July 13 (SeeNews) - ProCredit Bank Kosovo aims to expand the share of green loans in its portfolio to 18% this year and further on to 20% next year and 25% in 2025, despite gaps in the renewable energy regulatory framework and the specifics of the local energy market, management board member Visar Pacarada told SeeNews in a recent interview.
In 2022, ProCredit Kosovo recorded an 11% increase of green loans in the total loan portfolio, slightly below expectations, Pacarada said.
Green lending, however, is stalled by the country's reluctance to move away from coal. Kosovo has the third largest lignite reserves in Europe and the fifth largest in the world. Cheap electricity prices from coal-fuelled plants coupled with the global energy crisis stifled government incentive to move towards renewable energy swiftly, Pacarada explained. Nonetheless, Kosovo's government last year approved an energy strategy aiming for a 35% share of renewable energy consumption in the total mix and the installation of 1,300 MW of renewable energy capacity by 2031.
Against this backdrop, interest on the part of international investors in green projects in the country is great and Kosovo has enormous potential for investments in renewable energy Pacarada said.
Since 2019, ProCredit Bank Kosovo has been financing renewable energy projects, predominantly self-consumption and rooftop installations with a total capacity of 20 MW.
Last week, the parent company, ProCredit Holding, and ProCredit Bank Kosovo commissioned a 3 MW photovoltaic (PV) park in Lipjan, a town near the capital Pristina, the first of its kind to be owned by a bank in Kosovo. ProCredit Holdings and ProCredit Kosovo invested nearly 2.5 million euro in the project.
“We decided to go ahead with the project despite a long payback period of 12-15 years, as the impact which we can have with this [project] is far greater than the payback period. We want businesses to take ProCredit Bank as a reference,” Pacarada commented.
He added that the bank wanted to get a first-hand experience in renewable energy projects so as to be able to provide relevant advice to investors seeking financing for such projects.
The idea for the project was born four years ago but its implementation took longer than expected due to regulatory challenges in the licensing and permitting phases, he explained, adding that the adoption of renewable energy legislation is still pending.
Additionally, the introduction of energy performance certificates – a document providing specifications about the energy efficiency of a building - would also give a further boost to green lending for private households, Pacarada added.