March 2015 Sustainable Energy Finance Update
story highlights

Sustainable energy finance projects in Albania, Armenia, Chad, China, Georgia, Honduras, Latvia, Morocco, Poland, Romania, Ukraine and the EU were announced by the African Development Bank (AfDB), Asian Development Bank (ADB), Climate Investment Funds (CIF), European Bank for Reconstruction and Development (EBRD), European Commission, European Investment Bank (EIB), Inter-American Development Bank (IDB) and World Bank during the month of March.

In addition, the multilateral development banks (MDBs) and World Bank released publications related to sustainable energy finance, and EBRD and the World Bank hosted energy efficiency and renewable energy events.

march_2015_sustainable_rnergyMarch 2015: Sustainable energy finance projects in Albania, Armenia, Chad, China, Georgia, Honduras, Latvia, Morocco, Poland, Romania, Ukraine and the EU were announced by the African Development Bank (AfDB), Asian Development Bank (ADB), Climate Investment Funds (CIF), European Bank for Reconstruction and Development (EBRD), European Commission, European Investment Bank (EIB), Inter-American Development Bank (IDB) and World Bank during the month of March. In addition, the multilateral development banks (MDBs) and World Bank released publications related to sustainable energy finance, and EBRD and the World Bank hosted energy efficiency and renewable energy events.

In Albania, a US$226.7 million-equivalent public finance policy-based guarantee approved by the Board of Executive Directors will support fiscal sustainability, including through reforms in the energy sector. [World Bank Press Release] [World Bank Project Page]

In Armenia, CIF approved a US$8.55 million grant for a geothermal exploratory drilling project under its Scaling Up Renewable Energy Program (SREP). The grant, which is being administered by the International Bank for Reconstruction and Development (IBRD), will advance Armenia’s goal of siting a geothermal plant at Karkar, by providing the financial backing for exploratory drilling, which is the biggest hurdle to private sector investment in the project. [CIF Document Page] [Project Proposal]

Also in Armenia, the World Bank Board of Executive Directors approved a US$52 million loan for the Electricity Transmission Network Improvement Project (ETNIP), which will enhance the reliability of power supply in the country. The project focuses on rehabilitating the transmission system, including the rehabilitation of substations, as well as improving power system management, through the creation of a back-up dispatch center. The Government of Armenia is providing US$17.16 million in co-financing. [World Bank Press Release]

Additionally, EIB announced a €10 million loan for a high-voltage direct current station in Armenia and a power transmission line linking Armenia and Georgia. KfW Bankengruppe (€85.2 million loan) on behalf of the Government of Germany, EU Neighborhood Investment Facility (NIF) (€10 million grant), the Government of Armenia (€1.5 million) and the Government of Georgia (€6.6 million) are also supporting the project. The project is expected to increase the potential for generation and use of hydropower. [EIB Press Release]

In Chad, the AfDB’s Sustainable Energy Fund for Africa (SEFA) approved a US$780,000 preparation grant for the development phase of a 40-megawatt (MW) solar photovoltaic (PV) plant. The plant will be the country’s first Independent Power Producer (IPP) connected to the national grid and will increase its installed capacity by 45%. The grant will finance technical assistance for completing the plant design and grid study, legal counsel and financial advice for structuring a bankable IPP. The project promotes technology transfer, job creation, carbon-free electricity production and energy access. [AfDB Press Release]

In China, the World Bank announced a US$71.5 million loan for the Hebei Rural Renewable Energy Development Project, which aims to demonstrate sustainable biogas production and utilization for 96,100 rural households over the period 2015-2020. Under the project, six biogas facilities will be constructed to convert crop residues and livestock manure into a clean energy source. The fuel generated will be used first for cooking in rural households, while the remaining will be upgraded to fuel for public transport. The project is expected to reduce carbon dioxide (CO2) emissions by 58,780 tons every year in addition to greatly improving air quality. [World Bank Press Release] [World Bank Project Page]

In Georgia, the World Bank’s International Finance Corporation (IFC), ADB and EBRD are arranging US$250 million in debt financing for the Shuakhevi hydropower plant. ADB and EBRD are each providing US$90 million long-term senior loans. In addition to lending US$70 million, IFC is providing US$34 million in equity in a joint venture with Tata Power (India) and Clean Energy Invest (Norway). As the first hydropower scheme in Georgia certified by the UNFCCC for carbon emission reductions, the 187-MW project is anticipated to reduce greenhouse gas (GHG) emissions by more than 200,000 tons annually. [EBRD Press Release] [ADB Press Release]

In Honduras, CIF approved US$428,000 for the project ‘Private Sector Set-Aside: Honduran Self-Supply Renewable Energy Guarantee Program,’ which was submitted to SREP by IDB. The programme aims to improve the credit-profile of renewable energy projects by providing risk-sharing instruments, such as first-loss guarantees. The grant from CIF will fund capacity-building, training, feasibility studies and legal documentation. [CIF Document Page] [Project Proposal]

