Kazakhstan Renewables Framework

Location:

Kazakhstan

Project number:

48919

Business sector:

Power and energy

Notice type:

Private

Approval date:

14 Dec 2016

Status:

Approved

PSD disclosed:

10 Nov 2016

Sub-projects signed under this framework

Translated version of this PSD: Russian

Project Description

Senior loans to private and in exceptional cases public companies for a total amount of up to EUR 200 million to finance the construction and operation of renewable energy projects in Kazakhstan including solar, wind, small hydropower and biogas energy sources (RES) and modernization and strengthening the electricity grid in order to enhance the integration of renewable energy sources into the electricity grid.

Project Objectives

The purpose of the Framework for Kazakhstan is to facilitate systemic change in the country's power generation sector where coal remains the dominant fuel by supporting the development of private renewable energy projects and moving towards sustainability of the power market. Despite
considerable renewable energy resources, the current share of renewables (excluding large hydro) in total generation is less than 1 per cent. The Framework will support the achievement of the country's target to increase the share of renewables to 3% of total generation by 2020, reduce carbon intensive power generation and reduce the power deficit in the southern regions of Kazakhstan.

The Framework will contribute considerably to Kazakhstan's climate mitigation efforts. Kazakhstan is a country with very high emissions of CO2 from power generation, and the Framework will therefore have a substantial positive impact on these, by providing clean energy into the mix. Based on the experience with the current portfolio, the expected CO2 emissions reductions are about 600,000 tonnes of CO2 per year once all projects are operational.

Transition Impact

Green Economy Transition: The sub-projects are expected to result in carbon savings for the country in a sector which is dominated by aged coal-fired plants.

Demonstration effect of new ways of financing and new technologies: the Framework will enable the development of a viable renewable energy market in Kazakhstan. Despite Kazakhstan's considerable renewable energy resource base and ambitious deployment targets, the current contribution of renewables to final electricity consumption is less than 1 per cent. The adoption of renewable energy technologies in a fossil fuel resource-rich country like Kazakhstan remains a significant challenge. This Framework will aim to facilitate the development of new a mix of renewable energy projects (wind, solar, biogas and small hydro) to overcome this challenge. By demonstrating the commercial viability of the RES projects it will encourage commercial lending in the future. The Framework will provide a highly visible demonstration to other potential developers that projects can be successfully implemented in this market. By supporting the development of the renewable energy projects in accordance with best international practices, the Framework will help to establish standards that can be replicated and will further encourage other developers to enter the market.

Increase in private sector participation and expansion of competitive market interactions: The Framework will target private sector projects and thus increase the share of privately owned generation in the country. The sub-projects under the Framework will predominantly target private sector investors and introduce new privately owned entrants into the Kazakh market.

Client Information

The borrowers will be mainly private and in exceptional cases public investors, including special purpose vehicles (SPVs) incorporated in Kazakhstan for the development of renewable energy projects and grid modernization and strengthening. The Bank expects to finance 6-9 projects under the Framework during next 5 years. The sponsors will be local private, institutional and public investors as well as international private and institutional investors.

EBRD Finance Summary

EUR 200,000,000.00

Secured project finance or corporate loans to 6-9 individual borrowers for a total amount of up to EUR 200 million. Additional co-financing could be potentially attracted from the Clean Technology Fund, the Green Climate Fund and other international financial institutions.

Total Project Cost

EUR 477,000,000.00

Environmental and Social Summary

The framework itself is not be categorised under the Bank's 2014 Environmental and Social Policy, however, each sub-project will be categorised on a case by case basis and will be subject to individual environmental and social due diligence (ESDD) specific to the project size and location as well as to the sponsor. Category A projects under the Bank’s Environmental and Social Policy will need to be submitted to the Board for approval regardless of the size of the Bank financing.

The sub-projects are expected to result in significant environmental benefits and contribute to climate change mitigation by producing renewable energy and displacing more-carbon intensive electricity generation in line with the Bank’s Green Economy Transition approach. The project specific ESDD will verify that each sub-project is structured to meet the Bank’s Performance Requirements. Based on the ESDD, an appropriate Stakeholder Engagement Plan (SEP), Non Technical Summary (NTS) as well as Environmental and Social Action Plan (ESAP) will be developed and appropriate level of information will be disclosed locally and by the Bank on each sub-project.

Technical Cooperation

TC funding will be sought to finance support in the regulatory reform and project-level due diligence/monitoring and verification under the Framework designed to support renewable energy projects in Kazakhstan.

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

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