Mytilineos CCGT

Location:

Greece

Project number:

51936

Business sector:

Energy

Notice type:

Private

Environmental category:

A

Approval date:

10 Nov 2021

Status:

Passed Final Review, Pending Approval

PSD disclosed:

06 Sep 2021

Project Description

Provision of a senior loan of up to EUR 75 million in favour of Mytilineos S.A (the "Company" or "Mytilineos") for the construction and operation of a 826 MW Combined Cycle Gas Turbine ("CCGT") power plant located at the Agios Nikolaos Energy Complex in Viotia, central Greece (the "Project").

Project Objectives

The Greek electricity sector is embarking upon a fundamental transformation, ending its reliance on lignite and replacing this with a widespread rollout of renewable energy and a few significantly less carbon intensive gas generating units. The ambitious strategy sets out to phase out all existing coal-fired plants by 2023 and close or completely repurpose the coal plant under construction before 2027, one of the fastest exits from coal in the European Union.

An economic analysis incorporating shadow carbon prices and security of supply and an assessment focusing on the Project's consistency with a low carbon transition of the Greek electricity sector and the Paris Agreement goals have been carried out. The Project was compared to a low carbon counterfactual characterised by no new fossil fuels plants and the Bank has concluded it represents the most economic pathway for the Greek electricity sector to meet the Paris Agreement goals. Consistent with low-carbon transition and the Paris Agreement goals the carbon lock-in risk for the Project has been determined to be low across the assessed technical, economic and institutional factors.

The Project has been assessed as critical to ensuring security of supply by the Greek transmission system operator and gas is identified in the Greece's National Energy and Climate Plan (the "NECP") as an important precondition for enabling the accelerated coal-phase out and for achieving the target of 42% reduction in greenhouse gas emissions by 2030. The Project will also support the ramp up of renewable energy in the Greek system.

Transition Impact

ETI score: 60

The expected transition impact of the Project is the fundamental role it plays in enabling fast renewable capacity build out (Resilient), allowing Greece to achieve and potentially exceed its NECP targets (9GW of additional renewable capacity by 2030).  The Project will add state of the art, highly flexible and efficient privately owned generation capacity, directly supporting the decommissioning of 4GW of state owned coal generation assets (Competitive).

Client Information

MYTILINEOS SA

Mytilineos is one of Greece's leading and globally operating industrial and energy companies, listed on the Athens Stock Exchange since 1995 and active in Power & Gas, Metallurgy, Renewables and Storage Development and Sustainable Engineering Solutions. The group was founded in 1908 in Greece and today has a strong international presence with projects in more than 30 countries on five continents.

EBRD Finance Summary

EUR 75,000,000.00

Total Project Cost

EUR 300,000,000.00

Additionality

Financing Structure and Risk mitigation: Cofinancing alongside a commercial bank and EIB, the Bank's financing is assisting to diversify the Company's funding tenor and is providing a tenor that matches Project's cash flows.

Policy and Standard Setting: Involvement and assessment of the Project is informing and driving sector wide discussions, influencing EBRD's support to Greek authorities towards achieving Paris Agreement goals. The Company is making use of EBRD expertise on higher environmental standards which go beyond local permitting requirements and ensure alignment with EU Taxonomy.

 

Environmental and Social Summary

Categorised A (2019 ESP) and high risk due to the CCGT size/capacity, and potential cumulative impacts with the existing aluminium plant, use of water cooling and GHG emissions, labour and overhead power line.  An Environmental and Social Impact Assessment (ESIA) for the CCGT Project has been undertaken by the Company and permits issued by competent authorities. The Project was subject to a Gap Analysis and Environmental and Social Due Diligence (ESDD) performed by an independent consultant, in compliance with Bank's PRs. The ESIA will be disclosed for 60 days. The Bank has provided financing to Mytilineos in the past, including participation in the recent Green bond issue.

