Graanul Invest Phase III



Project number:


Business sector:

Power and energy

Notice type:


Environmental category:


Approval date:

08 Jul 2015



PSD disclosed:

04 Jun 2015

Translated version of this PSD: Estonian

Project Description

The EBRD is considering a senior secured corporate loan of up to EUR 42m with a maturity of 10 years to AS Graanul Invest (Graanul or the Company) to finance part of Graanul’s two year (2015-2016) investment programme. The proceeds will be used in financing part of the construction cost of two new biomass combined-heat-and-power plants (CHP) located in Imavere and Osula, Estonia (the Project).
The new CHPs will have an installed capacity of 10 MWe, 28 MW heat each and will be located adjacent to the existing Imavere and Osula pellet production plants in Imavere and Voru Parish respectively. The CHPs will be based on grate type biomass boiler and will be able to burn efficiently significant proportion of forest wood wastes, thus reducing significantly related environmental and safety risks.

Transition Impact

Transition impact stems mainly from:
Market expansion – backward linkages: CO2 benefit – 2 new CHPs will utilize residual wood, reducing carbon footprint of residuals decomposition as there is no other commercial use for residuals. Forest restoration – wood residuals become new source of forest companies’ cash flows creating sources for investments into forest restoration/planting.
Demonstration of new replicable behaviour and activities: 2 new CHPs will generate approx. 2% of Estonian power and hence Estonia will reach its renewable energy target (20%). Graanul will be selling approx. 50% of its power produced externally, partially to grid operator Elering for market price (plus premium) taking on power market risk.

The Client

AS Graanul Invest, an existing client of the EBRD, is a fast-growing Tallinn-based company primarily engaged in the production of wood pellets. In 2012 & 2014 Graanul successfully commissioned four new biomass CHP plants in Estonia and in Latvia, which were partly financed by the EBRD.

EBRD Finance

A EUR 42m senior secured corporate loan.

Project Cost

EUR 54.4m.

Environmental and social categorisation, impact, and mitigation

The Project has been categorised B in accordance with the EBRD Environmental and Social Policy (2014). The construction and operation of two new medium-size combined heat and power (CHP) plants at the Company’s existing pellet production plants in Imavere and Osula, Estonia, will mainly result in environmental and social benefits by introducing additional renewable energy generation capacity and safer pellet production processes. Potential adverse impacts are efficiently managed through introduction of a best available technology, appropriate management and mitigation measures as well as ensuring the forest-based biomass fuel for the CHPs and wood raw material for the pellet plants is of legal and sustainable origin.
The environmental and social due diligence (ESDD) expanded on the independent environmental and social due diligence undertaken for the Bank’s project with the Company in 2011, which is summarised in an EBRD Project Summary Document (PSD).
In 2013, the Bank  undertook further environmental and social due diligence of the Company for the purpose of financing two new biomass combined-heat-and-power (CHP) plants located in Incukalns, Latvia, as summarised in a separate PSD.
The ESDD for this third project with Graanul was undertaken by EBRD environmental and social specialists. It consisted of a corporate environmental and social review of Graanul and its operations, a review of the existing pellet production facilities and operations at Imavere and Osula as well as an environmental and social analysis of the new CHP plants at these sites.  Graanul’s performance and implementation of the Environmental and Social Action Plan agreed under the existing projects was also reviewed.
The investigations showed that the project is structured to meet the Bank’s Performance Standards. Both of the CHPs have capacity of 10 MW electricity and 28 MW heat (the fuel input is 45 MW) and are designed to meet relevant EU environmental standards including Best Available Techniques. The CHPs will generate heat and electricity for the pellet plants’ own needs and electricity to the grid. The renewable electricity will replace grid electricity from other sources and the corresponding amount of avoided CO2 emissions by each of the CHPs is estimated to be 50,000 tonnes of CO2-eq. per year, resulting in a total emission reduction of 100,000 tonnes of CO2-eq. per year for the project.
The biomass fuel for the CHPs will consist of wood residues: approximately one third of bark and two thirds of forest chips. Most of the bark and forest chips are of low value and currently under-utilised and has no commercial demand in Estonia. To mitigate the adverse impact of the harvesting and wood procurement as well as to ensure the biomass fuel is of legal and sustainable origin, Graanul has obtained FSC Chain of Custody (CoC) and Controlled Wood (CW) certifications for all of its pellet production and CHP operations as well as PEFC certifications for its Estonian operations. Approximately one third of the fuel for the CHPs will be supplied by Estonian State Forest Management Centre, which has PEFC and FSC sustainable forest management certification for the forest areas under its control.
The existing corporate Environmental and Social Action Plan has been amended to include specific mitigation and management measures for the proposed two new CHP projects. The Company will undertake public disclosure and consultation for the new CHP projects in accordance with its corporate stakeholder engagement plan.
The Company is systematically monitoring and reporting on its environmental, social and health and safety performance under its certified management systems. The EBRD will evaluate the Project's compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing annual reports prepared by the Company and conducting periodic supervision visits when deemed appropriate.

Technical Cooperation


Company Contact

Rain Silivask, Chief Financial Officer
Tel. (372) 669-9876

Business opportunities

For business opportunities or procurement, contact the client company.

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Text of the PIP

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