EBRD provides loan for construction of solar power plant in Azerbaijan's Neftchala

The European Bank for Reconstruction and Development (EBRD) has approved a long-term loan of $66 million for the development, construction, and operation of the 315 MW Banka Solar photovoltaic power plant in the Neftchala district of eastern Azerbaijan, Report informs referring to the bank's statement.

The total project cost is $283 million, and several other international financial institutions will support its implementation.

The project is being implemented by Masdar's (UAE) subsidiary - Abu Dhabi Future Energy Company.

The project will add 315 MW of solar generation to Azerbaijan's power grid, replacing natural gas-powered plants and helping the country achieve its renewable energy goals under the Paris Agreement. The project is expected to reduce CO2 emissions by 314,000 tons annually, supporting Azerbaijan's transition to a low-carbon economy and reducing dependence on thermal generation.

The project aligns with EBRD's Green Economy Transition (GET) strategy as it will contribute to solar power generation, marking an important step in advancing the country's green agenda. The project covers three sites with a total area of 973 hectares, belonging to the municipalities of Yenikend, Banka, and Neftchala Executive Authority.

These lands will be transferred to the Ministry of Energy for development. The site is flat, semi-desert terrain with a 3.5-kilometer paved road and parallel 6 kV and 35 kV power lines.

Previously, part of the territory was used for cattle grazing by a shepherd and his two workers, but the lease was terminated in 2023, and an alternative site was provided. Currently, the land is unused, with no seasonal land users. The site also contains abandoned ruins of Soviet military facilities, which local authorities consider valueless and will be removed.

Consultations revealed that the road crossing the site is an important route for Azerbaijan's fishing industry, and any restrictions or damage could significantly disrupt its operations. To prevent these risks, a Traffic and Transport Management Plan will be developed, bridge use in Banka village will be avoided when possible, and the road crossing the site will remain accessible to the fishing industry.

Construction work will be organized to avoid disrupting their activities. If fencing is necessary, an alternative route will be proposed. The plan also includes relocating the 6 kV line with minimal disruption to fishing operations.

"Adjusting the power line route will avoid physical resettlement and minimize disruption to normal life, and a plan will be developed according to World Bank standards to minimize residual risks. Also, as per EBRD requirements, a Livelihood Restoration Plan is being developed to support people affected by the project," reads the EBRD statement.