EAC to buy 113.5 MW from Cyprus private wind farms

www.financialmirror.com
October 12, 2009

Cyprus has moved closer to reaching the European Union's renewable energy target by 2020, with the birth of the first wind park on the island, as the state-owned Electricity Authority of Cyprus has pledged to buy 113.5 MWs of energy from two new operators - Orites windfarm in Paphos and Ketonis windfarm in Larnaca. With the EAC's installed capacity presently at 1170MW, the two wind farms will supply the public utility with the equivalent of 10% of its current generation needs, until three further projects add some 840 MW more to its electricity network.

The first wind park in Orites near Paphos, expected to be operational by next summer, was inaugurated last week with the EUR 200 mln 82 MW project billed the largest of its kind in the Mediterranean region. "It is a very big project. Normally in Europe - especially in Greece and Spain - they consider 20 to 30 MW a huge project, so 82 MW is a massive project. It is the biggest in the region," Akis Ellinas, chairman of the windfarm D.K. Wind Supply Ltd., told Reuters. Financing for the project was secured by British company Platina Partners, with the European Investment Bank providing 50% of the loan under a conventional project finance structure.

Once operational, the site - - which is the first to benefit from the new 20-year fixed rate tariff recently approved by the Cyprus government and the EU Commission - - will be home to 41 turbines. Split into two phases encompassing 140 MW in total, the 16 square km windfarm is the first private sector power project on the island. "It was very difficult because we faced governmental people who had no idea what energy or wind farms meant. Some people thought it was a monster, others, something from space," said Ellinas.

According to estimates, Cyprus has enough wind capacity to keep the towering white windmills turning to power 50,000 households, save 100,000 tons of carbon emissions and produce 120,000 Kilowatt hours of energy annually. "Cyprus is not among the windiest areas in the world. I'd say we have something in the region of 6 meters per second and around 1,600 hours annually. But with new technology, like the Vestas 2MW V90 turbines which we are installing at the moment, it helps," said Ellinas. "That represents almost 3% of Cyprus's requirements toward EU regulations and targets," Ellinas said.

EIB paves the way
The EIB is providing EUR 65 million for the Orites windfarm in the first substantial renewable energy project in Cyprus. The project concerns the design, construction and operation of an 82 MW windfarm of 41 turbines, promoted by the European Renewable Energy Fund I. The public ground breaking ceremony was done by Interior Minister Neoklis Sylikiotis in the presence of House President Marios Garoyian, EIB Vice-President Plutarchos Sakellaris, diplomats and business associates.

Sakellaris, whose responsibilities include the EIB's lending activities in Cyprus as well as energy issues, said that this project "paves the way for further developments in the sector, and brings the Cypriot government closer to its target and the EU's objective for renewable energy production. This is of particular importance for Cyprus, whose electricity network is not interconnected and has no other indigenous energy resources. We were ready to participate in a finance structure taking direct project risk.

"The EU objective for renewable energy will be a major challenge, as the required investment could be in the order of EUR 600-700 bln up to 2020. We are ready to play a strong and active role in supporting the member states' efforts with adequate funding and tailored finance products," added Sakellaris. This project contributes significantly to the government's target of producing 13% of its electricity from renewable sources by 2020. It also represents 27% of the required installed wind energy capacity of 300MW by 2020. The implementation of the project was mindful of environmental aspects and is based on a multi-contract approach, bringing together know-how from leading EU companies including Vestas and Siemens.

Larnaca wind farm to add 31.5 MW
The EAC has signed a purchase agreement with Ketonis Developments Ltd., to buy a further 31.5 MW from a windfarm underway near the Larnaca villages of Alethriko and Tersefanou. The contract was signed last week by Charilaos Hadjigerou on behalf of the EAC and Makis Ketonis on behalf of the operator. The new venture includes renewable energy consultants Wincono Cyprus, whose Managing Director Sylvia Tribert was present at the contract signing. Following a similar agreement signed with the Orites windfarm in July, the EAC will be buying a total of 113.5 MW from the two new operators, with an additional 58 MW expected to come on stream from the second phase of the Orites venture.

EIB energy funding in Cyprus The EIB has supported a number of energy projects in Cyprus as it has been involved in the part-financing of most of the EAC's electricity generation and network development investments. This includes loans totalling EUR 200 million for the Vassilikos electricity power plant and the bank's support for the upgrading of the electricity transmission and distribution network, for a total of EUR 130 million.

A further EUR 30 mln has gone to a new internal combustion engine power plant at the Dhekelia power station. Initially powered with heavy fuel oil, the plant can be retrofitted to natural gas, once this becomes available on Cyprus. The EIB financing of the Orites project was one of the elements that led Euromoney to award the "Lender of the Year" title to the EIB. The bank is seen as a front-runner and a leader in promoting investments across the renewable energy sector. It is also serving as an important example of project lending in a difficult financial climate.