GGF’s Kostadinov: Green investment is nearing inflection point in many countries

The Balkans require a critical mass of renewable energy development to fully benefit from the promise of green job growth and the accompanying buildup of skills and knowledge, the Fund Director for the Green for Growth Fund (GGF) Borislav Kostadinov said at Belgrade Energy Forum. In his view, green investment is near an inflection point in many countries overall, for markets and the private sector to take up the challenge of delivering climate action.

Renewable energy has quickly become an almost conventional area of investment, but it’s only the beginning of the real journey from the initial acceptance and the flagship projects so far, the Fund Director for the Green for Growth Fund (GGF) Borislav Kostadinov said. In his keynote speech at Belgrade Energy Forum – BEF 2024, he pointed to the goal of true mainstreaming so that such facilities are woven into the fabric of regional energy systems, and fossil fuels turn into a distant memory.

Green investment is nearing an inflection point in many countries, Kostadinov pointed out. Past the juncture, markets and the private sector can and will take up the challenge of delivering climate action, but their inflection points need to be carefully understood and nurtured, he explained.

“Now is the time to look critically at the market environments we are building, and to look for inspiration in neighbors close and far. If we set the enabling conditions in the right way today, then most of the battle is won in delivering a viable future,” the head of GGF added.

Building critical mass for green investment in Balkans

As for the Balkans, Kostadinov highlighted the need to build a critical mass of renewable energy development in the region to fully benefit from the promise of green job growth and the accompanying buildup of skills and knowledge.

GGF is a green investment fund supported by the European Union and Germany’s Federal Ministry for Economic Cooperation and Development. Advised by impact asset manager Finance in Motion, it has been active in the region for 15 years, supporting climate action.

GGF is nearing EUR 2 billion in green finance provided

There are almost 40,000 beneficiaries in the Balkans of EUR 544 million in GGF’s financing, Kostadinov revealed. The fund’s green investment projects range from large-scale wind parks to energy efficiency in companies and industry to insulating households.

GGF started in the Balkans. It has since grown to 19 markets in the broader European neighborhood and will near EUR 2 billion in total green finance provided by the end of this year, Kostadinov added.

Diversify legal framework for financing opportunities

“Despite progress in recent years, there is a need to make up lost time. There is arguably three decades of significant underinvestment in renewable energy and ongoing per capita rates of renewable energy deployment that lag behind the EU. My main message today is that we don’t have the luxury of time nor of tackling the problem with only some of the tools available to us. What I mean by that is that we need to create investment environments across the region that allow different structures and scale of renewable energy projects to flourish in parallel,” he stated.

A diverse approach can help to mitigate risks and maximize opportunities

Each type of project and structure has its own advantages and challenges, and a diverse approach can help to mitigate risks and maximize opportunities, Kostadinov underscored. He referred to the example of the Blue 1 solar power project in Albania, for which Finance in Motion won the Market Pioneer Award Europe from IJGlobal.

It is the first utility-scale solar power project in the Balkans to be materialized without government subsidies, he noted and went further to call it “a world-leading infrastructure deal.”

Blue 1 doesn’t have a long-term power purchase agreement nor an awarded auction price. “There is no blue-chip corporate buyer. Instead the innovative structure is built as a bridge-to-PPA, designed to allow the project to absorb a variable income stream while providing a motivation for signing individual power purchase agreements. This ventures into new territory for lenders, but territory that we feel is vital if we want to grow the renewables sector in the region in line with ambition,” Kostadinov said.

Additionally, the Bogoslovec wind farm is the fund’s first equity investment in renewable energy infrastructure. The facility in North Macedonia is scheduled to be inaugurated in a few weeks.