The European Bank for Reconstruction and Development will lend 43 million euros ($43.6 million) for the construction of two wind farms in Croatia to boost electricity generation from renewables by more than 10%, the EBRD said on Tuesday.

The wind farms, due to be built in the southwestern Zadar region, will have a total grid capacity of 111 megawatts (MW), enough to power 85,000 households and help avoid more than 78,000 tonnes of CO2 emissions annually, the bank said.

The lender extended loan to Kunovac, a limited liability company jointly owned by Taaleri Energia's SolarWind II Funds and ENCRO Kunovac, for the first utility-scale renewable project in Croatia developed outside of a renewables subsidy scheme.

Taaleri Energia is part of the Finish investment company Taaleri Group.

The EBRD financing will be complemented by parallel loans from Zagrebacka Banka and the Croatian Bank for Reconstruction and Development for a total debt financing package of 126 million euros.

The EBRD said its first wind-farm investment in Croatia showcases a novel financing structure in the country, combining a corporate power purchase agreement and merchant-based financing structure.

It will help Croatia to make progress towards its 2030 environmental targets and COP26 commitments, which envisage an increase in the share of electricity generation from wind and solar from 14% in 2020 to 27%, it said.