The inhabitants of Zagreb stand to benefit from a large investment in the modernisation of their electricity and heat supply under a joint effort by the EBRD, the EIB and the European Commission’s ‘Juncker Plan’.
The loan proceeds will be used for the installation of two low-NOx gas turbines, two heat recovery steam generators and one back pressure steam turbine producing heat and electricity at the Elektrana-toplana combined heat and power (EL TO CHP) plant close to the centre of Zagreb. The capacity of the new combined cycle gas turbine units will be 150 MW of electrical energy and 114 MW of thermal energy, with lower greenhouse gas emissions.
The new units will be fuelled by low-emission gas, and generate electricity for the grid and heat for district heating in north-western Zagreb, replacing obsolete, mostly heat-only, gas and oil-fired units. It is a critical part of Zagreb’s energy infrastructure and the investment will ensure implementation of a modern and environmentally friendly project satisfying the heating requirements of the city and all national and EU environmental standards.
The loan financing will be split between the EBRD with a EUR 87 million loan and EIB with EUR 43 million. The project will be implemented at Elektrana-toplana Zagreb, a power plant fully owned and operated by HEP Group.
A special feature of the financing is that the EIB loan will be guaranteed by the European Fund for Strategic Investments (EFSI), which is the central pillar of the Investment Plan for Europe (‘Juncker Plan’). The EFSI support makes it possible to provide loan conditions aligned to the economic lifetime of the financed asset and is expected to act as a catalyst in bringing in private sector banks.
“As the EU transitions to a cleaner and more sustainable economy, it is crucial that we replace older, polluting power plants with climate-friendly versions. This is precisely what this project will do: generate electricity for residents of Zagreb in a more sustainable way. With financing support from the European Investment Bank under the Investment Plan for Europe, as well as from the EBRD and national power company Hrvatska Elektroprivreda, this is a collective effort to modernise energy supply in Croatia and contribute towards the EU’s climate goals,” Jyrki Katainen, Commission Vice-President for Jobs, Growth, Investment and Competitiveness, said.
“This innovative operation supported by the EIB, the Investment Plan for Europe and the EBRD will improve the quality of life of the citizens of Zagreb by reducing pollution levels and ensuring reliable supply to the city’s district heating network. It will help reach efficiency targets and provide a source of electricity from highly efficient cogeneration,” EIB Vice President Dario Scannapieco added.
In her turn Vedrana Jelušić Kašić, EBRD Regional Director, Croatia, Slovenia, Hungary and Slovak Republic, mentioned: “We are pleased to join forces with the EIB and the Investment Plan for Europe to deliver this investment, which is vital for Zagreb and the city’s population. The EBRD has a strong track record in progressing towards green energy and this is yet another important step in this direction.”
“This project will be excellent in all ways – ecologically friendly owing to state-of-the-art systems and measures of environmental protection, a reliable heat supply for customers in the City of Zagreb and as an electricity source for the Croatian power system. Above all, it will be highly effective and energy efficient because based on the simultaneous generation of electricity and heat energy, its fuel efficiency will amount to 90 per cent,” Frane Barbarić, CEO of HEP, underlined.
The European Bank for Reconstruction and Development (EBRD) signed its first project in Croatia in 1994 and has invested over EUR 3.67 billion in 199 projects in the country to date. The Bank’s activities cover all areas of the economy but are especially strong in the infrastructure, corporate, financial institutions and energy sectors.
The European Investment Bank (EIB) is the European Union’s bank. It is the long-term lending institution of the European Union and is the only bank owned by and representing the interests of the EU member states. It makes long-term finance available for sound investments in order to contribute towards EU policy goals. The EIB works closely with other EU institutions to implement EU policy.
As the largest multilateral borrower and lender by volume, the EIB provides finance and expertise for sound and sustainable investment projects which contribute to furthering EU policy objectives. More than 90 per cent of EIB activity is focused on Europe but it also supports the EU’s external and development policies. Over the last 10 years the EIB approved loans for more than EUR 5.7bn to support valuable projects in Croatia.
The Investment Plan for Europe (‘Juncker Plan’) is one of the European Union’s key actions to boost investment in Europe, thereby creating jobs and fostering growth. To this end, smarter use will be made of new and existing financial resources. The EIB Group is playing a vital role in this investment plan. With guarantees from the European Fund for Strategic Investments (EFSI), the EIB and European Investment Fund (EIF) are able to take on a higher share of project risk, encouraging private investors to participate in the projects. In addition to EFSI, the European Investment Advisory Hub (EIAH) helps public and private sector project promoters to structure investment projects more efficiently. The investment plan should also create a more investment-friendly EU regulatory environment, particularly in the digital, energy and capital markets sectors. In December 2017 the European Parliament and member states reached an agreement to extend the duration of EFSI and increase its financial capacity.