Cyprus: EIB paves the way for wind power

The European Investment Bank is providing EUR 65 million for the Orites wind farm, near Paphos. This is the first substantial renewable energy project in Cyprus.

The project concerns the design, construction and operation of an 82 MW wind farm of 41 turbines. Owned by DK Wind Supply Ltd, the project is promoted by the European Renewable Energy Fund I and in particular Platina Partners LLP.

The public ground breaking activity was done by Mr. Marios Garoyian, President of the House of Representatives and in the presence of Mr. Plutarchos Sakellaris, EIB Vice-President, Mr. Brian Olley, Deputy High Commissioner of the British High Commission, Thomas Rottner and Emma Collins, Managing Partner and Partner at Platina Partners, and Mr. Akis Ellinas, Chairman of DK Wind Supply Ltd. who also addressed the participants in the ceremony.  The blessing was given by the Metropolis of Paphos.

EIB Vice-President Plutarchos Sakellaris, whose responsibilities include the EIB’s lending activities in Cyprus as well as energy issues, stated today:  “I am delighted to participate in the ground breaking ceremony of this flagship project.  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.  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 EUR 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”. 

This 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 300MW by 2020.

The implementation of the project was mindful of environmental aspects and is based on a multi-contract approach, bringing together know-how from leading 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.  The Bank is also serving as an important example of project lending in a difficult financial climate.

Background information

EIB activity in Cyprus
EIB lending in Cyprus started in 1981.  It gained volume 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 EUR 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 EUR 645 million for projects in Cyprus in support of the Union’s objectives and the Bank’s priorities. 49% of total EIB financing in Cyprus in this period was for a cleaner environment and an enhanced quality of life.  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.  27% of total EIB lending in Cyprus in this period was for priority combined infrastructure investments, such as the development of transport, urban and public service information technology infrastructure.  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.  EUR 32 million financed projects in synergy with the Cohesion and Structural Funds. The Bank 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 maximise 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 part-financing of most of the Authority’s electricity generation and network development investments. This includes loans totalling EUR 200 million for the Vassilikos electricity power plant, the largest investment ever undertaken in Cyprus and the Bank’s support for the upgrading of the electricity transmission and distribution network, for a total of EUR 130 million. A further EUR 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 on 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.

EIB and Renewable Energy (RE)
For climate change mitigation, in line with the EU environmental sustainability goal of reducing CO2 emissions resulting from energy production and consumption the EIB has set RW as a priority.  In 2007, it set itself a target of EUR 0.6 billion for financing RE; that target was, however, exceeded to reach EUR 2.1 billion (2007 total lending EUR 47.8 billion).  In 2008 the target for RE lending was set at EUR 0.9 billion, also largely exceeded to reach EUR 2.3 billion (2008 total lending EUR 57.6 billion).  With a view to continuing this process, the Bank has now further increased its energy targets for 2009 and onwards and set itself a floor for RE projects of at least 20% of overall energy projects in the EU.  To date in 2009 the EIB has provided a total of EUR 1.7 billion in RE lending.

The EIB’s response to the current economic situation as far as energy, climate change and infrastructure are concerned: