EBRD to allocate $105M to Azerbaijan for wind power plant construction

The European Bank for Reconstruction and Development (EBRD) will provide a long-term senior debt of up to $105 million for the development, construction and operation of a wind power plant with an installed capacity of 240 MW located in Azerbaijan’s Khizi and Absheron regions, Report informs referring to the bank’s website.

The loan approval by the EBRD Board of Directors is expected on July 20. The total cost of the project is $300 million.

“The Bank is additional in providing long-term financing at terms and conditions not available in the local market for this major infrastructure project, particularly in view of the limited liquidity caused by the COVID-19 pandemic and as this is one of the first private project financings of a renewable energy project in Azerbaijan,” reads the message.

ACWA Power Azerbaijan Renewable Energy Limited Liability Company, a special purpose vehicle established in Azerbaijan, will act as the borrower. ACWA Power will act as the sponsor for the project.

The EBRD notes that the Project will add 240 MW of wind generation capacity to the power system of Azerbaijan: “This would help substitute natural gas-based power plants and help in meeting the renewable energy targets set by the Government of Azerbaijan in line with county's commitments under the Paris Agreement. The Project will also result in strong environmental benefits with estimated annual CO2 emissions savings of up to 400,000 tons. This will assist the country in its low-carbon transition, reducing its current high reliance on thermal power generation.

The transition impact of the Project is expected to come mainly from its contribution to the currently state-dominated Azerbaijani power sector by adding a new private entrant. The Project is expected to be the first privately owned utility scale wind power project in the country. The Project will also introduce a new international power sector sponsor to the country in a key milestone for power sector development.

The transition impact of the Project will also stem from its alignment with the EBRD's Green Economy Transition approach (GET) as it will allow producing electricity using wind power, which will assist the country in its low-carbon transition, reducing its current high reliance on thermal power generation.”

ACWA Power is an international developer of power generation and desalinated water projects.