Project Description

Senior secured loan of up to EUR 12 million in favour of the Co-Borrowers to finance the development, construction and operation of a 30MW portfolio of three solar photovoltaic plants in Croatia. EBRD loan is approved under EBRD InvestEU Framework for Sustainable Transition.

Project Objectives

The project will contribute to climate mitigation by increasing the share of renewable energy generation in Croatia, through the addition of 30 MW of new solar generation capacity to the national electricity system. The project will strengthen private sector’s role in the renewable energy sector in Croatia by bringing in a novel structure in the country, being a first full merchant renewable project in Croatia.

Transition Impact

ETI score: 80

The Project primarily targets the Green Transition Quality. It is 100% GET and has been rated via the GET Direct Track methodology where it receives transition impact uplifts for innovation and scale. The Project is expected to add approximately 0.4% increase in the national electricity generation and avoid above 12,500 tons of CO2 emission annually. 

Client Information

HUMAC DOO

Co-Borrowers: Lumen solis d.o.o., Humac d.o.o.  and 4 Encro d.o.o.

Lumen solis d.o.o., Humac d.o.o. and 4 Encro d.o.o. are special purpose vehicles incorporated in Croatia for the sole purpose of the development, construction and operation of the 30 MW solar PV plants in Croatia.

EBRD Finance Summary

EUR 12,000,000.00

EBRD financing consists of a senior secured loan of up to EUR 12 million in favour of the Co-Borrowers, Lumen solis d.o.o., Humac d.o.o., 4 Encro d.o.o. The Project is expected to be co-financed with other financial institution in the amount of up to EUR 9.2 million.

Total Project Cost

EUR 35,400,000.00

Additionality

The project demonstrates strong additionality by supporting an innovative project structure in the renewable energy sector in Croatia, which will be implemented on the basis of the full merchant exposure. Additionality sources include (i) financing structure, (ii) mobilisation of additional commercial funding and (iii) standard setting.

Environmental and Social Summary

Categorised B (ESP 2019). Environmental & Social Due Diligence (ESDD) has been undertaken in-house, which included the review of permits and project documents, site visits, review of the E&S management systems as well as the review of supporting documentation. Furthermore, the team has been working on the supply chain due diligence in accordance with the Management Approach for Solar Supply Chain Risk Management (CS/FO/21-35) approved by the Board. The Environmental & Social (E&S) risks and impacts associated with construction and operation of the three solar power-plants (SPPs), i.e. SPPs Gradic and Humac (up to 10 MW each), and SPP Pelegrin (up to 20 MW), are mainly related to supply chain and sourcing of the solar panels, occupational health and safety issues and landscape impacts during construction and operational phases. The ESDD has shown that the developer obtained the local environmental approvals for all three project sites and is on track with obtaining the remaining permits. The company has organisational capacities for management of E&S issues, including environmental, health and safety, stakeholder engagement and contractor management, however there is no formalised ESMS is in place yet. The ESDD has identified a few areas for improvement to structure the project to align with the Banks 2019 Performance Requirements and best practices, which have been included in an Environmental and Social Action Plan (ESAP) i to be agreed with the client prior to project signing. The ESAP stipulates the measure to strengthen and formalize the management of E&S and health and safety issues through development of management system (ESMS). In line with ESAP, Environmental and Social Management and Monitoring Plan (ESMP) will be developed prior to the tendering process, outlining E&S mitigation and monitoring measures to be followed by the successful bidder during the construction and operational phases.

The Company follows applicable Croatian laws related to labour and working conditions, which transpose the EU Directives. Additionally, Encro developed Code of Conduct, which is addressing, among others, relationship with suppliers covering PR2 risks. An enhanced supply chain due diligence has been conducted for the solar components in accordance with the Management Approach for Solar Supply Chain Risk Management (CS/FO/21-35). The project developer, Encro d.o.o. (“Encro”) has taken a pro-active approach to addressing potential risks in the solar supply chain, publicly recognised the potential for associated human rights violations in green-technology supply chains, and committed to bring further transparency to the supply chain before module production. Encro requires all its (sub-) contractors are in compliance with the EU Charter of Fundamental Rights and Croatian Labour Act, which also prohibits child labour, forced labour, or harm to workers, including gender-based violence. Encro has already selected and engaged the solar module supplier following guidance to only discuss with those suppliers that are listed on the EBRD Green Technology Selector website. ESAP also stipulates the measure to develop worker’s grievance mechanism and measures for traceability and auditing of supply chain to fully comply with PR2 as well as with Management Approach for Solar Supply Chain Risk Management.

The pollution prevention and control as well as health and safety will be ensured through ESAP measures to develop and implement ESMP.

None of the photovoltaic (PV) sites are located in sensitive area in terms of Natura 2000 sites or sensitive human receptors. Land is acquired through land lease agreements with the state authorities and requires no physical resettlement, nor any reported impacts are associated with land usage. No impacts on the known cultural heritage are expected and chance finds to be managed through a chance find procedure, as stipulated by ESAP.

The Project has undergone sustainability proofing assessment in line with the requirements for the InvestEU programme, as specified in the Technical guidance on sustainability proofing for the InvestEU Fund. The Project is considered contributing to EU climate neutrality objectives and residual impacts of climate hazards to which it is, as well as its residual environmental and social impacts are expected to be low risk.

Both SEP and Non-Technical Summary will be publicly disclosed in English and Croatian language. The Bank will monitor the implementation of the Project through review of annual reports provided by the Client and site visits when deemed necessary. The Bank will monitor the implementation of the Project through review of annual monitoring reports and visits as required.

 

Technical Cooperation and Grant Financing

N/A

Company Contact Information

Zvonimir Mestrovic, ENCRO d.o.o.
zmestrovic@encro.hr
http://encro.hr
Jurisiceva ulica 1A, 10000 Zagreb, Croatia

PSD last updated

30 Jun 2023

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168

Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794

Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD’s Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank’s countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.