Also in Honduras, IDB announced a US$23 million loan for upgrades to the generation infrastructure at the Cañaveral – Río Lindo hydroelectric power plants, which are expected to increase installed capacity by 20.8 MW. The project also intends to prolong the operating life of the facility by at least 30 years, reduce CO2 emissions; and improve business management of electrical generation. The project is being financed under the framework agreement for Co-financing Renewable Energy and Energy Efficiency Projects (CORE), a collaboration between IDB and the Japan International Cooperation Agency (JICA). JICA is providing US$135.4 million. The remaining US$8.8 million needed will be financed locally. [IDB Press Release] [IDB Press Release, JICA]

In Latvia, EIB announced a €200 million loan facility to support strategic investments in several sectors, including energy and sustainable transport infrastructure. Latvian small- and medium-sized enterprises and climate change mitigation projects will be among the eligible beneficiaries of the facility. [EIB Press Release]

In Morocco, EBRD, Agence Française de Développement (AFD), EIB and KfW Development Bank have joined forces to provide the first finance line under the Morocco Sustainable Energy Financing Facility (MorSEFF). The €20 million loan is being provided to BMCE Bank and its leasing subsidiary Maghrebail to finance energy efficiency projects and small-scale renewable energy investments in the commercial sector. With the support of EU NIF and EBRD’s Southern and Eastern Mediterranean (SEMED) Multi-Donor Fund, the loan is complemented by technical assistance for business development and investment incentives. [EBRD Press Release]

In Poland, EIB approved four loans, totaling more than PLN 1 billion, to support eco-friendly investments, urban infrastructure modernization in the city of Łódź and railway infrastructure in western Poland. The improvements will include increased energy efficiency and incorporation of environmental protection needs. [EIB Press Release]

In Romania, EIB is providing a €22.6 million loan to the municipality of Oradea to, among other things, upgrade its road network. The improvements, which will be co-financed by Oradea, are expected to reduce energy consumption and traffic-related emissions. [EIB Press Release]

In Ukraine, EBRD is allocating €65 million to the national transmission network operator, Ukrenergo, for the construction of a substation and the lines that will connect it to the grid. The project, which will increase energy efficiency and security of energy supply, is being financed from procurement savings achieved by Ukrenergo in implementing a 2010 transmission line project financed by EBRD. [EBRD Press Release]

In the EU, the European Commission opened a call for proposals under its Connecting Europe Facility (CEF), which will finance €100 million in trans-European energy infrastructure projects. The call is the first of two planned for 2015, during which a total of €650 million in grants is expected to be awarded. The Facility is supporting the EU’s planned Energy Union, focusing on projects that end energy isolation, eliminate energy bottlenecks and “complete the European energy market.” In addition, the projects must contribute to sustainability. The Energy Union is expected to better integrate increasing levels of renewables. [EU Press Release] [EU Fact Sheet]

On publications, AfDB put out its January-February Climate Finance Newsletter, highlighting renewable energy projects in, inter alia, Cameroon, Tanzania and Morocco. [AfDB January-February Climate Finance Newsletter]

The MDBs reported progress on delivering sustainable transport, stating they are on track to meet their goal of investing US$175 billion in sustainable transport over the decade from 2012-2022. [EBRD Press Release] [Progress Report (2013–2014) of the MDB Working Group on Sustainable Transport] [IISD RS Climate Story]

The World Bank’s Energy Sector Management Assistance Program (ESMAP) released a technical report, ‘Bringing Variable Renewable Energy up to Scale,’ which finds that “with the right combination of new policies and investments, countries can integrate unprecedented shares of variable renewable energy into their grids without compromising adequacy, reliability or affordability.” [World Bank Press Release] [Bringing Variable Renewable Energy up to Scale: Options for Grid Integration Using Natural Gas and Energy Storage]

On events, the Eastern Europe Energy Efficiency and Environmental Partnership (E5P) hosted a seminar in Tbilisi, Georgia, to discuss the benefits of energy efficiency investments with Georgian municipalities. E5P, which is supported by participating international financial institutions (IFIs) such as EBRD, EIB and the World Bank, is a fund of almost €170 million, with €20 million allocated for grant financing in Georgia. [EBRD Press Release]

EBRD and the EU organized Sustainable Energy Excellence Awards in Bucharest, Romania, to celebrate Romanian firms’ use of energy efficiency and renewable energy. Fifteen companies were honored with awards ranging from the ‘Green Award’ and ‘Bright Ideas Award’ to the ‘Tasty Investment Award’ and ‘Fantastic Plastic Award.’ [EBRD Press Release]

The World Bank organized Negawatt Weekend in Accra, Ghana, which was a cross between an “ideathon” and “startup weekend.” The event resulted in 14 potential solutions to Accra’s energy efficiency problems in public, commercial and residential buildings. [World Bank Press Release]