An innovative financing programme by the EBRD will stimulate private sector renewable energy generation across North Africa and the Middle East, where unreliability of energy supply is one of the main impediments to economic growth.
The European Bank for Reconstruction and Development (EBRD), together with its partners, is launching a US$ 250 million financing framework for private sector renewable energy generation in Morocco, Egypt, Tunisia and Jordan – a region where energy remains overwhelmingly supplied through imports of hydrocarbons.
Announced ahead of the high-level business forum in Morocco organised by the EBRD, the framework envisages up to US$ 250 million in debt and equity funding for private companies in the Southern and Eastern Mediterranean (SEMED) region to build new renewable energy generation capacity. Most of the produced energy will be sold directly to private sector consumers such as cement companies and hotel groups.
Thanks to the recent reforms in the four countries which have started to allow private power producers to sell electricity directly to consumers, the EBRD programme will support a number of new business models, from direct agreements between large developers and corporate consumers to small scale generation in communities. In Tunisia, given the early stage development of the sector, direct sales to STEG, the state-owned single buyer, are also eligible for financing.
EBRD’s Nandita Parshad said: “For the first time in this region the private sector is now able to produce and sell clean renewable energy on a commercial basis competing head to head with gas and oil-fired generation. We are grateful to our partners in this programme, the CTF and GEF funds and the Union for the Mediterranean for their support in catalyzing this development”.
The first project under the new programme is expected to be the 120 MW Khalladi wind farm near Tangiers in Morocco, one of the first private renewable projects in the country, the signing of which is expected in the near future.
Under the framework, two international funds will invest alongside the EBRD: the Climate Investment Funds’ Clean Technology Fund (CTF) will provide up to US$ 35 million, and the Global Environment Facility (GEF) of up to US$ 15 million; of concessional financing which will not exceed 10 per cent of any single project.
Mafalda Duarte, Program Manager for the Climate Investment Funds, said: “We hope that this programme and the types of projects it finances will serve as a blueprint for other regions seeking to promote private renewable energy investments.”
GEF’s Director of Programs, Gustavo Fonseca added: “This is an important framework announced in the run-up to COP21 talks in Paris this year, demonstrating innovative climate finance that goes beyond grants. Once these projects are built, they could result in direct CO2 reductions of at least 700,000 tons per year and much more from the market changes we expect the programme will promote.”
The Union for Mediterranean will be involved in the EBRD’s SEMED renewables framework as a policy dialogue partner. Drawing lessons from around the world, this policy dialogue will identify regulation to support private business models that are most appropriate for individual countries. Ultimately it will also build momentum for incremental sector reforms.”
The UfM Deputy Secretary General Teresa Ribeiro said: “We are very happy to join forces with EBRD to promote the important policy dialogue on renewables integration in the region”.
A technical assistance programme of over US$ 1 million, funded by the EU’s Neighbourhood Investment Facility, will support project preparation and analysis.
The EBRD, which has recently approved a Green Economy Approach, has undertaken new commitments to invest 40 per cent of its annual business volume by 2020 in projects supporting sustainable energy and resources. The EBRD is the largest renewables investor in its region.
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