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EBRD, InvestEU to finance 30 MW solar farms in Croatia

The European Bank for Reconstruction and Development (EBRD) announced on Friday (17 November) that its first project with the InvestEU programme will finance the construction of three solar farms with a combined capacity of 30 megawatts (MW) in Croatia.

With EBRD as one of its main partners, InvestEU Programme is run by the European Commission’s Directorate-General for Economic and Financial Affairs, with the aim of supporting sustainable investment, innovation and job creation in Europe by securing more than 372 billion euros in additional investment between 2021 and 2027.

“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,” said Grzegorz Zielinski, EBRD Head of Energy Europe.

The EBRD 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, a renewable energy developer 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.

“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,” said Mark Davis, EBRD Director for Central Europe.

The higher risks associated with novel financing structures will be mitigated by a first-loss guarantee by the InvestEU programme, the EBRD said in a press release. 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 EU, which will be backed by EU guarantees.

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, the EBRD noted.

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