latvia and Estonia meet its renewable energy and carbon emissions targets under the European Union law.

Renewable energy sources

Graanul turned to the EBRD to finance the construction of these plants. The EBRD has been promoting renewable energy sources in power generation as one of its key priorities in the Baltic states. In these countries, which are rich in forests, biomass makes a significant renewable energy resource with a high potential for energy production from wood-based fuels and waste from wood-processing industry, such as woodchips, pellets and briquettes.

In line with the EBRD’s support for sustainable energy infrastructure investments in its countries of its operations, in May [2011] the Bank provided a €34.4 million senior corporate loan to finance the construction of two biomass-fuelled CHP plants in Estonia and Latvia, each with a capacity of 6.4MW of electricity and 15MW of heat. Total investment cost for both CHP units is estimated at about €45 million.

The new loan will also fund associated energy efficiency investments in Graanul Invest’s adjecent pellet plants, improving the operational efficiency of its pellet production.

Using waste to produce energy

Energy production from wood-based fuels already has a relatively high share in the total primary energy supply. However it is primarily driven by the use of wood-based fuels for heating in households and in small-scale boiler houses especially in regions where there is limited access to natural gas systems.

In line with the renewable energy targets the European Union has introduced for each of its member countries, the countries of Estonia, Latvia and Lithuania aim to use renewable energy sources to produce 25 per cent, 40 per cent and 23 per cent, respectively, of their overall energy outputs in the next decade. With this investment, the EBRD will not only directly help the Baltic states achieve their targets, but it also encourages further investments in green energy across the region.

The carbon-neutral biomass will replace fossil fuels at the plants to produce electricity and heat, while usable surplus will be directed to the national grid. The two new CHP units will make the two pellet-producing plants self sufficient in electricity with total annual savings of more than 26,000 MWh corresponding to about €2 million in savings. Further, around 66,000 MWh per year will be exported to the grid, generating additional revenues of about €5 million. The 92,000 MWh in electricity capacity per year, generated from renewable energy sources, will replace electricity generated by burning high-carbon fossil fuel, which will lead to an annual harmful emissions reduction equivalent to more than 100,000 tonnes of CO2.

Diversifying through modern technology

The project serves as an example of comprehensive energy mix diversification with modern technology in Estonia and Latvia. Recently the EBRD has provided financing for biomass CHPs in Poland and the Bank will continue to support similar projects in its countries of operations.

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