The first European Bank for Reconstruction and Development (EBRD) project with the InvestEU programme, designed to support sustainable economy projects, will finance the construction of 30 MW of new solar generation capacity in Croatia. It is the Bank’s first solar photovoltaic (PV) project in the country.
The Bank has lent 10.6 million euros to three special purpose vehicles (SPVs) incorporated in Croatia for the purpose of constructing and operating three solar PV plants. The SPVs are part of the Encro Group, one of the leading renewable energy developers in Croatia.
The project will have a novel structure, relying on the wholesale market to offtake the produced electricity, and therefore not benefiting from any support schemes for renewables. It will thus demonstrate a market based alternative for the renewable energy sector development in Croatia.
The higher risks associated with novel financing structures will be mitigated by a first-loss guarantee by the InvestEU programme. This is the first application of the new programme with more than two billion euros of EBRD funding for green or circular economy projects in the Bank’s European Union (EU) economies which will be backed by EU guarantees.
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The electricity produced by the solar plants will be sold directly on the market, but will also allow the client to enter into corporate power purchase agreements (PPAs) at the time of its choosing.
Grzegorz Zielinski, EBRD Head of Energy Europe, said: “We are proud to be on a forefront of promoting innovative financing for renewables. This is the EBRD’s first financing of fully merchant renewable energy project in Croatia, as well as the very first project under the InvestEU Framework for Sustainable Transition. Alternative electricity offtake arrangements, as the one illustrated by this project, are crucial for scaling up renewables.”
Mark Davis, EBRD Director for Central Europe, said: “We are really pleased with this new partnership with Encro Group. Solar energy in Croatia is still underdeveloped compared with other EU countries, but it has a serious potential. This financing to three 10 MW solar PV plants – which have the required permits and approvals and will not need further regulatory support – is a welcome signal to other investors that small-scale solar PV in Croatia is already profitable.”
Iljko Ćurić, chief executive officer and owner of Encro, added: “We are proud to be able to support Croatia’s green transition, thereby contributing to the further expansion of installed solar capacity in the country. We are particularly satisfied with the fact that this is fully merchant project, demonstrating innovative ways of financing renewable projects, not only in Croatia, but also across the broader region. Implementing renewable energy sources on the island of Brač is fully aligned with the energy transition plan developed under the European Commission’s ‘clean energy for EU islands’ initiative and will reduce the island’s energy dependence on the mainland.”
To date, the EBRD has invested over 4.6 billion euros in the Croatian economy. A new country strategy, adopted in May, cites the green economy transition – including renewables – as the Bank’s top priority for Croatia.