EU and KfW support greening energy in the Western Balkans and Eastern Neighbourhood

The European Union and Kreditanstalt für Wiederaufbau(KfW) have signed a Guarantee Agreement enabling the financing of additional renewable energy generation capacities and further network development. The EU will be providing €260 million in guarantees for infrastructure projects, via the European Fund for Sustainable Development Plus (EFSD+). The guarantees will enable KfW to provide loans on a commercial sub-sovereign basis to energy utilities in Western Balkans and Eastern Neighbourhood regions. An additional €13 million for technical assistance will support enhancing the market readiness and accelerating the green transformation of energy sectors.

The implementation of the Green Deal in Western Balkans and Eastern Neighbourhood regions involvesthe sustainable transformation of the energy sector and a just green transition. It ambitiously requires simultaneous implementation of investments and developments in actors such as energy utilities. Thanks to this EU support KfW will fund technical assistance to energy utilities and for renewable energy generation capacities and power grids to an amount of up to €330 million.

Gert Jan Koopman, Director General at the European Commission’s Directorate General for Neighbourhood and Enlargement Negotiations stated, “Energy utilities in the Western Balkans and the Eastern Neighbourhood will now have access to an additional tool to accelerate the green transformation of their energy sector. This joint action of the EU and KfW contributes to achieving the objectives of the Economic and Investment Plans agreed with these regions. It contributes to decarbonising the economy, addresses pressing global challenges such as climate change, while boosting the competitiveness of a key economic sector.”

“Today marks an important milestone in our strong partnership with the EU and the support granted for the ‘Western Balkans and European Neighbourhood East countries’. KfW finances infrastructure across the whole spectrum of the energy sector in the region. The EFSD+ guarantee hedges default risks from KfW loans of up to EUR 260 million and is part of a broad investment programme with a total guarantee volume of up to EUR 1.1 billion.” stated Christiane Laibach, Member of the Executive Board of KfW.  

Background

The European Fund for Sustainable Development Plus (EFSD+) was established in June 2021 and offers EU partner countries support for key investments, using EU grants or financial guarantees. In this way, the EUmobilises additional financial resources for sustainable development from the public and private sectors. The EFSD+ has €39.8 billion in guarantee capacity for the period 2021 to 2027 globally, of which €22.5 billion will be used in the EU’s enlargement and neighbourhood regions.

During the last EFSD+ call-for-proposals, KfW applied with a proposed investment programme aiming to support the green transformation of the energy sectors in the six Western Balkan beneficiaries (Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia) and in the Eastern neighbourhood. The investments will be in line with EU policy initiatives such as the Green Deal and Global Gateway, delivered through Economic and Investment Plans in the East and in the Western Balkans, strengthening the regions’ security of energy supply. The programme will enable additional investments in renewable energy, energy efficiency and networks and is accompanied by technical assistance measures to promote the institutional, organisational and structural impact of the investment measures on a green and market-oriented transformation of the beneficiaries’energy sectors.