Western Balkan Investment Framework (WBIF) Project Grant Application Form

Western Balkan Investment Framework (WBIF)
Project Grant Application Form
Submission date: 10/02/2011
Contribution Request nr WB5-HR-ENE-03
WBIF decision sought
Approved
Under review
1
Non-approval
Proposal of the Project Financiers group:
Proposal endorsed by the Project Financiers’ Group for submission to the Steering
Committee on 23/06/2011
Grant Contribution from WBIF:
from EWBJF: 500,000 Euros
WBIF Screening
(cf. Screening list in Annex 2)
Eligible for assessment. Concern of possible market
distortion to be considered.
Assessor: KfW
WBIF Assessment
(cf. Assessment list in Annex 3)
Recommended for submission to the Steering Committee. Will
be the first wind and solar project in Croatia.
To be filled by the submitter
Title of the Operation:
Beneficiary(ies)/
Country(ies)
Documentation for wind and solar projects in Splitskodalmatinska County, Croatia
HEP-Obnovljivi izvori energije d.o.o. / Croatia
KfW
(Interested) Lead IFI
Energy
Eligible Sector
Energy generation and supply
Sub-sector
DAC Sector
2
Wind and solar power
23068 and 23067
DAC code
Location
Croatia
Borrower /
Beneficiary(ies):
(contact points for both)
HEP-Obnovljivi izvori energije d.o.o., Ulica grada Vukovara 37, 10 000
Zagreb, Croatia – director: Mr. Goran Slipac
Project description :
(description of the required
1
2
HEP-Obnovljivi izvori energije d.o.o. (HEP-Renewable Energy Sources Ltd.),
subject to the finalisation of the approval procedures of the corresponding institutions
www.oecd.org/dac/stats/data
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Western Balkan Investment Framework (WBIF)
investment(s) and the
present situation, including
problems to overcome)
HEP OIE, is developing two combined wind and solar projects in Splitskodalmatinska županija (County) in Croatia, namely: Zelovo (wind 30-60 MW,
solar TBD) and Stražbenica (wind 22 MW, solar TBD).
Zelovo is being developed in 100% ownership of HEP and Stražbenica is
expected to be realized in 50-50% cooperation with Dalekovod d.d.
Both wind projects received so far Preliminary Energy Approval (PEA) from
Ministry of Economy, Labour and Entrepreneurship. The PEA gives HEP
OIE (Zelovo, Stražbenica) exclusive access to those locations for three
years, during which the application for Location Permit must be submitted to
the Ministry of Environmental Protection, Spatial Planning and Construction.
For the purpose of further development, it is necessary to evaluate wind and
solar potential on the sites, investigate environmental impacts, assess grid
connection possibilities and assess economics. Details for each project
follow.
Zelovo (wind 30-60 MW; estimated investment: 90 mil.€ for 60 MW; solar
unknown) is located near the city of Sinj. Wind measurements on 46m mast
are ongoing and additional 100m measurement will be set up in spring 2011.
Preliminary wind study and optimization was created based on 46m
measurements for 33 MW, but there is a clear possibility for expansion of the
location. Grid connection possibilities were evaluated through grid study and
examined by HEP TSO, but the project is currently on the waiting list
because of current grid limitation to 360 MW. Investigations for the EIA are
ongoing (ornithology, bats, conservation, geology and pedology). Project
was submitted for introduction to spatial planning documents of the County
as combined wind and solar project and should be accepted within the next
amendments. Solar measurements should be set up in spring 2011 latest on
existing wind measurement masts.
Stražbenica (22 MW, 35 mil.€ ; solar unknown) is located near the city of
Sinj. Wind measurements on 50m mast started in June 2010 and are already
showing promising results. Some preliminary environmental investigations of
the location were done, but not in much detail. Investigation of bird and bat
species should begin in February/March 2011. Grid connection possibilities
were not thoroughly evaluated, but some options exist. Projects were
submitted for introduction to spatial planning documents of the County as
combined wind and solar project and should be accepted within the next
amendments. Solar measurements should be set up in spring 2011 latest on
existing wind measurement masts.
