Highlights
- Project is co-financed by European Bank for Reconstruction and Development, International Finance Corporation, and Black Sea Trade and Development Bank
- The European Union (EU), the United Kingdom, and CIF's Clean Technology Fund (CTF) supported the mobilization of the finance package
- Deal marks a pivotal step in advancing Ukraine's shift towards renewable energy
An international finance package will bring 157 million of project finance debt to a private wind power project that aims to boost Ukraine's energy security. The deal, announced today in Kyiv, is co-financed by the European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC) and Black Sea Trade and Development Bank (BSTDB) and supported by the European Union (EU), the United Kingdom, and CIF's Clean Technology Fund (CTF).
One of the first greenfield private projects in Ukraine's power sector since the beginning of Russia's invasion of Ukraine in 2022, this project forms part of efforts to advance Ukraine's shift towards renewable energy generation as well as bolster its energy security following attacks from Russia on the country's energy generation infrastructure.
The EBRD and IFC will each lend 60 million and BSTDB 37 million. The total cost of the project is estimated at 225 million (excluding VAT), with the rest to be met by equity from the project sponsor, GNG Group or Galnaftogaz, widely known in Ukraine as OKKO Group. The loans are to Wind Power GSI Volyn LLC and Wind Power GSI Volyn 3 LLC, special purpose vehicles incorporated in Ukraine.
The loans will support OKKO to construct and operate wind power plants in Ukraine with a combined capacity of 147 MW. The plants are expected to generate at least 380 GWh of renewable zero carbon electricity annually, resulting in carbon dioxide emission savings of approximately 245,000 tons per year.
The EBRD's funding will be backed by financial guarantees from the European Union provided under its Ukraine facility, the Ukraine Investment Framework. This comes from the Ukraine Investment Framework Hi-Bar guarantee programme, which supports both new and existing climate mitigation technologies, in particular in the energy sector, in line with the EU's detailed Ukraine Plan.
IFC and BSTDB's loans are backed by guarantees from the European Union under the Ukraine Investment Framework as part of IFC's Better Futures Program: RE-Ukraine. The United Kingdom's Foreign, Commonwealth & Development Office (FCDO) provided grant funding as a first loss guarantee to enable the mobilization of IFC and BSTDB's loans. IFC's funding package also includes 10 million in debt financing from CTF and was enabled by pre-investment work through which IFC helped optimize the project structure in a highly volatile market environment. This was possible thanks to support from Austria's Federal Ministry of Finance and the Swiss State Secretariat for Economic Affairs SECO.
"We are grateful to our partners for their long-term, sustainable cooperation, which is especially valuable during wartime for both business and the country as a whole. This project addresses several key challenges at once. Firstly, it strengthens the country's energy security and independence. Secondly, it advances the transition to zero-emission electricity production," said OKKO Chief Executive Officer Vasyl Danyliak.
"With significant power generation capacity in Ukraine destroyed as a result of the war, this investment is crucial to address the severe current energy shortfall, support Ukraine's decarbonisation goals and boost the private sector's role in further development of the renewable energy sector in the country," said Matteo Patrone, the EBRD's Vice President, Banking.
Ines Rocha, IFC's Regional Director for Europe, said: "This project will ensure that people can keep the lights on, stay warm and connected - therefore marking a significant milestone in Ukraine's recovery. While paving the way for a more resilient Ukraine, this transaction also sends a clear signal about the country's readiness for private investment and ability to meet the challenges of tomorrow."
"Ukraine's energy sector has faced unprecedented challenges due to the ongoing crisis, making the diversification and resilience of its power infrastructure more critical than ever. Supporting projects that strengthen the country's energy independence and accelerate its transition to renewable energy is a priority for BSTDB. This wind power project is a tangible step toward building a sustainable energy future for Ukraine. We are proud to stand alongside our development partners in mobilizing essential resources, enabling investments that will help restore and stabilize Ukraine's energy supply while fostering long-term economic recovery and environmental sustainability," said Dr Serhat Köksal, BSTDB President.
"This is a smart investment at a critical time. It boosts Ukraine's energy security and supports its shift to renewables. The EU is glad to help make it happen," said Stefan Schleuning, Head of Cooperation at the EU Delegation to Ukraine.
Martin Harris, British Ambassador to Ukraine, said: "I'm delighted that £3.8 million in UK grant funding has helped unlock this wind farm project, which has the capacity to power the equivalent of up to 80,000 homes. The UK stands firmly behind Ukraine's green recovery. These sustainable energy solutions not only help Ukraine withstand Russia's attacks on the energy grid but also build a more sustainable future economy. It's encouraging to see Ukrainian businesses diversifying their energy sources with cleaner, modern technologies. This strengthens Ukraine's entire energy sector - a key priority behind the 100-Year Partnership Agreement that Prime Minister Keir Starmer and President Volodymyr Zelenskyy signed earlier this year."
The EBRD and IFC have been supporting OKKO Group, their client since 2005, to move forward with the decarbonization strategy it is pursuing against the backdrop of Russia's war on Ukraine, as it prepares for Ukraine's integration into the European Union and a future net-zero economy.
Energy is a priority for the World Bank Group in Ukraine. The World Bank, IFC, and MIGA have been working closely on complementary public and private sector interventions to meet both the country's short-term imperatives, including restoring essential infrastructure and procuring equipment, and longer-term needs.
Since February 2022, IFC has delivered $2.2 billion to support Ukraine's private sector, including $760 million in mobilization, through its Economic Resilience Action (ERA) Program for Ukraine. The support is part of the World Bank Group's response package, which has assisted more than 15 million Ukrainians by helping businesses stay afloat and enabling the government to provide essential services, pay wages, keep schools and hospitals open, and make critical repairs.
About IFC
IFC a member of the World Bank Group is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2024, IFC committed a record $56 billion to private companies and financial institutions in developing countries, leveraging private sector solutions and mobilizing private capital to create a world free of poverty on a livable planet. For more information, visit www.ifc.org.
