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EUROPEAN INVESTMENT BANK
Supporting energy investments in Ukraine
14 September 2017European Investment Bank Group 11
2
EIB at a Glance1
EIB support to Ukraine
EIB and the energy sector
EIB support to energy projects in Ukraine
3
The EIB: the EU bank
Largest multilateral lender and
borrower in the world
Shareholders: 28 EU Member States
HQ in Luxembourg with 40 local
offices
Around 3000 staff (finance
professionals, but also engineers,
sector economists and socio-
environmental experts)
Around 450 projects each year in
over 160 countries
AAA-rated by the three major rating
agencies
European Investment Bank
The EIB: capital breakdown
European Investment Bank Group 4
5
Our Priorities in 2016
SMEsInfrastructureEnvironment Innovation
EUR
16.9bn
EUR
19.7bn
EUR
13.5bn
EUR
33.6bn
EIB Activity outside EU
6
Outside EUEuropean Union
EUR 75.4bn
Outside
EU
EUR
8.3bn
Eastern
Neighbours
EUR 1.6bn
Africa,
Caribbean,
Pacific,
South Africa
EUR 0.8bn
EFTA &
Enlargement
Countries
EUR 3.3bn
Southern
Neighbours
EUR 1.6bn
Asia and
Latin America
EUR
1.0bn
• The EIB finances projects in nearly 140 non-EU countries.
• In 2016 EIB lending outside the EU accounts for 10% of its global activity.
European Investment Bank
7
EIB at a glance
EIB and the energy sector
EIB support to energy projects in Ukraine
EIB support to Ukraine2
Ukraine Special Action Plan - EUR 3bn for 2014-2016
8
Investing in Ukraine’s Future ! Ukraine Task Force
Created to focus on the Special Action Plan Ukraine2014 – 2016 and beyond.
Additional EIB sector experts based in Kyiv andconsultancy support
Through cooperation with all relevant stakeholders,instrumental in addressing specific needs of Ukrainiancounterparts.
As a result, several innovative projects were broughtto implementation stage:
Ukraine Agri-Food Loan Ukraine Higher Education
Early Recovery Programme Municipal Infrastructure Programme
March 2014
The European Commission announced acomprehensive EUR 11bn assistance plan tosupport Ukraine .
March 2014
EIB pledged to finance EUR 3bn new investmentsover the period 2014 – 2016.
December 2016
EIB fully delivered on its promise:₋ Signed 15 transactions for more than EUR 3bn
across various sectors₋ Provided advisory support alongside its financing
European Investment Bank
Ukraine Special Action Plan - EUR 3bn for 2014-2016
9
Development of the
local private sector, in
particular SMEs
Development of social
and economic
infrastructure
Climate change
adaptation and
mitigation
625 640
413
940
1 258
826
0
200
400
600
800
1 000
1 200
1 400
2011 2012 2013 2014 2015 2016
Ukraine Special
Action Plan
External Lending
Mandate
Loans portfolio development
(EUR m)
Loan portfolio
breakdown
European Investment Bank
10
EIB at a glance
EIB support to Ukraine
EIB support to energy projects in Ukraine
EIB and the energy sector3
European Investment Bank Group 11
EIB Energy Lending 2012-2016
Energy sector lending in 2016 reached EUR12.3bn
• More than 90% within EU countries
• 15-20% total lending
• substantial technical assistance
• Significant part of Climate Action lending (>25% total lending)
• EIB’s energy lending policy approved after public consultation (2013)
• Energy lending criteria aligned with 5 dimensions of Energy Union
• Prioritise EE, RE, Energy Networks & RDI
• EE: “mainstreaming”, TA & tailored instruments
• RE: support to mature & emerging technologies
• EPS for power generation
• Safeguard the environmental sustainability of hydrocarbon projects
European Investment Bank Group 12
EIB Energy Lending Criteria
Eligibility & Appraisal
Requirements for Projects :
• Meet at least one of the EIB’s objectives; and Article 309 of the Treaty on Functioning of the European Union
• Be technically sound, at appropriate stage of development• No late financing
