No debate, the world must move to cleaner power sources. The private sector can push this transition to reality, and IFC can help address climate change in many ways, including finding new markets for proven technologies in wind and solar power generation. The need for new power sources is greatest in emerging economies such as Bulgarian, which has long relied on antiquated power plants.
In March 2012, IFC’s EMENA Infrastructure team closed the largest solar financing deal in the history of IFC – for the Karadzhalovo solar power plant in southern Bulgaria, near Plovdiv. US-based SunEdison, a leading global solar power system developer, will build the 60 MWp plant, which will be among the largest solar installations in Europe.
“The Bulgarian renewable energy sector is challenging, with change-in-law risk and tariff uncertainty remaining issues of concern,” said Adam Schwatzman, IFC Senior Investment Officer, who was working on the deal. “However, the project team managed to structure the deal around regulatory and completion risks within four months - meeting the project’s tight financing timetable.”
IFC provided a €46.1 million loan and mobilized an additional €41.1 million from UniCredit Bank Austria through syndication, while OPIC provided a $50 million parallel loan. UniCredit Bulbank acted as the Bulgarian local bank and provided a local currency VAT facility worth around €30 million (58.7 million Bulgarian lev). The value of the transaction totals the equivalent of €155 million. The new solar plant will help Bulgaria develop its renewable energy capacity and demonstrate the country’s ability to attract large investments. IFC led the deal to closing in a time of considerable global economic uncertainty.
Tomasz Telma, IFC Director for Europe and Central Asia, said, “IFC’s support for renewable energy is an important part of our work to address climate change. This is our second renewable energy investment in Bulgaria, following the financing of the St. Nikola wind farm in 2008.”
AES Corporation—a global power company—saw opportunity in Bulgaria and began planning one of emerging Europe’s largest wind farms, a 156-megawatt site at Kavarna, near the Black Sea coast. But Bulgaria’s regulatory climate for renewable energy was new and untested, limiting commercial banks’ interest in financing such a large-scale project.
IFC filled a substantial part of the financing plan and helped the sponsor manage sensitive environmental risks such as impacts on the area’s endangered birds. We provided a €40 million, 16-year loan, working alongside EBRD and Italy’s UniCredit to bring the transaction to financial close on this €270 million project, even as market conditions deteriorated in late 2008.
IFC continues to look for opportunities in the renewable energy sector of Southeast Europe.