IFC, EBRD, and EU to Support First Solar Project in Armenia

IFC, EBRD and the EU have signed on to support the development of the first utility-scale solar power plant in Armenia, the 55 MW Masrik Solar Project.

The International Finance Corporation (IFC), a member of the World Bank Group, the European Bank for Reconstruction and Development (EBRD), and the European Union (EU) have signed on to support the development of the first utility-scale solar power plant in Armenia, which is also the first for the Caucasus. The 55-megawatt (MW) power plant facility, located in Mets Masrik municipality, Gegharkunik Province, will boost Armenia’s supply of renewable energy and will help the country reduce its reliance on imported fuels.

The plant is being developed by Fotowatio Renewable Ventures (FRV), part of Abdul Latif Jameel Energy, a global leader in utility-scale renewable energy projects. The company will receive a USD 35.4 million debt financing package consisting of two USD 17.7 million long-term loans, one each from IFC and the EBRD. The project will also receive a EUR 3 million investment grant from the European Union, mobilised by the EBRD. The IFC financing package includes a USD 8.9 million loan from IFC’s own account and a USD 8.9 million loan from the Finland-IFC Blended Finance for Climate Program.

“Armenia has great potential when it comes to the development of renewable energy, in particular solar energy, and the country is a strategic priority for FRV,” said Mikel de Irala, Managing Director, Middle East and Africa, FRV. “The financial close of our first solar project in the Caucasus-region is a milestone for FRV and it allows us to expand our reach and continue leading the utility-scale solar power industry worldwide. In connection with this project, we are extremely proud to contribute to the country’s sustainable economic growth, local generation of wealth and local employment, thus helping to build a more sustainable future.”

The Masrik solar plant is expected to generate more than 128 gigawatt-hours (GWh) of electricity annually at a competitive tariff of ȼ4.19 per kilowatt-hour. The electricity will be sold under a power purchase agreement to Electricity Networks of Armenia, a utility responsible for the distribution of electricity. The project will displace the release of 40,000 tons of carbon emissions annually. Right now, nearly 70 percent of Armenia’s electricity generation depends on imported fossil fuels.

As the country’s demand for electricity grows, renewables are expected to provide a sustainable and low-cost alternative source of energy and the Masrik plant is designed to set an example for the rest of the Caucasus.

Cheryl Edleson Hanway, IFC’s Regional Senior Manager for Infrastructure and Natural Resources, said “Energy security is critical to business activity, which is why supporting Armenia’s renewable energy plan is an important part of IFC’s mission. The Masrik solar project is an additional milestone in IFC’s support of Armenia’s efforts over the years to attract private sector investment to power generation.  It is the first step in the country’s ambitious solar power plans and will serve as an example to be followed by many more projects in the years to come.”

The project—which includes the development, construction, and operation of a 55-MW power plant and a nine-kilometer transmission line—is the first competitively-tendered solar-photovoltaic project in Armenia. The World Bank helped the government prepare the project and provided transaction advisory support. The bidding process, backstopped by the Scaling up Renewable Energy Program and the World Bank, was highly competitive.