EIB Loans €65M for Wind Farm in Cyprus
October 6, 2009 // Published as a news service by IHS
The project will design, construct and operate an 82-megawatt wind farm of 41 turbines. Owned by DK Wind Supply Ltd, the project is promoted by the European Renewable Energy Fund I and Platina Partners LLP.
"Orites is the largest and most advanced wind farm in Cyprus. It paves the way for further developments in the sector, and brings the Cypriot government closer to its target and the EU's objective for renewable energy production," said EIB vice president Plutarchos Sakellaris at the Sept. 30 ground-breaking ceremony for the new wind farm.
"This is of particular importance for Cyprus, whose electricity network is not interconnected and has no other indigenous energy resources. We were therefore ready to participate in a finance structure taking direct project risk."
"The EU objective for renewable energy will be a major challenge, as the required investment could be in the order of €600-700 billion up to 2020. We at the EIB are ready to play a strong and active role in supporting the member states' efforts with adequate funding and tailored finance products," Sakellaris added.
The project contributes significantly to the government's target of producing 13% of its electricity from renewable sources by 2020. It also represents 27% of the required installed wind energy capacity of 300 megawatts by 2020.
The implementation of the project will be mindful of environmental aspects and is based on a multi-contract approach, bringing together know-how from leading European Union (EU) companies, including Vestas and Siemens.
EIB financing of the Orites project was one of the elements that led Euromoney to award the "Lender of the Year" title to the EIB. The bank is seen as a front-runner and a leader in promoting investments across the renewable energy sector. EIB is also serving as an important example of project lending in a difficult financial climate.
EIB and Renewable Energy
For climate change mitigation, in line with the EU environmental sustainability goal of reducing carbon dioxide (CO2) emissions resulting from energy production and consumption, the EIB has set renewable energy as a priority.
In 2007, the EIB set itself a target of €0.6 billion for financing renewable energy; that target was, however, exceeded to reach €2.1 billion (2007 total lending of €47.8 billion). In 2008 the target for renewable energy lending was set at €0.9 billion, also largely exceeded to reach €2.3 billion (2008 total lending of €57.6 billion).
With a view to continuing this process, the EIB has now further increased its energy targets for 2009 and onwards, and set itself a floor for renewable energy projects of at least 20% of overall energy projects in the EU. To date in 2009, the EIB has provided a total of €1.7 billion in renewable energy lending.
The table below shows EIB's response to the current economic situation as far as energy, climate change and infrastructure are concerned:
EIB's Investments (in € billions)
| Period Covered | Annual EIB Group Support | EIB Group Support 2009-2010 | ||||
| 2009-2010 | Existing | Additional | Total | Existing | Additional | Total |
| 12.4 | 4.0 | 16.4 | 24.8 | 8.0 | 32.8 | |
EIB Activity in Cyprus
EIB lending in Cyprus started in 1981. It increased markedly after 1996, when the country started accession negotiations with the EU. In the following 12 years, total EIB financing in Cyprus amounted to more than €1.5 billion, of which almost half was after the country's accession in 2004.
In the five-year period 2004-2008, the EIB provided a total of €645 million for projects in Cyprus in support of the EU's objectives and the EIB's priorities: 49% of total EIB financing in Cyprus in this period was for a cleaner environment and an enhanced quality of life.
Moreover, flagship projects for urban environment infrastructure, notably water and wastewater collection networks, have been financed in almost all major cities, including Nicosia, Limassol, Larnaca and Paphos.
Some 27% of total EIB lending in Cyprus in this period was for high-priority combined-infrastructure investments, such as the development of transport, urban and public service information technology infrastructure.
About 20% of total EIB financing in Cyprus was in the energy sector, with the construction of new combined-cycle and internal combustion power plants in Vassilikos and Dekeleia. In addition, €32 million financed projects in synergy with the Cohesion and Structural Funds.
The EIB works closely with the Cypriot authorities and the European Commission with respect to the programming and implementation of projects supported by the Structural and Cohesion Funds in Cyprus, in order to maximize the impact of its action.
EIB Energy Financing in Cyprus
The EIB has supported a number of energy projects in Cyprus. The bank has established a long-term relationship with the Electricity Authority of Cyprus and has been involved in the partial financing of most of the authority's electricity generation and network development investments.
This includes loans totaling €200 million for the Vassilikos electricity power plant, the largest investment ever undertaken in Cyprus, and the EIB's support for the upgrading of the electricity transmission and distribution network, for a total of €130 million.
A further €30 million has gone to a new internal combustion engine power plant at the Dekeleia power station in the district of Larnaca in Cyprus. Initially powered with heavy fuel oil, the plant can be retrofitted to natural gas, once this becomes available in Cyprus.
Electricity demand in Cyprus is rising and plants of this type provide a rapid response to load changes, which makes them suitable for generation of electricity during peak demand This will help meet demand changes, in particular during the summer months, when cooling and electricity needs are highest.
Source: European Commission (EC).