The EBRD is considering establishing a Kazahkstan Renewable Energy Financing Facility which would provide the Bank with an instrument to extend financing for renewable energy projects in Kazahkstan.
The two main objectives of the Facility will be:
- to provide financing and technical assistance for the realisation of early renewable energy projects, which will demonstrate the benefits of utilisation of renewable energy sources;
- to encourage and support policy dialogue and institutional capacity building in respect of renewable energy, in order to foster the development of a favourable environment for the implementation of such projects in Kazahkstan.
The Facility will consider all forms of renewable energy generation project including hydro, wind, biomass and solar.
Concessional co-financing from the Clean Technology Fund (CTF) is anticipated to be available to cover up to 20 per cent of project eligible costs.
The project is part of the CTF Investment Plan for Kazakhstan and carries the promise of high additionality, transformational impact and replicability.
Frameworks for markets: Part of the funds will be used to support dialogue with the government on adoption of new legislation to support renewable energy sources, as well as in building the necessary institutional capacity for implementation both at the project level and within the enabling institutions such as the regulator. This will create a proper framework for the development of renewable energy projects in Kazakhstan and will help the country in its much needed efforts to reduce the environmental impact of energy production.
Demonstration of replicable products and processes which are new to the economy: The project will support development and financing of some of the first renewable energy projects in Kazakhstan, all of them private projects in the generation sector, which is dominated by state controlled nuclear and thermal power plants. The proposed direct Financing Facility will provide a highly visible demonstration program to other potential developers that projects can be successfully implemented in this market and in addition, will support and facilitate financing structures which are not widely available for these types of projects from local banks but which may be expected to enter the market once precedents are established. As long term limited recourse financing is essential to enable increased levels of investment for renewable energy projects the Facility could have a fundamental role in establishing this market.
Companies developing renewable energy projects in Kazakhstan.
€50 million financing.
Up to €100 million, of which €20 million will be provided by the CTF.
Sub-projects financed through this Facility will be appraised on a case-by-case basis utilizing a range of approaches including the use of environmental questionnaires, the undertaking of environmental audits and environmental impact assessments.
The Bank will take a risk-based approach to environmental and social due diligence with all projects undergoing a basic environment, social, health and safety review against the EBRD’s RE and EE eligibility criteria for wind power, hydro power and biomass projects prior to project approval. For companies with higher environmental and social risk, additional studies will be carried out with assistance from external consultants. These will allow the Bank to fully understand all environment-related liabilities and environmental and social risks associated with the project or company’s operations and to develop and agree upon the environmental and social action plan as required.
Borrowers will be required to comply with the applicable national and EU environmental, social, health and safety and labour requirements and provide the Bank with an annual report on environmental, social health and safety and labour issues.
The Facility will be supported by a comprehensive technical assistance programme designed to provide both institutional and project support.
The EBRD will support the regulator with the development of secondary legislation in order to present a workable framework for the support of renewable energy development in Kazakhstan. The scope of the work may also include any required amendments to primary legislation.
In addition the EBRD will establish a pipeline of renewable energy projects which would be suitable to be financed under a dedicated financing facility. This will include a list of all known project proposals, indicating the sponsor, project description, projects status and required investment, also an indicative initial assessment of the viability of each project and their readiness to proceed.
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