EBRD Promoting Renewable Energy in Southeastern Europe

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EBRD Promoting Renewable Energy in
South-eastern Europe

• Zagreb
• March 18, 2008

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Agenda

• EBRD who we are and what do we do
• Perspectives on renewable energy in South-eastern
  Europe
• How EBRD can help support renewable energy

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EBRD Who We Are and What We Do
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EBRD in a Nutshell

• AAA-rated international financial institution
  founded in 1991, owned by 60 national and two
  supranational shareholders
• Asset base over 1,800 transactions worth 33 bln
  signed since 1991
• Capital base 20 bln dedicated exclusively to
  CEE and FSU
• Special mandate facilitate the transition to
  market economies

• Cumulative commitments 33.3 billion

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Leader in Power Sector

• A network of 36 offices in 27 countries. Half of
  our bankers based in the field

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Foundations of Operations

• Apply sound banking principles to all projects
• We do not subsidize
• Advance the transition to a full market economy
• Priority to promote private sector and market
  expansion
• Support, but not replace, private investors
  (additionality)
• Act as a catalyst for higher and riskier
  involvement of private financiers
• Achieve environmentally sound and sustainable
  development

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Enhancing Sustainability

• Approx. 2.0 bln invested in sustainable energy
  to date, of which 500 mln in renewable energy
• Both direct project financier or equity investor
  in renewable projects, and indirect investor via
  funds and local banks
• Renewable energy sector remains in early
  development stage in the region, and is a key
  priority for EBRD
• Goal deliver innovative financing to
• sustainable energy projects

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Parameters of EBRD Financing

• Can invest up to 35 of project cost
• Typical minimum investment amount 5 mln but
  sustainable energy priority means smaller
  transactions are possible
• Flexible investment type debt, mezzanine, equity
  
• Minority equity investor up to 49
• Invest in funds and through local banks to
• address smaller projects

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Leveraging Commercial Finance

• Catalyst for commercial investment Every 1
  invested or lent by EBRD mobilises 3 from other
  sources
• Equity by investing with majority sponsor we
  reduce the equity burden and add value through
  partnership
• Debt syndication EBRD can syndicate all or part
  of the senior debt under A/B structures
• Debt co-financing EBRD will work with or
  alongside other commercial banks as part of the
  debt package

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Mobilising Technical Assistance

• Access to Government grant funding
• Funds available for technical assistance such as
  environmental assessments, baseline studies
• Assisting committed sponsors in early project
  development phases
• Entrusted with grant funding to
• overcome transition challenges

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Monetising Carbon Credits

• Manager of 165 mln Multilateral Carbon Credit
  Fund buying carbon credits from Joint
  Implementation and Clean Development Mechanism
  projects
• Contracting carbon purchase at time of financing
  adds certainty to cashflow
• In-house expertise to guide clients through
  monetisation of carbon
• Well-structured carbon transactions to
• further enhance project viability

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Perspectives on Renewable Energy in South-eastern
Europe
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The Opportunity is Increasing
Black Veatch analysis, 2003
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Case Study EnerCap Power Fund

• 25 mln commitment to private equity fund
  dedicated to renewable energy and energy
  efficiency across Central and Eastern Europe
• First large scale pan-regional renewable energy
  fund
• Expects to invest the majority of its funds in
  wind energy for which it has a proprietary
  pipeline of over 1GW
• EBRD was a cornerstone investor in the fund
  alongside other institutional investors

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Case Study Vez Svoghe Small HPPs

• 54 mln A/B loan for construction of nine (26 MW
  total) small HPPs along the river Iskar
• Supports first international venture of sponsor
• Contributes to Bulgaria meeting pledge of
  increased amount of renewable energy by 2010
• Builds on EBRDs long track record of supporting
  restructuring of Bulgarian power sector

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Practical Challenges

• Renewable energy markets poised for growth
• Practical issues remain
• Legislative gaps
• Licensing issues
• Long-term contracts
• Environmental concerns

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How EBRD Can Help
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How EBRD Can Help

• Legislative gaps policy dialogue, e.g.
  commissioning studies on required renewable
  energy support, grid connection constraints
• Licensing issues can be influential partner,
  e.g. successful appeal of unfair licensing
  decision in Poland
• Long-term contracts in-house expertise in, for
  ex, assessing contract quality and due diligence
  and ability to invest long tenors against quality
  PPA
• Environmental concerns in-house environmental
  expertise to review and bolster EIAs. TC funding
  to undertake strategic environmental reviews

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How EBRD Can Help Flexible

• Wide palette of financial instruments debt
  equity guarantees credit lines equity funds
• Long-term partner offering longer tenors than
  market norms partnering at an early stage
• Public and Private invest with and through
  public and private operations engaging with
  government bodies on projects and policy

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How EBRD Can Help Innovative

• Developing new instruments Armenia renewable
  energy fund, EE/RE Credit Line (e.g. Bulgaria
  www.beerecl.com)
• Establishing new activities Developing carbon
  finance capability under Bank operations
• EBRD Renewable Development Initiative Website
  pooling latest information on regional renewable
  activities. www.ebrdrenewables.com

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How EBRD Can Help Connected

• In-depth understanding of region 36 offices
  across region experience through rough and
  smooth from Russian crisis to EU Accession
• Working with governments and the EU on-going
  policy dialogue at country level and continuous
  discussions with EU on implementation of
  renewables framework
• Extensive commercial expertise Team staff from
  leading banks, funds and industry