Tirana, Albania, April 24, 2023—To help Albania improve its climate resilience, diversify its energy mix and scale up clean and affordable energy sources, IFC is providing a €41-million financing package to Karavasta Solar sh.p.k, supporting the largest solar photovoltaic power plant in the country.
IFC's funding includes an A loan of up to €29 million and a B1 loan of up to €12 million, which is part of a wider package including a loan of up to €58 million from the European Bank for Reconstruction and Development and Intesa Sanpaolo. Voltalia—a global utility-scale renewable energy developer and service provider—has incorporated Karavasta Solar sh.p.k., a special-purpose vehicle for the development, construction, and operation of Albania's first large-scale solar photovoltaic (PV) project.
Albania relies almost entirely on hydropower for its domestic power generation, which is seasonal and insufficient to meet the country's growing demand for power. As a result, the country is heavily reliant on expensive fossil fuel-based power imports. Moreover, the regional energy market disruptions in Europe and high energy prices globally highlight Albania's need to further develop its renewable energy sources.
Climate change is having an adverse effect on hydropower production due to decrease in annual runoff, which is expected to further continue. Annual energy demand in Albania is expected to increase by 77% in 2030 and electricity output from large hydropower plants are expected to decrease by about 15%-20%.
The PV plant will prioritize resilience by securing electricity supply in the face of erratic rainfall, and mounting PVs onto higher piles to protect them from coastal flooding. The climate adaptation finance provided by IFC will increase diversification in Albania's renewable energy mix, contributing towards increased resilience of the power sector.
IFC's funding will enable the development of a 140-megawatt power plant and a 19-kilometer overhead transmission line located in Fier municipality, western Albania. Once operational, the plant is expected to generate over 265 gigawatt hours of electricity annually, with greenhouse gas emission reductions of circa 96,500 tons of CO2 equivalent per year and supporting Albania's climate goals.
"In view of a high installed capacity of 140 MWp, as well as a short realisation time of a year and a half, this project has triggered a boom for solar energy in the country," said Constantin von Alvensleben, Voltalia`s Country Manager for Albania. "Today's signing is a proof of the quality and the sustainability of the project. It is a great moment for all stakeholders, including Government of Albania, Voltalia as the developer, borrower and contractor, and the banking consortium consisting of EBRD, IFC and Intesa San Paolo Bank."
The Karavasta project will adopt a novel hybrid commercialization strategy. This includes selling 50% of the power generation to a state-owned utility at a fixed price and selling the other 50% at market prices, combined with a power price hedge to avoid price volatility.
"We are very pleased to provide catalytic financing to Karavasta Solar and contribute to making a transformative impact on Albania's generation matrix," said Ary Naïm, IFC's Regional Manager for Central and Southeast Europe. "This investment demonstrates how with good policies, countries in the Western-Balkans can best attract fresh private investment and provide better and more sustainable infrastructure services without over-relying on the state fiscal and human resources."
IFC is the largest development finance institution supporting the private sector in emerging markets, investing directly and partnering with financial institutions in climate-smart sectors. This project highlights IFC's key role in driving the country's renewable energy agenda and aligns with IFC's climate business approach.
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 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
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About Voltalia
Voltalia is an international player in the renewable energy sector. The Group produces and sells electricity generated from wind, solar, hydraulic, biomass and storage facilities that it owns and operates. Voltalia has generating capacity in operation and under construction of more than 2.6 GW and a portfolio of projects under development representing total capacity of 14.2 GW. Voltalia is also a service provider and supports its investor clients in renewable energy projects during all phases, from design to operation and maintenance. As a pioneer in the corporate market, Voltalia provides a global offer to private companies, ranging from the supply of green electricity and energy efficiency services to the local production of their own electricity. With more than 1,550 employees in 20 countries on 3 continents, Voltalia has the capacity to act globally for its customers. Voltalia is listed on the regulated market of Euronext Paris, compartment B (FR0011995588 – VLTSA) and is part of the Enternext Tech 40 and CAC Mid & Small indices. The Group is also included in the Gaïa-Index, an index for socially responsible midcaps.
