Project detail - LLC CHYSTA ENERHIIA-2011

Who is our customer

Scatec Solar ASA (“SSO”) is a publicly-traded Norwegian developer, investor and constructor of PV solar projects in emerging markets: currently, they have 322 MW operational and over 1 GW in development. For the 30MWp, Chysta Enerhiia-2011 LLC (aka: “Kamiyanka”) project in the Ukraine, the EBRD was invited as lead arranger. When in mid-2017, the Ukraine adopted a new Electricity Market Law (“New Law”), many local and international developers and sponsors realized that Renewable Energy (“RE”) Projects were made possible with (i) long term power purchase agreements (“PPAs”) and (ii) a Feed-in-Tariff (“FiT”) in EUR.

What is our funding objective?

FMO proposed investment in Kamiyanka is an up to EUR13.5m B-Loan participation under EBRD’s Loan Agreement. The proposed debt funding will be dedicated to the development and construction of a 30MWp PV Solar plant in the Ukraine. Scatec will provide the necessary equity contributions along with a prospective co-investor. Because Kamiyanka will be funded by EBRD under their Ukraine Sustainable Energy Lending Facility (“USELF III”) and EBRD’s E&S Performance Requirements do apply for this Project, reference is also made to EBRD’s web-site: http://www.ebrd.com and https://www.ebrd.com/cs/Satellite?c=Content&cid=1395274751052&d=Mobile&pagename=EBRD%2FContent%2FContentLayout

Why do we fund this investment?

The Kamiyanka investments by Scatec do directly contribute to the realization of the policy of the Ukrainian government targeting a 15% in renewable electricity generation by 2030 (up from the current ~2%). This Project also complies with FMO’s Strategy with respect to energy security and energy transition, which is of particular importance for the Ukraine (being still heavily dependent upon nuclear and thermal generation). A second benefit of the Project is the clean-up of the site, currently partly being used as waste dump by local communities.

What is the Environmental and Social categorization rationale?

The Project is a B+ risk category according to FMO, due to temporary impacts generated during Construction Phase (like noise, dust, traffic), and impacts on land, and biodiversity. The impacts are mitigated through dedicated mitigation plans and activities. For FMO E&S rationale and Ex Ante Disclosure, FMO uses for all its investments however the (8) IFC Performance Standards (“PS”): PS 1 - Assessment and Management of Environmental and Social Risks and Impacts. Considered being applicable due to environmental and social impacts as a result of the Project. PS 2 - Labour and working conditions. Applicable due to labour involved in Project activities, mostly during the Construction Phase. PS 3 - Resource Efficiency and Pollution Prevention. Applicable due to Construction activities and/or Operational activities, as part of the Project; the selected solar panels meet the highest standards in terms of energy efficiency (for both manufacturing of panels, and power production). PS 4 - Community Health, Safety and Security. Applicable as local communities are impacted as a result of the Project: mostly during Construction Phase. PS 5 - Land Acquisition and Involuntary Resettlement. The Project needs land to base the solar power plant on, and the connection to the national electricity network. Land users no longer have access (power plant), or reduced access (transmission line) to land. Replacement land will be made available. PS 6 - Biodiversity Conservation and Sustainable Management. The Project needs to clear vegetation, and will reduce options for bird nesting, and animals living on the land. A plan for revegetation will be implemented. Solar panels will be located avoiding impacts as much as possible. Impacts on nearby Tyasmin river will be minimized through dedicated design and operation. IFC’s PS 7 (Indigenous People) is not applicable: the Environmental and Social Assessment did not identify any impacts on local people qualifying as Vulnerable or Indigenous. IFC’s PS 8 – (Cultural Heritage) is not applicable: the Environmental and Social Assessment did not identify any relevant objects or sites as referred to under PS 8: a chance find procedure however will be developed.