A national EIA has been prepared for the Project and approved by the competent authorities of Greece following a 60-day public disclosure period.  In addition to the CCGT Project, EIAs related to the Overhead Transmission Lines (OHTLs) comprising a new 14km 440kV OHTL, and 5km realignment on an existing 400kV OHTL. The EIA for the 5km realignment was approved in January 2021 and the EIA for the new OHTL was approved in June 2021. 

Furthermore, the Project has received financing from EIB in 2020, following an independent project review. The Project is not GET eligible, but will result in a significant efficiency improvement as compared to Greece's current installed capacity, and will also enable the decommissioning of higher-polluting power facilities (e.g. lignite-fired plants).

The ESDD, undertaken by an independent  consultant has confirmed that the Project is compliant with National and EU legislation and aligned with EBRD PRs, and the Company has the institutional capacity required to deliver the Project in compliance with the EBRD ESP and requirements of Equator Banks.

The Bank has worked with Mytilineos in the past, and to date, the Company has fully implemented the Bank's requirements. A detailed ESAP has been developed for the Project, which supplements an existing corporate ESAP with the Company approved in 2021. The ESIA includes a cumulative impact assessment, with potential impacts associated with the OHTL also assessed under separate ESIA studies.

The key Project risk is associated with the technology in terms of EU IED/BREF compliance, and ensuring that there are technically feasible options for enabling the Project to align with longer-term Net Zero targets. Detailed assessment has been undertaken by the consultant to analyse the proposed technology, energy efficiency; associated air emissions; water use; Carbon Capture and Storage (CCS) provisions; Hydrogen-readiness; and other aspects. It has been confirmed that the Project will comply with BAT-AELs (Associated Emission Levels) for NOx and CO2 throughout its operation. Water cooling technology was also found to be compliant with BAT requirements. The Project exceeds the guideline minimum Electrical Efficiency values presented in the BREF Note and efficiency characteristics are representative of modern, high- efficient technology. At the same time, the Project will result in significant CO2 emissions that are estimated in the region of 1,241,626 tCO2 per year (annual average during 2022 - 2041) and the carbon intensity is in the range of 330 gCO2/kWh. Furthermore, the due diligence confirms that the Project - through the use of hydrogen-blending and/or CCS - is capable of achieving progressively lower carbon intensities throughout the lifetime of the Project, and is likely to be phased out in the 2040s.

Implementation of the Project will provide security of energy supply and facilitate the shutdown of the existing lignite-fired capacity in Greece, thus, significantly contributing to the country's decarbonisation program.

The Project will not have any significant impact on protected areas, such as Natura 2000 designate areas. The Company is also developing associated OHTLs, which have been subject to separate EIA process, and outstanding permits due in summer of 2021. The Bank has undertaken an ESDD of the power line and the Company is developing a Land Acquisition Framework in line with PR 5. A summary of the power lines is included in the ESIA disclosure package. The Company will also develop a full EHS management plan for the construction in line with the Bank's PRs and National and EU legislation.

A cultural heritage assessment has been carried out and no significant adverse impacts on cultural heritage are present. A Chance Finds Procedure will be developed for the construction phase. Other E&S impacts include labour and safety issues, particularly with regard to construction activities, contractor and supply chain management, as well as community health and safety related to construction activities during the constructions phase. Project-specific Environmental and  Social Management and Monitoring Plan (ESMMP) will be developed as part of project implementation to address any potential  E&S issues at construction, commissioning and operational phases.

A full ESIA disclosure package has been publicly disclosed for the Project on 6 September 2021. The Bank will monitoring the implementation of the Project through site visits.

Technical Cooperation and Grant Financing

None.

Company Contact Information

Mytilineos Investors Relations
ir@mytilineos.gr
+30 210-6877300
+30 210-6877400
http://www.mytilineos.gr
8 Artemidos Str.,Maroussi, 15125 Athens

Implementation summary


PSD last updated

24 Sep 2021

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

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Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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