EIB in Renewable Energy Lending

Supporting transformation outside the EU

RENPOWER ETHIOPIA
07 Nov 2010

07/11/2019 European Investment Bank Group 1

 The EIB: the bank of the European Union
 Largest multilateral lender and
borrower in the world

 Shareholders: 28 EU Member States

 HQ in Luxembourg with 40 local offices

 Around 3000 staff (finance

EUR 55.6bn professionals,

sector
but
economists
also

and
engineers,

socio-
environmental experts)

EUR 230bn 


Around 450 projects each year in over
160 countries

AAA-rated by the three major rating

Total investment
supported agencies

 Around 10% of lending outside the EU

EIB Group financing in 2018*
* Provisional and subject to audit
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 Our priorities

ENVIRONMENT INFRASTRUCTURE INNOVATION SMEs

EUR EUR EUR EUR

15.2bn 12.3bn 13.5bn 23.3bn

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 EIB Group activity outside the EU (cont.)
• Overall, EIB accounts for 30% of the total EU Official Development Finance

• EIB finances projects in c. 140 non-EU countries

• EIB lending outside the EU accounts for some 10% of its global activity

Signatures in 2018
EFTA & Enlargement
Eastern
Countries
Neighbours
EIB Group
EUR EUR 1.9bn
0.6bn

Outside EU Africa,
EUR Caribbean,
EUR 1.7bn
8.1bn EUR
2.2bn
Pacific,
South Africa

56.1
EUR
EUR 1.7bn
bn Southern
Neighbours/
Mediterranean Asia and
Latin America

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Access to energy remains a problem
1.1bn people remain without access to electricity and 2.8bn rely on biomass, coal or
kerosene for cooking

Source: IEA, World Energy Outlook2017

More than one half of people without access to electricity live in sub-Saharan Africa. Progress
remains slow, but in 2014 electrification outpaced population growth for the first time

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What’s changed? SDGs in context of shifting global demand

Change in energy demand, 2016-40 (Mtoe)

Europe 135 Eurasia

-200
United States Middle China Japan
-30 480 -50
East 790
Southeast
485 India Asia
420
Central and Africa 1 005
270
South America

Old ways of understanding the world of energy are losing value as shifts occur in demand and supply;
Asia, particularly China and India, are moving to the centre of the global energy demand picture

© OECD/IEA 2018
Energy transformation: four key themes

Energy efficiency first

Decarbonising power and heat

Innovative technologies and

business models

Securing the enabling infrastructure

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Example: solar and wind are fast becoming
least-cost solutions

Renewables outbid gas and coal in India IEA-forecast growth to 2040

Note: Black LCOE coal; Grey LCOE gas; yellow solar; blue wind. Note: Global change in primary energy demand 2016-2040
Source: BNEF. Source: IEA

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EIB energy signatures 2013-2017

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 EIB in Sub-Saharan Africa in 2017
Impact: Sectors:

1.4bn 39 projects
Agriculture,
Industry and Microfinance,
Local private R&D, EUR EUR 30m
education, housing

460m 21 projects sector 35m

and telecoms, EUR
36m
development Equity finance
for SMEs and
midcaps, EUR
Social and 102m Access to

942m 18 projects
credit for
economic SMEs and
infrastructure midcaps, EUR
324m
Energy, EUR
246m
Cross-cutting objectives: Water and
Climate change Transport,
sewerage,

438m 24 projects
EUR 361m
mitigation and EUR 268m
adaptation

Regional
216m 4 projects integration

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 Blending mechanisms (TA, Grants) BLENDING &

and cooperation with other IFIs

TRUSTFUNDS

National Development Banks

Multilateral Development Banks

Regional Blending Risk capital signatures EIB Loan
mechanisms (TA, Equity
grants) (with
guarantee
Neighbourhood Investment Impact Financing Envelope of or without
Facility (NIF) FEMIP Trust Fund guarantee)

Western Balkans Investment Global Energy Efficiency and Co-financing

Framework (WBIF) Renewable Energy Fund (Loans,
grants,
Latin America Investment Facility FEMIP Trust Fund
(LAIF)
equity)

Investment Facility for Central

Asia (IFCA)
Project financing package
Asia Investment Facility (AIF)

Other TA and grants

Grants
SME Finance Facility (SME FF)

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 Project Finance – recent operations

310MW Lake 50MW CSP KHI 54MW Sainhand 1.1 GW Don Jose 2x40MW Radiant
Turkana Concentrated Solar Wind & Villanueva Solar & Eldosol
Wind Energy Energy Wind Energy Solar PV IPP Solar PV
EUR 225 million EUR 50 million EUR 47 million USD 87 million USD 50 million
19 year Loan 18 year Loan 18 year Loan
15 year Loan 16 year Loan
Kenya South Africa
Mongolia Mexico Kenya

African Energy 117MW Tafila Senegal River Nachtigal HPP 34MW Scaling
Guarantee Facility Wind Valley Rice Solar Zambia
Hydro Power IPP Solar PV
Wind Energy Agriculture
EUR 50 million EUR 50 million USD 12 million
EUR 90 million EUR 15 million
Innovative guarantee 17 year Loan 10 year Loan 18 year Loan 18 year Loan
Sub Saharan Africa Jordan Senegal Cameroon Zambia

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 Project example

BUJAGALI HYDROPOWER
Amount USD 136m

Country Uganda
Status Signed, operational
Description
Construction and operation of a 250MW run-of-river hydroelectric power plant in Uganda.
The plant includes a 28 metre dam and five 50MW Kaplan turbine-generators.
At inception the project presented the least-cost option for electricity generation, and increased the Ugandan generation capacity by
almost 150% at a time when the electrification rate stood at a mere 9% of thepopulation.

