ESM solar PV Transition

Location:

North Macedonia

Project number:

52320

Business sector:

Energy

Notice type:

State

Environmental category:

B

Approval date:

08 Sep 2021

Status:

Passed Final Review, Pending Approval

PSD disclosed:

05 Oct 2020

Project Description

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").

Project Objectives

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.

Transition Impact

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.

Client Information

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

EUR 25,000,000.00

Up to EUR 25 million loan to be provided to ESM.

Total Project Cost

EUR 25,000,000.00

EUR 25 million

Additionality

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

Blagoj Gajdardziski
blagoj.gajdardziski@elem.com.mk
+389 2 3149 101
+389 2 3224 492
https://www.esm.com.mk/
11 Oktomvri 9,1000 Skopje, Republic of North Macedonia

PSD last updated

19 May 2021

Understanding Transition

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

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

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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