European Bank

Thanks to the U.S. Department of Commerce, many U.S. power companies this week will be connected to international delegates and leave POWER-GEN International with plans to expand globally. Once connections are made, investments are the next step in the development chain. The European Bank for Reconstruction and Development (EBRD) helps U.S. companies make investments in countries throughout Europe and Asia.

The EBRD is different from other multilateral development banks because 80 percent of the deals are private versus sovereign. The U.S. is the largest EBRD shareholder with 10 percent.

Riccardo Puliti, managing director of energy and natural resources for EBRD, said the bank has seen an excess of €1 billion (US$1.33 billion) invested in 17 projects YTD 2010. In 2009, the bank invested €854 million (US$1.14 billion)  in 14 projects in the power sector, which was up 41 percent from 2008 levels. The rise in renewable energy financing was even steeper from 2008 to 2009 – the volume increased by 75 percent. Countries experiencing a large volume of investments in terms of renewable energy are Poland, Romania and Bulgaria.

In Poland, the bank provided a €30 million (US$39.96 million) loan in 2009 to finance the first large-scale biomass fired power plant owned by a local investor. The project has the potential to lead to critical demonstration effects of large-scale biomass energy which could attract new developers and investors in the renewable energy sector.

Puliti said that Turkey is also a growing investment hot spot for the power industry. “Turkey is an interesting market in terms of possible generation and renewables because of its stable political situation.”

Puliti also said that EBRD has overseen investments for projects in the Ukraine, where the need for new generation is “acute, especially with the refurbishment of hydro.”

While EBRD does not work in the electric markets in India and China, Puliti said that the EBRD Asian electric markets in Kazakhstan and Mongolia are seeing tremendous growth. In Mongolia, the bank has invested in a wind farm being built outside the capital, Ulaanbaatar. Mongolia has a great need for renewable energy development, as its existing capacity is fuelled entirely by coal. Once constructed, this project will not only be the first wind farm in Mongolia, but also the first private generator.

Will Center, senior commercial officer with the U.S. Commercial Service, serves at the EBRD as a liaison to U.S. companies. He said working with EBRD is an opportunity for U.S. companies to introduce technology that has been successful in America to countries with developing power markets.

“If a U.S. company has a particular solution or a business model that is particularly attractive, we exist to introduce them to people here who would be interested in their solutions,” Center said.

When branching into a foreign nation, U.S. companies find themselves submitting to a sovereign lending institution, which can multiply the possibilities of litigation risk. The role of EBRD, Center said, is to litigate risk.

“Because EBRD is a political institution, it’s less likely that there will be any funny games in the litigation,” Center said. “Our role is to make sure the US firms are taken care of.”

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