EBRD to provide loan for construction of solar power plant in Neftchala

The European Bank for Reconstruction and Development (EBRD) will provide a long-term loan of up to 80 million dollars for the design, construction, and operation of the 315 MW Banka Solar solar photovoltaic plant in Neftchala district in the east of Azerbaijan, Azernews reports.

According to the bank, the total cost of the project is 280 million dollars and its implementation will be supported by several other international financial institutions. The approval of the loan by the EBRD Board of Directors is expected on October 22.

The project will be implemented by Abu Dhabi Future Energy Company, a subsidiary of Masdar (UAE).

The project will add 315 MW of solar power to Azerbaijan's energy system, which will replace natural gas-fired power plants and help the country meet its renewable energy goals under the Paris Agreement. The project is expected to reduce annual CO2 emissions by 314,000 tons, contribute to Azerbaijan's transition to a low-carbon economy and reduce dependence on heat generation.

The project is in line with the EBRD's Green Economy Transition Strategy (GET) as it will contribute to electricity generation using solar energy, an important step in advancing the country's green agenda.

The project area partially overlaps with a Key Biodiversity Area (KBA) for waterfowl. Preliminary studies have identified the presence of bird-priority biodiversity sites, but the Environmental and Social Impact Assessment (ESIA) and Critical Habitat Assessment (CHA) have shown that the solar plant will not adversely affect these sites and no net loss of biodiversity is expected.

The 80-kilometer 330 kV power line that will connect the station with the Navahi substation passes near the Shirvan National Park and an important ornithological area located near the migration corridor. The Azerbaijani government, which is responsible for building the line, will have to comply with the World Bank's Environmental and Social Standards, including a possible adjustment of the route to avoid impacts on sensitive areas and minimize risks to birds.

The project covers three areas with a total area of ??973 hectares belonging to Yenikand, Banke municipalities and Neftchala Executive Authority. These lands will be given to the Ministry of Energy for research. The site is a flat semi-desert area with a 3.5-kilometer asphalt road and parallel 6 kV and 35 kV power lines. Part of the site was previously used by a shepherd and his two workers for cattle grazing, but the lease was terminated in 2023 and an alternative site was provided. The land is currently unused and there are no seasonal land users. The site also contains the abandoned ruins of Soviet military facilities that, according to local authorities, are worthless and will be dismantled.

Consultations have shown that the road through the field is an important route for Azerbaijan's fisheries, and any restriction or damage could significantly disrupt its operations. To avoid these risks, a Traffic and Traffic Management Plan will be prepared, the use of the bridge in Banka village will be avoided as much as possible and the road through the site will be kept open for fishing. Construction works will be organized in a way that will not interfere with their activities.

If fencing becomes necessary, an alternative route will be offered. It is also planned to move the 6 kV line with minimal disruptions to the work of the fishery.

"Rerouting the power line will prevent physical displacement and minimize disruption to normal lifestyles, while a World Bank-compliant plan will be developed to minimize remaining risks. Also, within the framework of the EBRD's request, a Livelihood Recovery Plan is being prepared to support the people affected by the project," the EBRD said.