Outcome / Results to be
achieved for the
investment: (specify the
foreseen results, indicate
1. the economic
2. the social
3. the environmental
benefits produced by the
investment as well as the
estimated number of direct
beneficiaries)
Proposed investment should achieve the following results:
- construction and realization of feasible and profitable wind and/or power
plants – according to the feed-in tariff in Croatia (in 2010: 9,93€c/kWh for
wind farms over 1 MW installed capacity; in 2010: in range from 30 to 50
€c/kWh for solar plants, depending on the installed capacity)
- revitalization of economy of local communities (according to Croatian
legislation, local communities with wind power plants over 1 MW receive
0,01kn for every kWh produced)
- employment of local and regional resources during preparation,
construction and operation of the objects
- reduction of CO2 emissions of more than 140.000 tons of CO2 annually
Financing of the grant would cover wind studies, feasibility studies and
preparatory documents for location permit, which are necessary for further
development of projects.
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Western Balkan Investment Framework (WBIF)
Both locations have already undergone a certain prefeasibility analysis and
some measurements already exist or will be set up before the start of
activities from the grant. Feasibility studies would determine whether the
location is suitable to be wind power plant, solar power plant or are there
possibilities to combine the two technologies together on one location.
Description of the Grant
use: (precise what is
concretely financed and the
expected outcomes)
Feasibility studies for the three locations would, in general, include the
following:
- Preparation of bankable location study including wind study and solar
potential evaluation through wind study including optimization, evaluation of
turbulences and determination of wind class needed for the site, based on
existing wind and solar measurement data and other available data (i.e.
ALADIN data, Sander&Partner data); if missing, long term data from
Croatian meteorological institute should be purchased by Consultants
- Conceptual Design of the power plant, from which further development of
Preliminary Design for Location permit could be evolved
- Preliminary grid connection study (PAMP), according to requirements of
HEP-Transmission System Operator or HEP-Distribution System Operator,
including participation in the process (meetings, clarifications, etc.)
- Environmental impact assessment, according to requirements of current
legislation (NN 89/07, NN 64/08, EC Guidelines for EIA for wind farms from
October 2010),) and Ministry of Environmental Protection, Spatial Planning
and Construction, including participation in the process (meetings, site visits,
public hearings, clarification, etc.)
- Strategic Environmental Assessment, according to requirements from
current legislation (i.e. EC Guidelines for EIA for wind farms from October
2010, including participation in the process (meetings, site visits, public
hearings, clarification, etc.)
- Financial model that would include calculation of profitability, cost benefit,
risks, sensitivities
Feasibility studies financed through this Grant will be used to help HEP OIE,
and also the Project Company to obtain a loan for the realization of the
project(s).
In April 2009, European Commission adopted a new Directive on the
promotion of the use of energy from renewable sources. This Directive
establishes a common framework for the promotion of energy from
renewable sources. It sets mandatory national targets for the overall share of
energy from renewable sources in gross final consumption of energy and for
the share of energy from renewable sources in transport.
Strategic justification:
(specify which strategy
and/or investment plans
both at national and
regional level include the
proposed project)
Can you describe how the
project is in line with
- EU pre-accession
strategy
- National strategy
-Other donors strategy?
At this point, Croatia does not have a mandatory national target prescribed
by the EU. However, in October 2009 the Croatian Parliament adopted a
new Energy Strategy (NN130/2009) with the objective of 20% share of
renewables in total energy consumption and 35% in electricity consumption.
In the last years share of renewables in electricity consumption varies
between 30 and 40% depending on the hydrology (large hydro power
plants).
With regard to wind power, Energy Strategy states the following (Section
9.2.4):
“Government of the Republic of Croatia shall create favorable investment
climate and encourage construction of wind power plants so that their share
in total electricity consumption reaches 9 to 10% in 2020.
Government of the Republic of Croatia will encourage construction of wind
power plants.
It is expected that installed capacity of wind power plants in Republic of
Croatia in 2020 reach 1200 MW. Dynamics of construction of wind power
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Western Balkan Investment Framework (WBIF)
plants will be determined in implementing programs of Energy Strategy,
depending on the regulation capabilities of Croatian power system,
balancing possibilities of Croatian power system in open domestic energy
market, capabilities of domestic industry and other operations to participate
in construction of wind power plants and available budget for incentives.”
With regard to solar power, Energy Strategy states that the Republic of
Croatia will support development of photovoltaic systems, as well as CSP
systems.
Additional comments on
the project: (duration,
constraints, partners/site
availability, assumptions
and risks appraisal etc..)
The last spatial/physical plan of Splitsko-dalmatinska County was adopted in
2005 and changes and amendments are expected to be announced in 2011.
Introduction of projects in spatial planning documents is a prerequisite for
Environmental Impact Assessment. All projects were submitted for
introduction to spatial planning documents of the County and should be
accepted within the next amendments. The County is familiar with those
projects, as HEP OIE informed them several times by either written notice or
on joint meetings and they expressed their general interest in those projects.
