Provision of a senior loan of up to EUR 25 million to public electricity generation utility JSC Elektrani na Severna Makedonija ("ESM") for implementing a 30 MW solar photovoltaic ("PV") project consisting of: (i) a 10MW "Oslomej" expansion (currently under construction) on the exhausted coal mine of TPP Oslomej, and (ii) a 20MW "Bitola" expansion adjacent to TPP Bitola (together the "Project").
The project is part of a broad partnership with the North Macedonian authorities and ESM to promote a just and green transition, encompassing investment in new green capacity for ESM, adding clean renewable energy generation to a region and country with serious capacity shortages and high reliance on lignite mining.
ETI score: 66
The project will contribute to the "Green" transition quality by supporting the construction of 30MW of solar PV generation capacity expected to result in CO2 savings of 33,000 tonnes annually. In addition, the project will target the "Inclusive" transition quality by identifying the social implications of green transition and defining redeployment and reskilling opportunities at ESM.
POWER PLANTS OF NORTH MACEDONIA JSC
Name: JSC Elektrani na Severna Makedonija
ESM is a public electricity generation utility, fully owned by the Government of North Macedonia. The company provides around 90% of the entire domestic production. Average annual production is about 3,600 GWh from the TPPs (installed capacity of 842 MW) and 1,250 GWh from the HPPs (installed capacity 554 MW). ESM also operates the first wind farm in the Country, with installed capacity of 37 MW and production of about 100 GWh annually.
EBRD Finance Summary
Up to EUR 25 million loan to be provided to ESM.
Total Project Cost
EUR 25 million
The EBRD is additional due to the financing structure provided. The Bank offers financing that is not available in the market from commercial sources on reasonable terms and conditions, and with a tenor that is above the market average and necessary to structure the project.
Furthermore, the EBRD provides expertise, innovation, knowledge and/or capabilities that are material to the timely realisation of the project's objectives, including support to strengthen the capacity of the client.
Environmental and Social Summary
Categorised B (ESP 2019) Due diligence confirmed that the environmental and social (E&S) impacts associated with a two small scale (10MW and 20MW) solar photo voltaic (PV) plants are generally site specific and can be readily mitigated through the implementation of a targeted action plan. Independent Environmental and Social Due Diligence (ESDD) has been undertaken on the Project and an Environmental and Social Action Plan (ESAP) has been developed and will be agreed with the Client.
The E&S risks and impacts of the projects are to a large extent mitigated by the site selection at Bitola, using an area of land owned by the Client and used for commercial crop production and at Oslomej, a brownfield site used for disposal of surplus overburden from the lignite mine. Both sites are located over 1km from the nearest community and in close proximity to existing sub-stations with only a short cable connection required at Bitola and Oslomej 2 connecting into already planned grid connection for Oslomej 1.
The ESDD included a biodiversity and critical habitat assessment, which identified that the area for Oslomej 2, where vegetation has re-generated since the area was last disturbed, is considered critical habitat for a number of amphibian and reptile species designated in Annex IV of the EU Habitats Directive. Adjustment of the site layout has avoided the most sensitive wetland habitats. Small sections of critical habitat have been identified at Bitola but have been avoided during the siting of the PV. At both sites panels have been elevated to 0.8m to allow taller grasses to be re-cultivated underneath to offset this habitat loss. A suite of biodiversity mitigation measures have been incorporated into the design and construction and a Habitat Reinstatement Plan will be developed within the existing mine site at Oslomej to compensate for the 8.6ha of lost woodland and scrub habitat and, if required, for any minor areas at Bitola due to the grid connection. Both sites have an Environmental Protection Elaborate approved in accordance with national legislation.
Due to the planned future development of 100MW of further solar PV at Oslomej, impacts on biodiversity are anticipated to be significant. With the mitigation measures described above, the Project itself will not make a substantial contribution to these impacts. The Bank will continue to explore opportunities to support the Client to enhance biodiversity through technical assistance to inform the approach for re-development of the mine site.
The Client will need to establish a team to implement the Project, and further develop the Environmental and Social Management Plans for construction and operation phases of the project. Relevant construction phase mitigation measures, including those related to occupational and community health and safety, will need to be included in the Engineering, Procurement and Construction (EPC) contract and their implementation monitored by the Client. A PIU Consultant will be put in place and will provide biodiversity expertise to support the design and implementation of biodiversity offsets.
Implementation of the ESAP on the Oslomej 1 project has been generally satisfactory with some items requiring further work. To ensure compliance with the Bank's PRs and to address the gaps identified at the ESDD, an ESAP for the new Project has been developed and will be agreed with the Client. The Bank will monitor the implementation of the Project via annual E&S reports review and monitoring site visits as required.
Technical Cooperation and Grant Financing
Technical assistance will be provided for the purposes of:
1) Environmental and Social Due Diligence to assess adverse environmental and social impacts associated with the Project, assess compliance with applicable laws and the EBRD ESP and PRs, determine the measures needed to prevent or minimise and mitigate the adverse impacts, and identify potential environmental and social opportunities, including those that would improve the sustainability of the Project.
2) Technical Due Diligence to review existing radiation measurements and to provide guidance to the Company on the minimum technical requirements to be included in the tender specifications to ensure alignment of the project with international best practice.
3) Inclusion Programme to address the social impacts of closing coal mining and generation assets and moving towards sustainable energy generation.
Company Contact Information
+389 2 3149 101
+389 2 3224 492
11 Oktomvri 9,1000 Skopje, Republic of North Macedonia
PSD last updated
19 May 2021
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Independent Project Accountability Mechanism (IPAM)
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