IFC’s energy-market-enabling work in Serbia is estimated to have facilitated investments worth €715 million.
In Serbia, more than half of electricity generation stems from dated coal-fired plants. That’s why the nation is among the largest greenhouse gas emitters per capita in Europe. But this is about to change, because Serbia’s wind power gives it a huge environmental advantage.
When the Alibunar and Cibuk 1 wind farms whirr into action in 2019, Serbia’s as-yet-untapped renewable energy potential will become its power—literally. IFC is helping make this move possible, lending €19.1 million to Belgian renewable-energy firm Elicio for the construction of the 42-megawatt (MW) Alibunar wind farm. This will help reduce Serbia’s carbon emissions by more than 120,000 tons per year.
IFC is also providing a €107.7 million lending package to a joint venture developing a 158-MW wind farm, the largest in the Western Balkans. The €300 million Cibuk 1 wind farm is a partnership between Abu Dhabi Future Company Masdar, from the United Arab Emirates, and Cibuk Wind Holding, a subsidiary of U.S.-based developer Continental Wind Partners. The project will reduce an estimated 370,000 tons of carbon dioxide per year.
IFC’s support for renewable energy—via investments such as these, and the years-long advisory work with the Serbian government that laid the foundation for these investments—reflects our commitment to improving access to electricity. Together, these two wind farms will offer an electricity supply to more than 1.9 million residents in the northern province of Vojvodina. The amount of carbon emissions avoided by both projects is equivalent to taking more than 100,000 vehicles off the road.
As with any development project, investments are critical to construction. But Serbia’s two new wind farms are equally the result of many years of IFC advisory work with the national government. From 2013 onward, IFC has helped officials improve the country’s regulatory framework for renewable energy—a critical first step before any building takes place.
In total, four key decrees drafted by IFC were adopted by the Serbian government, regulating key aspects of the market. These include off-take tariffs for renewable energy technologies and a sustainable model for collecting renewable-energy fees from all electricity consumers in the country.
IFC advisory services also contributed to the process by drafting a pioneering Power Purchase Agreement that introduced key risk-mitigation instruments.
These groundbreaking wind-energy projects make it possible for Serbia meet its obligations under the Energy Community Treaty, which requires it to have 27 percent of its energy consumption from renewable sources by 2020.
The Alibunar and Cibuk 1 wind farms pave the way for other renewable-energy projects in Serbia looking for long-term financing from international or regional financial institutions.
Already, more than 150 renewable-energy projects with a total installed capacity of 75 MW are operational, and many more are being developed.
All of these projects are the result of IFC’s market-enabling work in Serbia. When realized, this work is expected to have facilitated investments worth €715 million. Of this number, IFC is likely to have invested and mobilized over €190 million.
IFC’s work in Serbia is part of a seven-year renewable energy program in the Western Balkans that was completed this year. Building on this experience, IFC is now expanding the advisory portion of renewable-energy projects across the Europe and Central Asia and Middle East and North Africa regions.
Read more about IFC’s work in energy: www.ifc.org/infrastructure
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Published in November 2017.