Harnessing the power of private sector
In Serbia, we supported privately financed wind farms at Cibuk - the biggest in the Western Balkans region - and Kova?ica, helping Serbia reduce its dependence on ageing coal-fired plants running on polluting lignite.
As the COP26 summit approaches, the question on all minds is: what can save the world from climate catastrophe?
The widely accepted answer - among the governments, international organisations and multilaterals like the EBRD that are already spending billions on the green transition - is getting the private sector to spend the necessary trillions in green investment. "Of course this has to involve the private sector," says the EBRD's Harry Boyd-Carpenter.
"You need huge investment. Today's energy mix is round about 80-83 per cent hydrocarbons. By 2050 we have to be at zero per cent. It's an extraordinary rewiring of the economy."
But how? The good news, Boyd-Carpenter says, is that private-sector interest in green investments is growing sharply. "There is lots of private money keen to find a green home." The EBRD view, he adds, is that "the trick is really to create the right enabling environment. That's still missing in a lot of places." (This is why the EBRD, which aims to make a majority of its investments green by 2025 and to align with the goals of the Paris Agreement on climate change by 2023, is stepping up green policy engagement across its regions.)
Two things are needed, says Boyd-Carpenter. One is a reliable policy framework in the country where an investment is made "for governments to really get on board and say, 'we've signed up to net zero', or 'we've produced an ambitious Nationally Determined Contribution (NDC)', and then, 'What does that mean? What's the policy we need to change in our steel sector? What's the signal we need to send investors in transport?' And that takes time.
That's an area we are putting a lot of effort into." The second is catalytic finance to de-risk the investment - the kind of finance that the EBRD provides.
The results of combining them can be transformative, as the EBRD's engagement in developing solar power in Egypt show. A 2012 crisis in the Egyptian energy sector prompted the government to make more use of its abundant solar and wind resources. Egyptian officials initiated a feed-in tariff scheme for solar power and concentrated it all on one very big site in southern Egypt. Then they came to the EBRD for advice on how to make the scheme attractive to private investors.
Two years of work on bankability later, the 37km2, 1.5 gigawatt (GW) Benban solar park attracted strong investor interest, with 80 private-sector candidates shortlisted and about 20 selected to set up projects. The EBRD was the biggest lender. Benban was completed in 2019. "The message Benban sent to investors was, 'you can come to this country, you can find the technical expertise you need, you are going to be treated fairly by the government and you have a viable long-term project'. That got all these investors in, and gave them confidence," says BoydCarpenter.
With an enthusiastic pool of investors now in place, Egypt has moved to a still more market-friendly approach - competitive auctions rather than fixedrate feed-in tariffs, bringing prices lower still.
"When they've run these competitive processes, they've been getting fantastic prices - solar under two-anda-half US cents, wind between three and four US cents per kilowatt hour (kWh)," says BoydCarpenter. "The electricity price at Kom Ombo, the next big solar project financed by the EBRD in Egypt, earlier this year, is less than a third of the price of Benban per megawatt hour, because it was done competitively."
Separately, Egypt has decided not to invest in coal. Adds Boyd-Carpenter: "That's partly a climate decision, but it's also partly a pragmatic economic decision. Solar is cheaper. Why would you pay twice the price?" This trajectory is being followed in other economies where the EBRD invests, which are also seeing high-quality international investors appear.
Uzbekistan, perhaps the most stunning transformation in the EBRD regions, has made impressive progress in the turnaround of its power sector, with a focus on green solutions. It was the first EBRD economy that developed (with the Bank's help) a low-carbon pathway for the development of the power sector. With current installed power-generation capacity of 14 GW, the country has committed to building 8 GW of new solar and wind power generation by 2030, and is currently considering increasing this target to 12 GW.