EU and KfW Sign Agreement to Boost Renewable Energy in Western Balkans and Eastern Neighbourhood

The European Union (EU) and Kreditanstalt für Wiederaufbau (KfW) have taken a significant step towards fostering renewable energy in the Western Balkans and Eastern Neighbourhood regions. By signing a Guarantee Agreement, they have set the stage for financing new renewable energy capacities and enhancing energy networks. This collaboration is bolstered by the EU’s commitment to provide €260 million in guarantees for infrastructure projects through the European Fund for Sustainable Development Plus (EFSD+).

Empowering Energy Utilities

The EU’s guarantees will enable KfW to offer commercial loans to energy utilities within these regions, promoting substantial investments in renewable energy and network development. Additionally, an extra €13 million is allocated for technical assistance, aimed at improving market readiness and expediting the green transformation of the energy sector.

A Commitment to Green Transition

This initiative is a crucial part of the Green Deal’s implementation in these regions, aiming for a sustainable transformation and a just green transition. The combined efforts of the EU and KfW will facilitate a significant investment of up to €330 million, benefiting energy utilities and infrastructure.

Gert Jan Koopman, Director General at the European Commission’s Directorate General for Neighbourhood and Enlargement Negotiations, highlighted the importance of this agreement, stating, “Energy utilities in the Western Balkans and the Eastern Neighbourhood will now have access to an additional tool to accelerate the green transformation of their energy sector. This joint action of the EU and KfW contributes to achieving the objectives of the Economic and Investment Plans agreed with these regions. It contributes to decarbonising the economy, addresses pressing global challenges such as climate change, while boosting the competitiveness of a key economic sector.”

Christiane Laibach, Member of the Executive Board of KfW, echoed this sentiment, noting the milestone in their partnership with the EU. She emphasized that the EFSD+ guarantee mitigates default risks for KfW loans up to €260 million and is part of a broader investment program with a total guarantee volume of up to €1.1 billion.

Background on EFSD+

The EFSD+ was launched in June 2021 to support key investments in EU partner countries through grants and financial guarantees. It aims to mobilize additional financial resources for sustainable development from both public and private sectors. With a global guarantee capacity of €39.8 billion for 2021-2027, of which €22.5 billion is dedicated to the EU’s enlargement and neighbourhood regions, the EFSD+ plays a vital role in the green transition.

During the latest call for proposals, KfW’s investment program was selected to support the green transformation of energy sectors in the six Western Balkan beneficiaries and the Eastern Neighbourhood. These investments align with EU policy initiatives such as the Green Deal and Global Gateway, ensuring enhanced energy security and sustainable development in the regions. The program focuses on renewable energy, energy efficiency, and network improvements, supported by technical assistance to ensure institutional and structural advancements.

This collaborative effort marks a significant advancement towards a greener, more sustainable future for the Western Balkans and Eastern Neighbourhood, reflecting the EU’s and KfW’s shared commitment to addressing global challenges and fostering economic growth through sustainable practices.

Read the official communication by the Directorate-General for Neighbourhood and Enlargement Negotiations here.