GREENLAND HYDRO POWER PLANT

The Framework Loan supports the greenfield hydropower construction programme deriving from Greenland Energy Sector Plan. The project encompasses the construction of 76MW Buksefjord-3 hydropower plant (Buks-3 HPP) between Ista lake and Kang lake, approximately 30km east of existing 45MW Buksefjord-1 HPP, and associated infrastructure.

The project implementation period is 2025-2031. Once completed, the project will increase the available green generation by around 515 GWh/a. It will provide with partial redundancy of the power supply to Nuuk and full redundancy, should Nukissiorfiit, the Greenlandic utility decide for a second 60km backup transmission line from Buksefjord to Nuuk. Once new hydropower capacity will be made available, Nukissiorfiit intends to use existing baseload diesel generators as backup and decommission outdated backup diesel generators dating from 1970's.

The hydropower plant and the related facilities such as transmission items, roads and water tunnels included in the project scope, are currently subject to an Environmental Impact Assessment (EIA) process. The environmental permit is expected to be delivered to the Buksefjord HPP after end 2024 when the EIA has been completed. The EIA Report for the Buksefjord HPP (including a section on heating system conversion impacts) was submitted to the public consultation phase in mid-2023, after being reviewed by an external consultant hired by the Authorities. However, following a major design change of the project layout, the EIA process will be complemented and amended as required by the Greenlandic legislation. Moreover, should the Promoter decide to request financing for the second 60km backup transmission line from Buksefjord to Nuuk, the component will follow a screening process depending on the design parameters adopted. The EIA Reports will be reviewed in terms of compliance with the content and necessary information and data against Annex 2a of the EIB Standard 1. The hydropower and related facilities are not located in habited areas and are unlikely to affect negatively local population livelihood. The Bank has hired an external consultant for project appraisal and will review the project's potential impacts and avoided CO2 amount at appraisal stage or upon new allocation request under the framework loan. The project is expected to contribute to climate action and environmental sustainability (CA&ES) objectives, in particular to climate mitigation.

Greenland is an independent Danish territory outside the EU and whose procurement law is based on Danish law. Greenlandic procurement regulation is deemed to be in line with relevant EU directives. The Borrower is a private company, fully owned by the Greenland Government, that will benefit from exclusive rights by leasing the assets with a fixed return on investment to Nukissiorfiit, the state-owned electric utility company. Therefore, the Borrower shall follow the public procurement procedures outside EU set in the Bank's Guide to Procurement. The promoter is assisted by an external consultant with relevant procurement knowledge. A new Buksefjord HPP tender process will take place in end 2024.

Greenland currently implements its "Sector Plan for Energy and Water Supply from 2018" with 35 goals of which decarbonising the electricity and district heating sector to achieve an 85% share of green production by 2030. The sector plan translated into the Greenland Parliament Act no. 22 of 1. December 2021 and the decision to implement the project. Besides the Government of Greenland is drafting a new strategic vision for energy and climate, to be ready in 2024. Greenland wants to reinforce its green strategy and sees opportunity to develop hydrogen production from oversupply of hydropower plants. Hydrogen could be used in Greenland's fish industry (boat fuel) and to replace oil fuel for power and heat production in small remote settlements where renewables are not viable to achieve 100% green energy production.