Financing and Final investment decision
Funding may come from public or private investors. Several organisms provide grants, such as the European Investment Bank or the Western Balkan Investment Framework. Projects who are granted PCI status are eligible to receive funding from the Connecting Europe Facility, an EU fund worth € 30 billion supporting energy, transport, and digital infrastructure.
In 2019, a total of € 556 million in CEF grants was allocated to 8 PCI projects, including 6 in the electricity sector, of which 3 transmission projects and 3 storage projects.
Financing the proposed amount of infrastructure investments in the coming decades represents a challenge, considering both the size of the investment needed and its pace. The total CAPEX of TYNDP 2020 projects (transmission and storage) represents 153 billion euro, and the timing to deliver those new investments is challenging as projects due to commission until 2030 represent already 123 billion euro.
Two stories on financing: The Black Sea Corridor and the interconnection Albania – North Macedonia
The Black Sea Corridor project, recognised as Project of Common Interest in the 4th PCI list, aims at allowing the transfer of generation from Western coast of the Black Sea towards consumption and storage centers located in Central Europe and South-Eastern Europe. It consists in a new 400 kV double circuit overhead line Cernavodă-Stâlpu with in/out connection of one circuit in substation Gura Ialomiţei, one new 400 kV circuit OHL Smardan-Gutinas, the upgrade of the substation Stâlpu to 400/110 kV in Romania and a new 400 kV OHL Dobrudja-Burgas in Bulgaria.
In 2018 the project received a favorable opinion for grant funding through the financial instrument Connecting Europe Facility (CEF). According to this EU financial support mechanism, the amount of financial assistance from the EU can be of maximum 50 % of the eligible costs of the works. The PCI label and the grant obtained from the CEF positively impressed the public authorities, which eased the granting of the building permits.
The commissioning date for project 400 kV double circuit OHL Cernavodă-Stâlpu with in/out connection of one circuit in substation Gura Ialomiţei is expected to be in 2023 and in 2025 for the new 400 kV double circuit (one circuit wired) between existing substation Smârdan and Gutinaş.
This connection line between Albania and North Macedonia was launched as part of Corridor 8 which is an integral part of a much larger and important project aiming at the exploitation of energetic resources from the Caspian region and Central Asia. Financing of the project’s feasibility study and environmental impact assessment (803.000 €) and project design and tender documentation (2.0750.000 €) were covered by two grants of the Western Balkans Investment Framework (WBIF).
Thanks to good cost-benefit analysis results in every TYNDP from 2010 to 2018, the project was recognised as a project of regional significance and received the status of Project of Energy Community Interest (PECI) in October 2016. Consequently, the project received a befitted loan agreement and significant amount of investment grant. The Macedonian part of the project is estimated at 43.5 M€, and the Albanian part is estimated at 70 M€. In December 2015, North Macedonia signed a financial agreement with the EBRD for a loan of 37 M€. Albania signed a financial agreement with KfW in November 2016 for a loan of 50 M€. In 2016 both countries received an investment grant: North Macedonia 12 M€ and Albania 13.72 M€. The interconnection is currently in construction phase and the project is expected to be commissioned by 2022.