• Be financially and economically viable
• Meet environmental, procurement, social standards and regulations• For electricity generation : compliance with EIB Emission Performance
Standard threshold of 550 gCO2/kWh
• Local content requirements not accepted
Financing
• Lowest between Eligible Project Cost & 50% of total Project Investment Cost• Purchase of existing assets and land acquisition are excluded
• Derogations up to 75% for RES/EE and 100% natural disasters subject to conditions
• Loan tenor as a function of Project Economic Life / Financial Life / Physical Life of asset
European Investment Bank Group 13
EIB’s Environmental & Social Framework
Lisbon Treaty Charter of Fundamental
Rights of the EU
EIB Statement of Environmental and Social
Principles and Standards (2009)
10 EIB E&S Standards
Good practice
IFI’s Standards
UNGPs
European Investment Bank Group 14
Climate Action Eligibility
• Adaptation & Mitigation projects
• All Energy Efficiency projects with acceptable economic return
• Renewable energy projects and related components (manufacturing, transmission)
• Hydropower plants with water storage, geothermal and biomass/biofuel facilities with a net decrease of GHG emissions
• Sustainable biofuel production compliant with Directive 2009/28/EC, i.e. with GHG savings of at least 50%
• RDI & technological deployment in energy efficiency and low-carbon technologies
• Climate adaptation e.g. flood control and drought management
• Transmission and distribution leading to quantifiable reductions in GHG
• RES connection or integration
• Smart grids
• Enabling technologies higher participation of consumers in energy markets generating energy savings
European Investment Bank Group 15
Energy Investments by Sector
• Fossil fuel, hydrocarbons
• Energy efficiency
• Renewable energy
• Electricity and Gas Networks
16European Investment Bank Group
Power Generation
General
• Emission Performance Standard: CO2 emission < 550 gCO2/kWh• Also applicable to Geothermal
• Cost-benefit analysis including a externalities which reflect the marginal damage of each unit harmful emissions (CO2, NOX, SOX, particles ..).
• Comply with CCS, large combustion plants, industrial emissions and ETS Directives.
• Flexible design: to meet policies and market potential changes• « No Regrets » approach
Eligibility
• Yes Gas fired CCGT and CHP, high efficiency coal/lignite fired CHP, coal/lignite plants with CCS and some coal/lignite stations co-fired with biomass
• No most unabated power-only coal or lignite fired power stations
• Exceptions• Technical constraints – isolated networks
• Outside EU : “Substantial contribution” poverty alleviation – UN LDCs and World Bank “low income”. Excludes all European and North African countries
European Investment Bank Group 17
Emission Performance Standard
0
100
200
300
400
500
600
700
800
900G
as -
CC
GT
CH
P -
co
al
Bio
mas
s &
Co
al Oil
Co
al
Lign
ite
gCO2/kWh Standard emissions
CHP = Combined Heat & Power
European Investment Bank Group 18
Energy Efficiency
Projects rationale consistent with:
• pre-defined list of EE measures or
• Energy audit or
• Legal and regulatory requirements in line with EU Directives 2012/27 (EED) and/or Energy Performance of Building Directive 2010/31 (EPBD)
Economic justification - Cost Benefit Analysis to demonstrate
• NPV energy saved > NPV project cost
• Energy savings > 50% of investments cost (for multipurpose project)
Eligibility – specific cases
• Buildings
• Meet national minimum requirements or cost-optimum levels
• Limited eligibility for new buildings e.g. NZEB
• Public Lighting – refurbishment of existing networks only
European Investment Bank Group 19
Renewables
All projects:
• Environmental requirements
• Protected areas, Bird Directive, Habitat Directive, Strategic Environmental Assessment, Water Framework Directive, etc.