Grant request
justification:
(Why a grant contribution is
needed for the Project
completion?)
There are several reasons why a grant is needed for further development of
projects:
- Mother company of HEP OIE, HEP d.d., currently needs to work on
fulfilment of Government’s requirements for construction of big power plants,
and therefore will focus the resources on those projects. As wind power
plants are smaller, the amount of funds and resources for such projects are
quite limited.
- Although there are a number of registered potential wind projects (reserved
land plots) in Croatia by private investors from 2007, so far not a lot of wind
farms were actually built. Croatian objective for 2010 was to have 5,8%
share of renewables (excluding large hydro) in overall electricity
consumption, but Croatia only reached around 2%. HEP OIE’s objective is
not to acquire, develop and then sell interesting land plots, but to build and
operate wind power plants and also to become a leader in renewable energy
sector in Croatia and possibly in region. HEP OIE, with already defined
pipeline of potential projects, has the capacity and strength to realise such
projects and could truly contribute to the objective of Croatian Energy
Strategy that includes 1.200 MW of wind power plants in 2020. This grant
would enable HEP OIE to significantly speed up the work on the projects;
especially with HEP d.d.’s resources being focused on big power plants.
- The concept of combined wind and solar power plants was not yet
examined in Croatia and the region, so development of such concept or
construction of such power plant would also serve as a kind of pilot project
for potential regional deployment of such facilities.
- Apart from the monetary value of the grant, this grant would carry additional
benefits for HEP OIE’s projects because key experts would be transferring
the necessary know-how to HEP OIE’s employees that would otherwise be
difficult to acquire.
- The studies and works under the grant would represent a credible source
of information for financing institutions and would be a basis on which HEP
OIE would find and contract financing at the best possible conditions.
Conformity with the
eligibility checklist:
summary
The project is in conformity with the checklist.
(cf. list in Annex 1)
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Western Balkan Investment Framework (WBIF)
Title of the Operation:
Type of Contribution
3
(type of grants)
Documentation for wind and solar projects in Splitsko-dalmatinska
County, Croatia
Technical Assistance – FS for 3 Wind Energy / Solar plants. (including
EIA, SEA, Location and economic aspects)
Total Investment
Financing Plan
(Annex 4)
EUR equivalent
In Project Currency
Curr.
estimated: 125M€
912.500.000
HRK
To be adapted case by
case
Finance Institution
Total (€ M)
EC Contribution IPA
WBJF
EBRD
EIB
CEB
KfW
0.5M
Remarks (grants/loans)
Grant for FS
124M
Estimated Loan, depending on
contribution from private
sources.
Not yet known – land
acquisition costs. To be
determined in FS
Beneficiary
Contribution
Total Financing (€)
Costs
125M
100%
Activities
Project preparation
5M
Investment
…
120M
Total activities
125M
Total Grant requested
€0.5M
Total Loan requested
Around 125M, depending on outcome of FS
FS, Detailed Design,
Supervision
100%
Eligible Finance Institution Consortium
Lead Finance Institution
KfW
Other Eligible FI (EFI) member
of the consortium
Project Chronology
Contact person
Phone
Claudia Hirtbach
+49 69 7431-4856
email
[email protected]
Contact person
Phone
email
Assessment mission
WBIF steering committee approval
date of signature of the loans
foreseen with the beneficiary
start of project
end of project
3
The grant financing to a specific investment project (“Grant operation”) may take the form of:
1) Technical assistance: financing technical assistance including preparatory work for eligible investment
projects such as impact assessments, feasibility studies, detailed design, project supervision and
targeted capacity building and implementation support.
2) Investment grants: direct grants for specific project components, as well as incentive schemes based on
performance of implementing institutions.
3) Incentive payments to financial intermediaries.
4) Interest rates subsidies: provision of a lump-sum amount to ensure that the loan finance needed for the
investment project can be made available at reduced interest rates.
5) Insurance premia: funding of insurance premia necessary to implement the investment projects.
6)
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Western Balkan Investment Framework (WBIF)
Annex 1: Eligibility checklist
Yes
1
Operations covered by the WBIF benefit one or more of the following beneficiaries: Albania,
Bosnia and Herzegovina, Croatia, former Yugoslav Republic of Macedonia, Montenegro,
Serbia and Kosovo under UNSCR 1244.
