The European Investment Bank (EIB) is lending €105 million to Lithuanian utility Ignitis Group to expand a key pumped storage hydroelectric power plant. The project involves installing a fifth pump-turbine unit at the Kruonis Pumped Storage Hydroelectric Power Plant, or Kruonis PSHP, making it one of the largest energy-storage facilities in Europe.
The expansion supports Lithuania''s goal of meeting 100% of electricity demand from renewable-energy sources by 2030. The steep growth of intermittent renewable-energy sources, mainly wind and photovoltaic, requires a strong increase of flexibility in the grid, including storage capacity and frequency and voltage control, which can be provided by pumped storage hydropower plants.
"We are delighted to sign the agreement with the EIB, which opens the door to new opportunities by expanding Kruonis PSHP infrastructure and implementing sustainable-energy solutions for the future, said Ignitis Group Chief Financial Officer Jonas Rimavičius. "The necessary investments will also increase electricity production and facilitate the development of green generation."
With the installation of the fifth unit (110 megawatts), the capacity of Kruonis PSHP will increase to 1,010 MW. The unit is due to be completed by the end of 2026.
The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. It finances sound investments that contribute to EU policy objectives. EIB projects bolster competitiveness, drive innovation, promote sustainable development, enhance social and territorial cohesion, and support a just and swift transition to climate neutrality.
The EIB Group, which also includes the European Investment Fund (EIF), signed a total of €88 billion in new financing for over 900 projects in 2023. These commitments are expected to mobilise around €320 billion in investment, supporting 400 000 companies and 5.4 million jobs.
All projects financed by the EIB Group are in line with the Paris Agreement. The EIB Group does not fund investments in fossil fuels. It is on track to deliver on its commitment to support €1 trillion in climate and environmental sustainability investment in the decade to 2030 as pledged in its Climate Bank Roadmap. Over half of the EIB Group''s annual financing supports projects that directly contribute to climate change mitigation and adaptation, and to a healthier environment.
Around half of EIB financing within the European Union goes to cohesion regions, where per capita income is lower. This underscores the Bank''s commitment to fostering inclusive growth and the convergence of living standards.
The EIB Group has announced a significant investment of €654 million in financing for projects in Lithuania in 2023. This represents a substantial increase from 2022, and EIB Group financing in the country over the past five years now totals almost €2.4 billion.
In order to enable the rapidly growing electricity production using renewable energy sources, it is necessary to efficiently utilise flexible large-capacity electricity storage facilities, such as Kruonis PSHP, which is operated by Ignitis Gamyba. This unique facility in the Baltic states today has the capacity to continuously supply electricity to the entire Lithuania for 12 hours at 900 MW. Kruonis PSHP also provides frequency restoration reserve services and voltage control services unrelated to frequency control and balancing, balancing the difference between electricity generation and consumption in the country. Kruonis PSHP also provides essential services for preventing and eliminating emergencies in the energy system.
The project concerns the extension of Kruonis pumped storage hydropower (PSH) plant in Lithuania by installing an additional pump-turbine unit in the existing powerhouse.
The European Investment Bank (EIB) and Naturgy have agreed a €1 bn loan to support investments in new solar energy and onshore wind power stations, as well as to modernise and convert existing sites into hybrid facilities in Spain. A €400 million initial tranche of the total agreement was signed in Madrid. The loan will also be used, to a lesser extent, for investments in batteries for renewable energy storage.
The European Investment Bank (EIB) has signed a €25 million financing contract with the University of Latvia to finance the third phase of the university''s campus development programme in Riga. This project aims to bring together most of the University''s activities on a single campus and provide advanced facilities for students and researchers.
The European Investment Bank (EIB) has granted Nortegas Group a framework financing of up to €80 million to enable group subsidiary Nortegas Renovables to finance the construction of biomethane plants in Spain and launch a digital operations centre.
The project concerns the extension of Kruonis pumped hydro storage power plant by installing an additional pump-turbine unit in the existing powerhouse.
The development of hydropower pumped storage hydropower supports national and European targets related to renewable energy production and thus contributes to climate change and security of energy supply objectives of the EU. The project is therefore eligible under Article 309 (c) common interest in energy (renewable energy) and also contributes to the environmental protection (tackling climate change). Additionally, it is also in line with the EIB''s priority objectives for energy sector lending in the EU related to renewable energy sources and climate action.
Investment in the project will finance the deployment of additional pumped storage capacity in Lithuania, supporting the country's goal of meeting 100% of electricity demand from renewable energy sources (RES) by 2030. The steep increase in intermittent RES, mainly wind energy and photovoltaic (PV), requires a strong increase of flexibility in the grid, including storage capacity and frequency and voltage control, which can be provided by pumped storage hydropower plants.
Storage technologies act as enabling infrastructure in the energy transition and contribute towards increasing security of fuel supply by reducing dependency on energy imports and ensuring price stability. Security of supply can be considered as a public good, which is not always effectively reflected in market prices.
The financing of this project is in line with the Bank's energy lending policy by supporting the energy transformation as enabling infrastructure (networks, storage) for the integration of renewable energy sources. Thereby also transversal objectives on Climate Action (mitigation) are met by the project.
By enabling the increased deployment of intermittent RES the project also addresses negative climate and environmental externalities, a market failure, through the reduction of carbon and air pollution, compared to generation and provision of grid system services based on fossil fuels.
In terms of project results, the projects are expected to have a positive economic return, considering the economic value of the electricity generated. Therefore, the project is expected to generate a broader positive social benefit by generating clean and renewable power at a cost (LCOE) reasonably below the cost alternatives in Lithuania.
The project is supported by adequate governance and capabilities of the promoter.
The long tenor of the EIB loan is in line with the economic life of the underlying assets. The funding of similar maturities is not available on the Lithuanian market. Customised terms such as flexible drawdown are of value to the Promoter because of the multiannual Project's implementation period. Moreover, the EIB involvement should have a crowding-in effect.
The projects may include components that fall under Annex II of the Environmental Impact Assessment (EIA) Directive (2011/92/EU) as amended by Directive 2014/52/EU, thus requiring a review by the competent authorities at the planning/consent stage with due regard to the necessity for environmental and biodiversity impact and appropriate assessments. Lithuania''s Environmental Protection Agency (the Competent Authority) approved the project on 2.6.2022 with the comment that no Environmental Impact Assessment is required.The project is expected to contribute to climate action and environmental sustainability (CA&ES) objectives.
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