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 Project example

LAKE TURKANA WIND POWER PLANT

Amount EUR 200m

Country Kenya
Status Signed, operational
Description
The EUR 613m Project involves the construction and operation of a 310 MW wind power plant in the Lake Turkana region, Northern
Kenya. The wind farm design includes 365 turbines.
The EIB acted as largest lender, providing a variety of instruments including:
EUR 50 m loan to the project company with full project risk (Commercial and Political Risk) retained byEIB.
EUR 100 m loan to the project company with comprehensive guarantee (for commercial and political risk) from EKF.
EUR 50 m loan to the project company with guarantee for commercial risk from 2 commercial banks and Political Risk
retained by the EIB.
EUR 25 m from EU-ITF blending mechanism in the form of preferred equity.

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 Project example

SCALING SOLAR PV ZAMBIA

Amount USD 11.75m

Country Zambia
Status Signed
Description
Construction and operation of a 34MW PV plant under the World Bank’s Scaling Solar Programme. The EIB is the largest
commercial senior debt provider.
The project benefits from a 25-year PPA tendered through the first Scaling Solar auction process in Zambia, guaranteed and fixed
offtake price of c.78.4 USD/MWh with the 100% state owned utility ZESCO.
Zambia was the first country adopting the Scaling Solar Programme which aims at standardizing the solar PV procurement process
for power plants in developing countries, thus reducing transaction costs and increasing competition.
The competitive auction attracted over 40 bidders, yielding the lowest solar power tariffs in Africa at the time.

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 Project example

2 SOLAR IPPS IN KENYA

Amount USD 60m

Country Kenya
Status Signed
Description
Construction and operation of 2 x 40MW solar PV plants developed by IPPs under the feed-in tariff inKenya.
Each PV plant was financed on a stand-alone-basis under a PF structure with separate project and financing documents
despite sharing a 60% owner shareholder.
The projects have signed separate take-or-pay 20 year PPAs with state owned KPLC for the entire electrical output.
In addition to its role as financier, the EIB also led negotiations with GoK and KPLC, amending the PPAs and obtaining a number of
improvements that led to a more robust project structure.
EIB’s leveraged on its access to the EU Member States funded Investment Facility under the Cotonou Agreement to provide the
project with highly attractive terms for the project.

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 Project example

NACHTIGAL HYDROPOWER PLANT

Amount EUR 50m

Country Cameroon
Status Signed
Description
The EUR 1,260m project consists in the development, construction and operation of a 420MW hydropower plant in Cameroon under
a PPP framework. When built, it will be the largest power generating asset inCameroon.
High developmental impact: i) 30% power supply increase, ii) tariff amongst the lowest in SSA and; iii) estimated to enable
c.0.33% annual GDP growth increase.
The project, sponsored by EDF and IFC, signed a 35yr take-or-pay PPA with the privatized utility ENEO. ENEO’s credit risk is back-
stopped by a guarantee from the GoC under committing on-going payments under the PPA and terminationpayments.
The project is funded through a DFI tranche and a Local Currency tranche. The EIB has committed EUR 50m 18 year 6 year grace
loan.

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 Project example

WIND FARM OF CABEOLICA

Amount EUR 30m

Country Cape-Verde
Status Signed, operational
Description
The project comprises the construction of four onshore wind farms and associated transmission infrastructure on four islands of the
archipelago of Cape Verde for a total installed capacity of 26 MW.
The project was developed by InfraCo under a PPP with the Government of Cape Verde and the local utility Electra. The EIB was
the largest lender in the operation.
The Project Company signed a fixed tariff 20 year take-or-pay with Electra. In order to incentivice the clean energy produced
from these wind farms, the agrees tariff decreases above the take-or-pay level.
The project benefits from an unconditional guarantee from the GoCV of Electra’s obligation to maintain an escrow account
amounting to three months worth of revenue payments throughout the life of the Project.

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 Guarantee example

AFRICA ENERGY GUARANTEE FACILITY

Amount EUR 50m

Country Regional – Sub Saharan Africa

Status Signed
Description
The AEGF consists of a first-in-kind guarantee to support an EU based reinsurer, Munich Re in the provision of political and
(sub)sovereign risk insurance.
Through local partners, Munich Re will create a portfolio with reinsurance exposure of USD 1bn.
Operation initiated by the EIB and forms part of the Bank's response under the UN initiative Sustainable Energy for All (SE4All).
The operation will allow Munich Re to scale up its reinsurance exposure to the SSA energy sector though the African Trade
Insurance.
Munich Re will take the first loss related to the facility with second loss covered by EIB and the IFC.
Products offered under the AEGF will include insurance against sovereign or sub-sovereign non-payment under a PPA,
expropriation and breach of contract, currency inconvertibility, war, civil unrest and arbitration award default

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 Project example

OFF-GRID SOLAR ACCELERATION

Amount EUR 25m

Promoter D.light Design

Countries Ethiopia, Kenya, Nigeria, Tanzania, Uganda

Status Signed
Description
EIB will provide EUR 25 million for access to energy to households and micro-entrepreneurs in Sub-Saharan Africa.
The project consists in the design, assembling, distribution, and /or financing and installation of about 10 million solar devices in Sub-
Saharan Africa by the promoter over the next 2.5 years.
The project is expected to have significant social impact given technology users (and final beneficiaries) typically are rural and / or
low income households and micro-SMEs in 5 targeted.

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