Y
2
Fall within one of the eligible sector:
Environment: water supply, waste water treatment, sewage systems, solid waste and
hazardous waste management, emission control etc.;
Energy: renewable energy, interconnection systems, transmission, co-generation, hydro,
and gas pipelines, etc.;
Energy efficiency and savings;
Transport: railways and inland waterways including river ports, roads, seaports, airports,
border facilities, inter modal terminals and urban transport;
Social: schools and education centres, hospitals and health centres, social housing,
reclusion centres and other public buildings;
SME, private and financial sector support
Y
The project is not supported by or eligible for the Regional Development Component of IPA
Y
3
project benefit public or private entities or entities with mixed public-private capital
responsible for the provision, management, construction and negotiation of public utilities
and services
Y
4
All elements included under the activities covered by a WBIF grant for the investment
projects are in principle eligible for grant financing
Y
5
The project is submitted by the Beneficiary, either via the NIPACs5 or via the partner IFIs
Y
6
The project is consistent with the EU Pre-Accession Strategy and relevant sector policies
and national investment plans
Y
7
Grant requests explicitly mention any complementarities or coherence with projects
supported or planned for support under the IPA National Programmes (for implementation
by the EC Delegations or by the Beneficiaries authorities) and/or other donors activities
Y
8
The borrower/beneficiary intend to use the leverage of a loan through the Joint Lending
Facility for this project
Y
9
Grant operation is be consistent with the policies, rules and procedures of each source of
funds (Commission, EIB, EBRD, CEB and EWBJF)
Y
2bis
4
4
When calculating the eligible costs of a project that may benefit from grant financing or co-financing, the rules
and procedures of the Commission, the partner IFIs and the EWBJF will apply. Eligibility of IFI Grant financing
should be confirmed with co-financiers. According to the IPA Regulation the following expenditures are not
eligible: a) taxes, including value added taxes (in principle); b) customs and import duties, or any other charges;
c) purchase, rent or leasing of land and existing buildings; d) fines, financial penalties and expenses of litigation;
e) operating costs (can be allowed on a case-by-case basis); f) second hand equipment; g) bank charges, cost of
guarantees and similar charges; h) conversion costs, charges and exchange losses associated with any of the
component specific euro accounts, as well as purely financial expenses; and i) contributions in kind. In addition,
any leasing costs or depreciation costs are not eligible. In the case of revenue-generating projects, meaning a
project involving an investment in infrastructure, which is subject to charges borne directly by users, the eligible
cost is calculated according to a funding gap method deducting the value of the net revenue over a specific time
from the value of the investment cost.
5
NIPAC = National IPA Coordinator. The NIPAC is responsible for coordination of programming and
monitoring the implementation of IPA in the Beneficiaries of the Western Balkans and Turkey. As IPA represent
the biggest source of external aid and is linked to the progress and development needed in the EU accession
process, and in line with the local ownership over donor funds and donor coordination as foreseen in the Paris
declaration, the involvement of the NIPAC is of utmost importance for the effectiveness of the JGF and the
WBIF.
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Western Balkan Investment Framework (WBIF)
Annex 2: Screening (to be filled by the DG Elarg)
How can you ensure that
beneficiaries NIPACs (National
IPA Coordinators) have been
adequately involved and are
supportive of project?
How the project is consistent with
national (sector) strategies,
national and regional investment
plans and with the IPA priorities
and the project potential for IPA
support (not allocated via the
JGF) or other donor funding?
How the project is consistent with
EU policies (pre-accession
agenda, sector priorities,
competition rules etc.) drawing
from and involving the EC
Delegations, line DGs and
ELARG geographical teams?
Assess eligibility of projects for
support from the JGF and the
appropriate mix of funding
sources
Conclusion
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Western Balkan Investment Framework (WBIF)
Annex 3: Assessment (to be filled by the lead IFI)6
Rationale for
use of grant
funds
The Financing
Plane
Regional / Cross
Border Impact
Conformity with
socioenvironmental
standards
Economic and
Financial
justification
Capacity of
Beneficiary
institution
Proposal
Contribution:
from EWBJF
XXX €
100 %
XXX €
%
from other Funds
Type of Intervention : … grant
Annex 4: Indicative Financial Plan Envisaged (€) (to be filled by the lead IFI)
6
-
As per ToR the Lead IFI has checked the following aspects:
Technical aspects, environmental and social standards, procurement, financial and economic profitability, credit
risk, legal aspects.
Consistency with IFIs’ policies and procedures
Analysis and estimation of TA/grants needs
Financial structuring/identification of lending under the Joint Lending Facility (only IFIs)
Identification of lead IFI and possible mutual reliance
Link with project borrowers and promoters on technical and financial aspects
Exchange of information among Finance Institutions (e.g. pricing, conditionality)
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