The Green Deal of the European Union involves major investments in the energy system, pointed out Cristina Ghimbovschi, Head of Project Finance & Financial Analysis, BCR, during the conference “Decarbonization: How fast? Where to?”, organized by Energynomics.
A major contributor to global emissions, with 75%, the energy system has a 66% share in local emissions. “Investments provided for in the INECP are large, at least at the level of production capacities they reach EUR 12-14bn, with a special mission for the sector of renewable energy and energy efficiency. Today we have installed renewable capacities of about 4,600 MW, mainly wind and solar. Under the INECP we plan a 30.7% increase by 2030, which means other 6,000 MW from wind and solar power and 1,000 from hydropower, which involves investments of about EUR 5.6 billion in the wind and solar power and other EUR 2.5-3 billion in hydropower”, said Ghimbovschi.
But for investments to take place there is a need to clarify the legislation, to introduce Power Purchase Agreements (PPAs), the Contracts for Difference scheme.
“We need predictability of the legislative framework, and here, first of all, permission to close PPAs is essential… Concluding PPAs is also important for existing capacities. A repowering process is estimated after 2025 in this area and we believe that PPAs could be a mechanism that could support this process”, she also said. At the same time, Contracts for Difference provide stability of revenues, which will therefore be less influenced by political decisions.
But the grid needs to be adapted to receive renewable energy, and the balancing market should integrate easier the new capacities, including the storage and back-up ones.
At the same time, in the thermal power segment, cogeneration needs a bonus scheme.
Structuring of such projects involves good creditworthiness of BCR customer and a minimum down payment of 30%, depending on the financial and technical parameters of the project, she also said. The financing period climbs to 15 years or a maximum of 75% of the asset lifespan, depending however on the maturity of PPAs. “We are also considering the quality of PPAs – who is the counterparty, what is the creditworthiness and the termination clause”.
BCR has been actively involved in financing the energy sector, both in the development period and in the consolidation period. “We now want an active involvement in transition. In the past we have financed high-efficiency cogeneration projects, projects in the field of renewable energy, we want to continue to support this approach”, added Ghimbovschi.