Regional Transmission Network Development: Implications for Trade and Investment

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Regional Transmission Network Development
Implications for Trade and Investment 
Financing Transmission Project Implementation
500 kV System Upgrade in Georgia HVDC
Connection with Turkey Laurent Chabrier Senior
Banker, Power and Energy Utilities, European
Bank for Reconstruction Development November
11-12, 2009
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Financing Transmission Projects

• Laurent Chabrier

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EBRD experience with HV line

• EBRD financed around 1 billion Euros equiv. to
  25 of overall power sector portfolio since its
  establishment
• Among all projects, several regional projects
  FYRoM / Bulgaria, Romania / Hungary, Georgia /
  Turkey

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Key features of HV lines projects

• Comparatively large size projects (i.e. Euro 50
  million plus)
• Hardly subject to possible adjustment in their
  scope and size (e.g. unlike distribution)
• Regulated assets, mostly in public hands, with
  limited room for private financing (e.g.
  ownership issues in addition to IRR below private
  sector expectations).

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Additional features of regional projects

• Though not technically challenging, interfaces
  and coordination require particular attention
• Agreements among parties (national Transco) rely
  more on common intention, and goodwill than legal
  enforceable clauses
• Make private involvement even more complicated if
  not impossible.

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Key challenges HV lines projects

• Regulation mismatch between loan repayment and
  depreciation or Asset Base
• Financing revenues stream not easily sizeable
  and accessible (e.g. long term securitisation of
  income would even contradict principle of free
  and transparent access to the line)
• Difficulties to quantify in financial terms some
  of the key benefits e.g. security of supply and
  quality of supply

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Key opportunities HV lines projects

• Very attractive to IFIs as commercial or
  Sovereign loan, with recourse to credit worthy
  Transco
• Tariff methodology usually mitigates major
  financial risk, low construction risk, lower
  environmental health safety risks
• Number of economic benefits e.g. trading,
  optimisation of capacities valued by multilateral
  institutions

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Black Sea Transmission Project
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Black Sea Transmission Project

• Client Georgian State Electrosystem
• Co-financiers KfW, EIB, EBRD, EC, GoG
• Project costs Euro 300 million
• Completion date 2012