Serbia, interview: The construction of wind farms will enhance the energy position of Serbia, Mark Krendal from Continental Wind Partners

7. April 2014. / News Serbia Energy

It’s good to see the efforts that all countries of the Balkans are united into a single electricity market. Since it is always easier to attract investors to a larger market rather than several smaller national. This means that the Balkan states should continue cooperation in order to attract investors to the region primarily, because such an approach will bring benefits for everyone. I was very happy because I’ve noticed that representatives of the Government have a good will to share the examples of good practice. In this context I will mention FYROM, which has adopted an electronic system for issuing building permits.

I believe that establishing such a system would be beneficial in other countries as well to speed up procedures for issuing construction permits, making ​​the process more transparent. It is well known that the speed of issuing construction permits is one of the key indicators of a favorable business environment – says for “Danas” Mr. Mark Crandall, the President of the U.S. company Continental Wind Partners, one of the participants in the “Investment Forum for the Western Balkans”, held in London.

How would you assess the position of foreign investors and do you think that Serbia is a good place to invest in?

I am convinced that Serbia is a good place to invest in according to the indicator which is the fact that my company Continental Wind Partners has invested about seven million euros in the development of wind farm Cibuk 1 in the municipality of Kovin; the total planned investment in the project is about 280 million euros. We have numerous projects in Serbia, not only in the field of wind energy, but also in other segments of the renewable energy sources. Our intentions are serious as it is shown by the fact that we have moved our European headquarter from London to Belgrade. We manage now from Serbia all business activities that we are doing in Europe. This country, indeed, has an excellent potential and I’m sure that it can be utilized in the full range of three to five years. The prerequisite for this is that the Serbian Government and investors work together on improving the business environment.

Are you satisfied with the conditions for investment in renewable energy, especially when it comes to building of wind farms?

– Frankly speaking, everything was progressing very slowly in recent years, but I have to  acknowledge success of the Ministry of Energy in managing and running the issues as well for speeding them up . Incentive tariffs for wind are satisfactory and the Ministry of Energy has found a good balance between the needs of investors and what Serbia can offer. The openness of the Ministry for direct negotiations with international financial institutions such as EBRD, IFC and OPIC is crucial. It is, actually, the only way to complete the legislative framework and make possible the construction of major projects. It should be mentioned that the Serbia is quite affected by the fact that there were long delays in recent years and because of that Serbia is at the worst position in Europe regarding the legal framework for major projects in the field of renewable energy.  In the meantime, the international financial institutions, which should credit the construction of these projects, they want to use experiences from other countries in Serbia. Therefore, currently the Ministry is in the most demanding negotiations about the Contract about the purchase of electricity (PPA), which have seen so far. I am sure, however, that a compromise will be found, bearing in mind the all the advantages of a large construction project, such as building of a wind farm, brings to a country, especially to its construction industry.

Which benefits will Serbia get of construction of wind farms and other projects in the field of renewable energy and are you satisfied with the existing legal framework by which is regulated this area?

– The construction of wind farms will greatly strengthen the Serbian energy sector, contributing to the overall energy security and significantly reducing the need to import electricity. In economic terms, this means increasing of the volume of Greenfield investments, employment of thousands of people, job for local construction and transport companies and increasing of revenue in the budget. In political terms, it will bring Serbia closer to the EU contribute to the fulfillment of goals in the field use of renewable energy. The benefit of wind farms is reflected in the preservation of the environment. When it comes to the legal framework, there still are things to be done, but my impression is that everything is going in the right direction and I’m optimistic about it. We had a meeting in February with the Minister of Energy Mrs. Zorana Mihajlovic. The meeting was open and immediate, and that is what U.S. investors appreciate very much.

What is the scope of your company’s planned investments in wind farms?

– We came in Serbia  in 2009 having an idea to invest 450 million euros in the development of wind farms with total capacity of 300 megawatts. The first phase of that endeavor is the project Cibuk 1. The construction is ready to begin, and gradually we enter the second phase. Will the second phase be realized, it depends on setting up of limits for the production of energy from the wind which at this moment is a modest 500 megawatts. I do not hide that we wish to increase this limit, but that decision will be made according to the Ministry of Energy and Serbia’s progress in achieving the obligations and goals in the use of energy from renewable sources. Besides the wind, the CWP is interested in investing in other sources, and we hope to have some of those plans  presented to the public in the months ahead.

When mentioning the particular project Cibuk 1, how many people will employ the future wind farm, and when can we expect it to be built?

Cibuk 1 is the largest US- German investment in Serbia worth 280 million euros, of which about 55 million will go directly to Serbian construction companies. CWP and General Electric (GE), as suppliers of turbines, have completed the selection of contractors on international tender and have chosen the consortium PORR and ELNOS, which will build a wind farm with engaging of other Serbian companies as subcontractors. The project has all necessary permits, and the mandate letters are signed with the international financial institutions as well. The beginning of construction is planned for the end of this year, after being approved by bank loans, which depends only on the rounding of the legislative framework in this area. The last obstacles on the way of this capital project in 2014 are finalization of the Contract’s model for the purchase of electricity and the adoption of a new energy that should allow investors the right to obtain all permits for connecting the power transmission line on their own name and build the connection by themselves before handing over to EMS.

The Company’s identity card

The company Continental Wind Partners is working on development of renewable energy in Australia, Central and Eastern Europe. In Australia, more than 90 percent of electricity produces from fossil fuels; 75 percent of this electricity is wasting at coal TPPs so that Australia ranks among the countries with the highest CO2 emissions in the world. At the same time, the country is very rich in locations with favorable wind and it has a good legal framework, which makes it a superb location for the development of wind farms. Most of the power plants in Central and Eastern Europe were built before 1980 and they are rapidly aging. This company estimates that this region should based a process of energy production on the latest technologies. Otherwise, the development of all CWP projects is based on the latest models of turbines, international financing and designing of planned and technical documentation for obtaining permits according to the highest possible standards.

The benefits of the project Cibuk 1

Can you explicitly specify the positive effects that will have impact on the Serbian economy by realization of direct investment of CWP in the project Cibuk 1?

– Besides investments of 55 million euros in the construction sector of Serbia and employing about 400 people, the Cibuk 1 through taxes will increase the Serbian budget  of around five million euros. There are an additional 25 million euros, which will be the first ten years “collecting” of the income tax rate of 15 percent, and about 100 million euros by the end of the exploitation lifetime of the wind farm. In addition, two percent of the net profit will be deposited directly into the budget of municipality of Kovin, wich is in total of about seven million euros. The CWP will continue to carry out its activities in Europe from its headquarters in Serbia, as well as to employ citizens of Serbia, which  is more significant perhaps than the direct benefits.  Finally, this project will return to Serbia OPIC – Investment Bank of the United States Government, which will greatly facilitate the arrival of new U.S. investors.

Source; Serbia Energy

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