CORRECTED - INTERVIEW - EBRD To Invest 1.5 Bln Euro in Renewable Energy, Energy Efficiency Projects in CEE, CIS in 2006-2008
The European Bank for Reconstruction and Development (EBRD) plans to invest 1.5 billion euro ($2.2 billion) in renewable energy and energy efficiency projects in Central and Eastern Europe and the Commonwealth of Independent States in 2006-2008, the EBRD director for Bulgaria, James Hyslop, said.
The amount of money invested in each country in the region is still unclear, as it depends on the size and number of projects in each country, Hyslop told SeeNews in a recent interview.
The EBRD said in late October it plans to extend credit lines worth a total 100 million euro to banks in EU newcomers Bulgaria and Romania to help their industries become more energy efficient.
“EBRD has three core areas of activity in Bulgaria: energy sector, corporate sector and infrastructure”, Hyslop said.
“We are looking to invest in renewable energy projects, aimed at diversifying the energy supply of the country”, EBRD power and energy principal banker Georgios Giaouris said in the same interview.
Bulgaria is one of the leaders in the region in terms of the EBRD's efforts to promote the efficient use of energy in a bid to improve energy security, increase the competitiveness of the economy and to help cut pollution levels through reduced carbon emissions. Over the last few years, the bank has lent 105 million euro via its Energy Efficiency and Renewable Energy Credit Lines to eight participating banks for on-lending to private sector companies for industrial energy efficiency and small renewable energy projects. In addition, the EBRD has extended a further 45 million euro to participating banks under its Residential Energy Efficiency Credit Line for on-lending to the residential sector for energy efficiency projects.
The EBRD will also target promoting cooperation among countries in the region and intensifying electricity trade in Southeastern Europe. The bank will also focus on helping the region modernise its electricity distribution networks.
“EBRD is in discussions for electricity distribution network upgrade projects in the Former Yugoslav Republic of Macedonia and we will be looking to participate in the privatization of the electricity distribution network of Albania, in a similar manner to our involvement in Bulgaria,” Giaouris added.
“The EBRD support for local businesses is a priority with a special focus on enhancing local business competitiveness and to stimulate cross-border trade and investment. We are committed to provide more funding options including more high-risk instruments such as equity, mezzanine and structured debt to achieve this,” Hyslop said.
In September the EBRD said small firms in Bulgaria and Romania can benefit from trading in carbon dioxide (CO2) emissions by coupling their projects and applying jointly for financing under energy efficiency credit lines.
Under the Kyoto Protocol, countries and companies with excess CO2 emissions, which they find hard to cut, can buy credits from other firms or states, and thus keep their emissions within the allocated allowances.
In September the EBRD agreed to buy from Bulgarian hydro power plant operator Vez Svoghe 336,462 tonnes of CO2 emissions, and couple of days later it signed a similar contract, for some 1.1 million tonnes of CO2, with the water utility company of Bulgaria's capital, Sofiyska Voda.
EBRD also plans to support the upgrading of national infrastructure particularly in the transport sector, and in local infrastructure including the water, waste water and solid waste sectors.
"Our strategy also involves to take part in building and expanding low-pressure gas distribution networks as a way to diversify the energy needs of the households and industry,” Giaouris said and added that they are in discussion with a number of companies, but there are no concrete projects signed yet.
“Bulgaria can develop wind parks and mini hydropower plants, as a result of its geographical advantages […] the costs of building of photo-voltaic parks on a large scale is still too expensive and their implementation requires a combination of incentives and support by the state, including preferential tariffs. EBRD is currently considering the financing of a cascade of nine mini-hydros along the river Iskar in Bulgaria,” Giaouris said.
Energy experts say Bulgaria should focus on the development of renewable energy projects to cut its high dependence on energy imports which it now needs to keep its economy running. The EU newcomer has to cover 11% of its gross domestic energy consumption by renewable energy sources by 2010, compared to about one percent in 2005, in order to comply with EU directives. Bulgaria joined the EU in January 2007. The installed capacity of active wind parks in Bulgaria is expected to reach some 70 MW by the end of this year and rise to some 200 MW by 2010.
The State Energy and Water Regulatory Commission (SEWRC) has set up the buyout prices of wind and sun-generated electricity at 175 levs ($126.7/89.5 euro) per MWh and 720 levs per MWh, respectively. Bulgaria's power grid operator NETC is bound by law to buy the electricity generated from renewable sources at preferential prices for a period of 12 years.
The country closed down a second pair of Soviet-made 440-megawatt reactors at its sole nuclear power plant Kozloduy at the end of 2006 to address nuclear safety concerns voiced by the EU. The closure left Kozloduy with two operating reactors of 1,000 MW each and reduced Bulgaria's power exports to a trickle. Before the closure Kozloduy generated about 40% of Bulgaria's electricity, enabling the country to cover over 70% of the power deficit of its neighbours.