First wind farm in eastern Serbia secures financing

MK Group and the Slovenian investment fund Alfi Green Energy Fund are investing 155 million euros in the Krivaca wind farm. Construction of this joint venture project began at the end of last year; the wind farm is expected to be fully operational at the end of 2023. Erste Group, as the main creditor and agent, initiated and structured the transaction and invited other banks to join the lenders consortium in the financing of the renewable energy project.

Krivaca is the first wind farm to be built in Eastern Serbia, covering 56 km2 of the Municipality of Golubac. With a capacity of 105.6 MW and 22 wind turbines, it will be producing 310 GWh of green electricity annually. This is equivalent to supplying about 75,000 households and reducing carbon dioxide emissions by about 115,000 tons per year.

Mihailo Jankovic, CEO of MK Group, pointed out: "MK Group has been investing in renewable energy sources for years and our long-term strategy is further expansion in this area. We are working on the development of wind energy projects with a total capacity of over 320 MW, as well as solar energy with a capacity of 660 MW, which are investments worth close to one billion euros planned for the next five years, which we are realizing through joint ventures and solo investments."

"We are proud to be part of the green transition of the Adria region. As the largest investment fund for renewable energy sources in the region, Alfi Green Energy Fund has ambitious plans for the development and construction of new wind farms and solar power plants throughout Southeast Europe. This will contribute to decarbonization and greater security in the supply of green energy," said Suvad Bajric, Managing Director of ALFI Renewables.

"The financing of the Krivaca wind park marks a major milestone for Serbia's energy landscape and we are hopeful that more such landmark steps will follow to expand the role of renewable energy in Southeastern Europe. Realizing Krivaca was only possible due to the strong commitment of all involved parties, including the investors, banks, advisors, the power offtaker, the turbine supplier, and many others," commented Wolfgang Hargassner, Head of Corporate Finance of Erste Group, which as the main creditor and agent organized and structured the transaction.

The importance of this investment was recognized by the participation of four banking groups, which are financing the project: Erste Group Bank AG and Erste Bank a.d. Novi Sad, Raiffeisen Bank International AG and Raiffeisen bank a.d. Beograd, NLB d. d. and NLB Komercijalna banka a.d. Beograd, and OeEB - the Development Bank of Austria.

Krivaca project stands out through many "firsts"

The wind turbines to be installed in "Krivaca" will be supplied by the German Nordex Group, one of the world's largest manufacturers of wind turbines, whose first project in Serbia is this undertaking. This is also the first renewable energy project in the country including a commercial power purchase agreement (PPA), which was concluded with the Swiss renewables' producer and trader AXPO.

Domenico Franceschino, Head Origination West & East Europe of AXPO said on this occasion: "We are pleased to facilitate yet another landmark agreement which advances the energy transition and supports the fight against climate change. While this is the first renewable PPA in Serbia, we are seeing an increasing number of companies seeking to purchase long-term electricity from renewable energy sources as part of their sustainability strategies."

The Krivaca wind farm, implemented by MK Group and Alfi Green Energy Fund, is a project that provides strong support in achieving the goal of the Government of the Republic of Serbia to increase the share of energy from renewable sources to at least 40 percent by 2040, and at the same time, it is an important milestone in the regional transition to green energy.

While Krivaca is the first project of its kind in Serbia, Erste Group plans to support similar projects in the future, both in Serbia and in the region, as doing so helps to promote the region's energy transition and support the fight against climate change, and is thus also inline with the banking group's sustainability strategy.