Akfen Renewable Energy signed Turkey’s first ‘green project finance’ agreement with four local and two international banks.
Akfen Renewable Energy will install four wind power plants, with 242 MW installed capacity under the project agreement. The total investment cost of the project is 350 million USD, whereas the plants will be located in Çanakkale and Denizli provinces of Turkey. Garanti BBVA is the ‘facility agent’ and ‘green loan coordinator’ while İşbank is the ‘security agent’ in the financing package. EBRD allocated the commercial loan of ~50 million USD and KfW IPEX Bank has mobilized ~210 million USD covered facility to the ‘green project finance’ agreement which is guaranteed by four Turkish commercial banks, Garanti BBVA Bank, IsBank, Vakıfbank and Yapı Kredi.
The structure of the ‘green project finance’ loan, which includes internationally recognized standards, is developed according to the project-specific updated methodology. The sustainability performance of Akfen Renewable Energy will be scored by an international sustainability rating agency throughout the loan term, and the loan pricing will change according to the annual score of the company. If Akfen Renewable Energy shows a better sustainability performance in environmental, social and governance areas, the loan pricing will be lower.
Following the developments in the last few years on a variety of green finance tools such as green & social bond issuances, green mortgages and a sustainability linked equity fund, the first green loan structure was implemented in 2018. The structure, where borrowers are incentivized to enhance their sustainability performance throughout the loan term, is recently attracting considerable amount of interest in the world, and the demand is expected to rise in Turkey. Akfen’s green loan is Turkey’s first ‘green project finance’ loan after the first green corporate loan agreement signed in Q1 of 2018.