EBRD flies the flag for sustainable energy innovation

By Sandy  Ferguson

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The EBRD’s experience in delivering low-carbon and climate-resilient innovation is bearing fruit with countries in other regions and our sister Multilateral Development Banks taking note of the results of our partnerships with the Climate Investment Funds (CIF).

That experience was one of the major talking points at the recent Partnership Forum in Montego Bay, Jamaica, co-hosted by the CIF and the Inter-American Development Bank (IDB) and bringing together over 400 participants from around the globe to network and exchange ideas.

Immediately afterwards, the CIF Trust Fund Committees and Sub-Committees took several decisions that bode well for sustainable energy development in the EBRD region.

An Armenia Scaling Up Renewable Energy (SREP) investment plan was endorsed for US$40 million and will focus on helping catalyse investments in geothermal and utility-scale solar and in supporting national efforts to reach 21 percent renewable energy generation by 2020.

Endorsement was also given to revisions to the $750 million investment plan for the Middle East and North Africa region, which brings in Libya to join Egypt, Jordan, Morocco, and Tunisia in developing close to 1,000 megawatts of solar power capacity.

Simten Ozturk, Manager, Project & Acquisition Finance of Garantibank, one of EBRD’s participating partner banks in Turkey, shared a client’s perspective. She explained how the use of Diversified Payment Rights (DPR) loan structures to collateralise EBRD’s loan to the bank provided a price advantage for long-term structured loans for energy efficiency and renewable projects.

“The technical assistance component of the financing package was very valuable, particularly facilitating the transfer of know-how regarding environmental and social (E&S) risks and mitigation processes to the borrowers and the investors,” said Ms Oztuk.

“Prior to this project we were having difficulties in implementing a certain standard of E&S as a pioneer in this area amongst Turkish banks. The increased awareness in terms of E&S matters made a significant contribution, which we see as a competitive advantage for Garantibank beyond EBRD projects.”

Narek Harutyunyan, Managing Partner of Rengy Development, a solar power plants developer in Ukraine, also spoke about his experience with EBRD’s Ukraine Sustainable Energy Lending Facility (USELF).

Given the very early stage of renewable energy development in Ukraine, climate finance funds have been essential to getting projects off the ground and also underscored the importance of technical assistance, he explained.

“Lenders and regulators now better understand the risks and opportunities of renewable energy projects” he said. “Climate finance helped us take the risk of being an early mover – we now have a portfolio of solar projects in Ukraine and are looking at other renewable sectors and countries for future development.”

The EBRD’s Adonai Herrera-Martinez, Principal Manager of the Energy Efficiency and Climate Change Team in Istanbul, discussed financing private sector investment in energy efficiency and small scale renewable energy projects, highlighting the highly successful Turkey Sustainable Energy Financing Facility (TurSEFF) which other MDBs are now interested in replicating.

"It was encouraging to hear our clients provide positive endorsement for the EBRD’s sustainable energy support and how it has impacted their approach to business” said Mr Herrera-Martinez. "Our partners have become as passionate as we are about how combating climate change can make good business sense."

Through the Sustainable Energy Initiative (SEI), EBRD has been an active partner in the CIF ever since its establishment in 2008. The CIF supports middle income and developing countries’ efforts to mitigate and manage the challenges of climate change by providing grants, concessional loans and risk mitigation instruments and leverages further financing from the private sector, the Multilateral Development Banks (MDBs), and other sources.

The partnership between EBRD and the CIF has enabled the Bank to scale-up its core energy efficiency and renewable energy activities and kick-start sustainable energy projects in emerging economies where more targeted efforts are required.

It has helped the EBRD develop innovative new products in the area of climate change mitigation and adaptation, and provide blended loan packages and technical support that address affordability and regulatory reform challenges.

Over US $480 million in funds has been approved by CIF for the EBRD, resulting in US $224 million in signed projects, largely for concessional finance that is blended with EBRD financing to stimulate market development and address affordability challenges for clean technologies.

The EBRD model has been particularly successful at combining these funds with technical assistance from the CIF and other donors, such as the Global Environment Facility (GEF) or the EU, to undertake policy dialogue, regulatory reform, technology transfer, and project preparation and development support.


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