EIB loans €206.9m to modernise the Polish distribution grid

The European Investment Bank (EIB) and Polish energy company ORLEN Group have signed a €206.9 million ($219. 5 million) loan agreement to bolster the country’s power grid and bring more renewables online.

The funds will be used to invest in strengthening and expanding the distribution grid of Energa, a DSO majority owned by ORLEN, in northern and central Poland.

The loan is the first under a total of €804.6 million ($853.4 million) in financing approved by the EIB to boost Energa’s network in the 2024-25 period.

The EIB funding will support Energa’s investment plan designed to improve security and efficiency of power supply. This entails adding new customers and increasing RES connection capacity by about 4.8GW, as well as modernising the distribution network, upgrading distribution assets, and investing in smart grid components, including smart metering.

Commenting in a release was EIB vice-president Teresa Czerwińska: “As the climate bank of the European Union, the EIB supports strategic investments in energy efficiency, renewable energy sources, as well as stability and security of supply. We expect this seventh EIB financing agreement with ORLEN to further these objectives.”

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Added Ireneusz Fąfara, president of the Management Board and CEO of ORLEN: “Achieving carbon neutrality requires not only a shift in generation sources but also significant improvements in operational efficiency.

“The rollout of distributed generation, demand-supply balancing, and energy storage represent crucial challenges for Poland’s economy. Effective energy management can provide a substantial competitive edge for both the Polish and broader European economies.

“Hence, large-scale investment programmes to upgrade our network are vital. The financing provided by the European Investment Bank will allow us to address these priorities while strengthening Poland’s energy security.

Under the agreement, EIB funds will be disbursed in tranches over a three-year period from the execution date, with repayments spread over a maximum of 15 years from the initial disbursement.

Said Magdalena Bartoś, vice president of the Management Board, Finance, of ORLEN: “Utilising a funding source dedicated to the energy transition will not only enable us to execute our planned investments but will also strengthen the Group’s financial security thanks to the long-term availability of these funds at a competitive cost.”

The agreement between the EIB and ORLEN Group was concluded under the EU programme REPowerEU, under which the EIB will provide €45 billion ($47.7 billion) in loans and equity financing by 2027.

The renewable energy capacity of Energa’s network currently amounts to around 9.2GW. This year, the company connected nearly 21,500 new renewable energy installations (including small prosumer installations) by the fourth quarter with total capacity of 801MW.