KEK SOLAR PV - GLOBAL GATEWAY

Promoter – Financial Intermediary

KORPORATA ENERGJETIKE E KOSOVES SHA

Location

• Kosovo*

Description

The project concerns the development of a 100MW solar photovoltaic (PV) power plant, located between Obilic and Fushe Kosova, in close proximity to Pristina, in Kosovo. The PV plant will produce electricity from low carbon sources, therefore it addresses the market failure of negative environmental externalities, by reducing carbon and air pollution.

Additionality and Impact

The project concerns the development of a 100MW solar photovoltaic power plan in close proximity to Pristina. The Bank will support the deployment of new renewable energy capacity in Kosovo, crucial for the achievement of the decarbonisation targets set out in the draft National Energy and Climate Plan. The Bank's financing will also support the EU Green Agenda for the Western Balkans. The project is in line with the Bank's lending priority objectives on Energy (Renewable Energy) as well as the transversal objectives on Climate Action (mitigation), Environmental Sustainability (Pollution Prevention Control), and Social and Economic Cohesion (other regional integration).  In terms of addressing market failures, the solar PV project produces electricity from low carbon sources and thereby addresses the market failure of negative environmental externalities, through the reduction of carbon and air pollution compared with coal generation. The majority of the generation will be dedicated to KEK's universal service obligation, with a regulated tariff. The remainder is expected to be sold on the new ALPEX electricity exchange. Thus the project will support market integration. The project is expected to generate a broader social benefit by generating electricity below the cost of coal based alternatives in Kosovo. Moreover, the project is expected to be supported by adequate governance and capabilities of the promoter, considering the technical assistance given through a specific grant from the Western Balkans Investment Framework (WBIF). 

The project contributes mainly to SDG 7 (access to affordable, reliable, sustainable and modern energy), in particular sub goal 7.2 (increase the share of renewable energy in the global energy mix), and SDG 13 (combat climate change).

The Bank's financial contribution to the project is relevant, as the Borrower is unable to raise funds at similar maturities. Moreover, the EIB loan offers customised terms, such as flexibility of drawdowns, longer availability and grace periods, possibility for interest rate conversion and possibility to select fixed or floating rates at the time of disbursement. The EIB participation is complementary, blended with financing from other International Financial Institutions and grants from the WBIF.

Objectives

The aim is to deploy new renewable energy capacity in Kosovo, crucial for the achievement of the decarbonisation targets for 2026 as set out in the in the National Renewable Energy Action Plan (NREAP). Kosovo depends almost exclusively on two ageing lignite plants for its electricity. The project is in line with the EIB's lending priority objectives of financing Renewable Energy, Climate Action, Environmental Sustainability, as well supporting a Pre-Accession region. It is also aligned with the EU Green Agenda for the Western Balkans.

Comments

* This designation is without prejudice to positions on status, and it is in line with UNSCR 1244/1999 and ICJ Opinion on the Kosovo declaration of independence.

Sector(s)

• Energy - Electricity, gas, steam and air conditioning supply

Under Global Europe NDICI guarantee

Under EFSD+ Guarantee

Proposed EIB finance (Approximate amount)

EUR 33 million

Total cost (Approximate amount)

EUR 107 million

Environmental aspects

Environmental impact studies will be carried out as applicable and mitigating and/or compensation measures applied as necessary.

Procurement

The EIB will require the Promoter to ensure that any procurement procedures are done in accordance with the EIB's Guide to Procurement and the relevant applicable EU public procurement rules.

Status

Signed - 18/03/2024