INTERVIEW – Green energy in the spotlight of the EBRD in SEE

May 27 (SeeNews) – The European Bank for Reconstruction and Development (EBRD) plans to invest over €2 billion ($1.09 billion) in Southeast Europe (SEE) this year, with a particular focus on renewable energy and energy transmission and systems distribution, said Charlotte Ruhe, the bank’s managing director for Central and Southeastern Europe.

“So far this year, we have signed contracts for energy investments worth 200 million euros in the region,” Ruhe told SeeNews on the sidelines of the bank’s annual meeting held in Yerevan, Armenia, earlier this month. “We have a pipeline of €600 million this year – a combination of renewable energy, about 60%, and distribution and transmission.”

The Southeastern Europe Renewable Energy Report 2024 can be downloaded here

The EBRD is a key financial player in Southeastern Europe and the largest international investor in the Western Balkans. In Serbia alone, it signed a loan of EUR 300 million last year to support the national electricity sector and ecological transformation.

The bank also provides advisory support to governments in the region, helping Albania, Serbia and Romania conduct their first renewable energy auctions. In Albania, it supported the development of the region’s first floating solar power plant, the 140 MW Karavasta project, and is working on a similar project in Montenegro.

“We are also working with the Bulgarian government on battery energy storage and working with North Macedonia on a just energy transition platform. We helped them raise €80 million in donor funds to help transition away from coal and help communities impacted by coal mine closures,” Ruhe said.

“We are working on many fronts. “I would say it was difficult at first because in some countries the preference was for the state-owned utility to deal with renewable energy sources,” she noted. However, it is the private sector that has the know-how and can acquire the necessary knowledge of the capital, Ruhe explained.

Investments in municipal and transport infrastructure are another key area of ​​interest for the EBRD.

“Our Green Cities program is very active across the region. In Romania, we have a very strong franchise in the water sector. In Bulgaria, we financed the airport and we are considering port infrastructure. In the Western Balkans, we are very active both in rail and road corridors, but also in Green Cities,” said Ruhe.

To help promote the green agenda, earlier this year the bank invested in green bonds issued by the Croatian subsidiary of Austrian banking group Erste and Slovenian energy company Gen-E. However, she noted that bond markets in the Western Balkans were still underdeveloped.

CAPITAL INVESTMENTS

In 2023, the EBRD invested in R.Power, a Polish renewable energy company operating in Romania, and in the Croatian business process and technology outsourcing provider M Plus. The bank also makes capital investments in the real estate sector, where financial leverage is lower due to development risk, in the financial sector, ICT, agribusiness and retail.

“Our plans are strong,” Ruhe said, adding that in one of the most active markets, Bulgaria, his portfolio consists of 28% equity.

However, in the Western Balkans, the small size of enterprises and the reluctance of family businesses to attract an external investor limit the possibilities of investing in equity capital.

BUREACURACY, RULE OF LAW

To make their countries more attractive to investors, governments in the region should cut red tape and strengthen the rule of law, Ruhe said.

She emphasized that a simple, straightforward and quick process of registering a company, issuing a license or changing the use of land, especially if it is digitized, is of paramount importance for investors.

“Then I would look at labor law at the level of social taxes. It can be quite high in some countries and I think that can be a bit of a deterrent for investors.”

Another important element is to ensure the effectiveness of commercial courts, so that judges are well-educated and their rulings are perceived as fair and not the result of some corruption process, emphasized Ruhe, adding that good infrastructure and access to green energy technologies are another key factor attracting investors to the region.

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