Construction Bridge Loan for Solar Portfolio in Poland: A Step Towards Green Energy Transition
Project Overview
The European Bank for Reconstruction and Development (EBRD) has approved a construction bridge loan of up to EUR 22.5 million for PL-SUN Sp.z.o.o., a Polish holding company. The loan will be used for the construction and operation of a 114.5MW solar portfolio in Poland, consisting of 16 solar PV plants owned by the company through 8 special purpose vehicles.
The main objective of the project is to contribute to climate mitigation by adding solar generation capacity to the Polish national energy system. With a total installed capacity of 114.5MW, the project is expected to generate 118 GWh of electricity annually, resulting in CO2 savings of 85,000 tonnes.
The EBRD has assigned an Environmental and Social (E&S) categorization of B (2019 ESP) to the project, indicating a high-medium risk due to potential labour risks in the supply chain. However, the EBRD believes that these risks can be effectively mitigated through appropriate measures.
Transition Impact and Additionality
The project has been assessed to have a transition impact score of 60, indicating a strong contribution to the “Green” Transition Impact quality. By supporting the construction of solar farms, the project promotes renewable energy development and helps reduce reliance on fossil fuels. Additionally, the project has the potential to unlock flows of institutional capital into the renewables sector in Poland by demonstrating the bankability of a construction bridge loan, a new and innovative financing structure.
The EBRD’s participation in this project brings additional value through its innovative financing structure, which is not readily available from other banks. This highlights the EBRD’s commitment to supporting and encouraging sustainable development in the region.
Environmental and Social Considerations
The project carries potential environmental and social (E&S) risks, primarily related to the supply chain risks associated with solar components, land acquisition, labour and occupational health and safety risks during the construction phase, and stakeholder engagement.
However, the EBRD has conducted a Technical Due Diligence Report and has determined that there is no obligation to prepare Environmental Impact Assessment (EIA) Reports for the individual solar power plants as per the national legislation. Environmental decisions have already been issued for each plant, taking into account the national regulations.
To address labour risks in the supply chain, the project will follow the Management Approach for Solar Supply Chain Risk Management approved by the EBRD. An independent E&S consultant will conduct an E&S due diligence (ESDD), which will include a review of the client’s E&S management systems and institutional capacity to implement the EBRD’s Performance Requirements. Based on the ESDD, a Non-Technical Summary (NTS), Stakeholder Engagement Plan (SEP), and Environmental and Social Action Plan (ESAP) will be developed and agreed upon for the project.
Editorial and Advice
The approval of the construction bridge loan for the solar portfolio in Poland is a positive step towards promoting renewable energy and reducing carbon emissions in the country. The project aligns with global efforts to combat climate change and transition towards a more sustainable energy future.
The EBRD’s financing structure, which is not readily available from other banks, demonstrates its commitment to innovation and supporting the development of renewable energy projects. This can potentially unlock institutional capital flows into the renewables sector in Poland, fostering further growth and investment in the industry.
It is crucial for the project to address the identified environmental and social risks associated with the construction and operation of the solar power plants. Through effective mitigation measures and independent E&S due diligence, the project can ensure compliance with the EBRD’s Performance Requirements and promote sustainable development.
Furthermore, stakeholder engagement and transparency should be key considerations throughout the project’s lifecycle. Meaningful consultation with local communities, workers, and other relevant stakeholders will help address concerns and ensure the project’s success.
Overall, the construction bridge loan for the solar portfolio in Poland represents a significant step towards a greener future. By supporting renewable energy projects, the EBRD is contributing to the global transition towards a sustainable and low-carbon energy system.
For further information:
- Lord LB Asset Management
- Contact: Grete Bukauskaite – info@lordslb.lt, +370 5 261 94 70
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The image is for illustrative purposes only and does not depict the actual situation.
