Green energy for business – PFR and Bank Pekao SA launching a new program for financing investments in OZE
September 9, 2021
In response to the growing energy costs and the need to implement the climate and energy policy, Polish Development Fund together with its first partner – Pekao SA, is approaching the market with a new financing program for investments in renewable energy sources.
The program is dedicated to projects that are not beneficiaries of the support system, selling electricity on market terms. PFR allocates up to PLN 300 million to the main program, which, combined with investors' equity and debt financing obtained from Bank Pekao SA, will enable the realization of the first 500 MW of new photovoltaic installations built on the basis of market energy prices.
The most popular support system for producers of electricity from wind and photovoltaics in Poland is the tender system. To this end, the Energy Regulatory Office organizes tenders, for example competitions in which participating investors compete, giving the price at which they will sell the generated energy under the support system.
Producers who win tender receive a guarantee of a fixed price at which they will sell energy, guaranteeing them a return on their long-term investment. Green energy for business is a new program for financing RES investments, created by PFR together with its partner – Pekao SA bank, which allows investors to implement projects at market risk and achieve higher profits.
The new program is addressed to:
- developers operating on the OZE market who want to become investors.
- OZE investors who would like to expand their portfolio with a new area of activity in market investments.
- contractors and operators of OZE installations who would like to become investors.
- entrepreneurs, including foreign investors, looking for green and cheaper electricity for their enterprises.
- electricity trading companies securing sources of renewable energy supply for current and future customers.
- local governments that plan to increase the share of OZE in their energy mix.
An important challenge of Polish energy policy is to stop the increase in energy prices by gradually replacing fossil sources with energy obtained from OZE.
In response to the need to increase the dynamics of investments in this area, we have created a new program as part of the PFR Green Hub, which fills the capital gap on the OZE market. The first partner with whom we have established cooperation is Bank Pekao SA, but we are open to further partners who, together with us, will supply the Polish economy with green energy
– says Bartłomiej Pawlak, Vice-President of PFR.
The role of PFR is financial support in the form of a subordinated loan or participation in the role of a capital partner for the investor and the bank. In this way, the investment gap resulting from the bank's expectations as to the investor's own contribution is filled.
The investor will be able to sell energy on the free market through bilateral contracts between the producer and the recipient (Corporate Power Purchase Agreement)* without the need for external state aid. PFR's offer will be based solely on free market principles.
What is green energy for business?
The new PFR program will increase the dynamics of OZE development in Poland, and may also have an impact on reducing energy costs for companies. In addition, it will increase the availability of green energy and thus improve the attractiveness of the products of the Polish economy on international markets.
The main phase of the program, in which PFR's financial commitment amounts to PLN 300 million, will start by the end of 2021. Bank Pekao SA wants to offer the market financing based on market risk. Which means that it can finance projects without winning the tender. In combination with PFR financing, such a structure can be very interesting for investors. First of all, it can generate a higher return on the investor's invested funds.
Bank financing with Bank Pekao and subordinated financing with PFR is in this case combined within a single, coherent financing structure. Both instruments complement each other and the right combination of them provides a number of benefits for the investor, borrower
– says Magdalena Zmitrowicz, Vice-President of the Management Board of Bank Pekao S.A., supervising the Corporate Banking Division.
The mere combination of such two instruments is nothing new in the world of structured finance. However, our goal was to prepare a coherent "package" for the client, in order to minimize the process of structuring financing and shorten the time necessary to achieve financial closing.
However, our goal was to prepare a coherent "package" for the client, in order to minimize the process of structuring financing and shorten the time necessary to achieve financial closing.
We wanted the client to focus on the implementation of the project, and we, together with PFR, deal with the arrangement of financing.
As a key corporate bank in Poland, we have a real impact on the climate transformation of our country.
Our priority is to actively participate in the financing of pro-ecological and sustainable investments, including from the energy sector and Renewable Energy Sources (OZE).
We want to help Polish companies in their transformation and change the energy mix of the Polish economy. This is one of the most important environmental objectives included in our ESG Strategy, adopted in June this year.
According to the assumptions, the main phase of the program has a chance to generate investments in new photovoltaic installations with a total value of PLN 1 billion, which consists of investors' equity, financing obtained from PFR and a loan granted by Bank Pekao SA. The resulting installations can reach a combined capacity of up to 500 MW.
More information on the PFR Green Hub offer can be found at on the website.