• LCOE below threshold – except for emerging technologies
• Existing technologies: proven technology/process, good track record
• Grid connection – bottlenecks, curtailment, compliance with grid code
• Priority to Rehabilitation vs Greenfield
Major renewable technologies
• Hydro: Regional master planning; River basin & Flood management plan; climate change impact
Concession awarding process
• Geothermal: Resources availability and re-injection methodology
• Wind: Measurement mast on site (<3km, 2/3 of hub height) and independent wind studies
Wind turbine Type certification
• Solar: Sustainable tariff
• Biomass & Biogas: Fuel availability and backup strategy
Exposure to bio-fuel market i.e availability, volume, price risks
European Investment Bank Group 20
Energy Networks
European Investment Bank Group 21
Electricity
• Enable RES integration, support integration among markets, supply reliability
• In particular Projects of Common Interest (PCIs)
• Smart grid demonstration projects and deployment, including roll-outs of smart meters
• Electricity storage projects;
• RDI activities in the upstream manufacturing industry, where needed and commercially feasible.
Gas
• Security of supply and diversification of sources
• Increase the market liquidity, foster integration of EU market
• Environmental benefit: displace other more costly and polluting energy sources
• Greenfield distribution tested against RES alternatives
• Priority projects:
• bi-directional flow pipelines, import and interconnection gas transmission pipelines (prioritizing PCIs);
• LNG regasification plants;
• underground gas storages; and
• compressed natural gas facilities and LNG refueling stations (mainly for ships).
22
EIB at a glance
EIB support to Ukraine
EIB and the energy sector
EIB support to energy projects in Ukraine4
Projects under implementation
23
Amount , EUR
750kV Ryvne – Kyiv High Voltage line750 kV electricity transmission line between the Rivne and Kyivsubstations and related transmission investments.
150m
750kV Zaporizhzhia-Kakhovska Line High Voltage Transmission Project in Southern Ukraine 175m
Hydro Power Plants RehabilitationUpgrade and refurbishment of 22 hydropower units owned byUkrhydroenergo along the Dniepr river.
200m
Urengoy-Pomary-Uzhgorod Gas PipelineUrgent repairs on the Ukrainian part of the Urengoy – Pomary –Uzhgorod natural gas pipeline.
150m
Guarantee for Economic Development in Ukraine
EIB guarantee in favour of IBRD, covering five investment loans inUkraine contributing to the development of economicinfrastructure, enabling IBRD to provide a USD 500m guarantee tosupport gas purchase by Naftogaz.
458m
Ukraine Higher Education ProjectThe project concerns energy efficiency investments in teaching,research and supporting facilities of Ukrainian universities.The EIB loan would be entered into with Ukraine.
120m
European Investment Bank
EIB potential support to projects under the Energy Strategy of Ukraine:
Power generation: renewable (wind, solar), hydropower
Power transmission: enhanced reliability of network, backbone corridors, ENTSO-E synchronization
Increase of domestic gas production
Gas transmission: interconnection, increase of reliability
Energy Efficiency
Projects under appraisal
24
Ukraine Security of Gas SupplyIncrease natural gas production by installing new gas compressorunits and gas treatment facilities in some Ukrainian gas fields.
Substations Reliability Enhancement ProgrammeRefurbishment existing substations in order to increase energyefficiency through shifting the substations in remote control modeand replacement of energy-intensive equipment.
Kaniv Pumped Storage PlantConstruction of a pumped storage hydropower plant in CentralUkraine and its interconnection to the national power grid.
Kahovska Hydropower Plant ExpansionConstruction of 235 MW of additional capacity on the existing damwith additional units as an extension to the existing Kahovskahydropowerplant (South of Ukraine).
European Investment Bank
Thank you for your attention!
EIB Resident Representation in Kyiv101, Volodymyrska Str
UA-01033 Kyiv
Ukraine
Phone: +380 443908018, e-mail: [email protected]
25
European Investment Bank
98-100, boulevard Konrad Adenauer
L-2950 Luxembourg
www.eib.org
European Investment Bank