ELECTRICAL GRIDS
AND STORAGE CRITERIA+ –Climate Bonds Standard
Why have Grids andStorage Criteria?
Enablers todecarbonisation
Expanding and upgrading electricity grid andstorage infrastructure is crucial to meeting thesteep decarbonisation goals for energy systems.
More flexible and distributed systems are needed
to bring about clean electricity. It is crucial toensure this infrastructure is not supporting
continued fossil fuel electricity generation.
At the same time, this infrastructure is vital for thedecarbonisation of other sectors. For industrial
sectors or buildings, electrification is a key means
to achieving decarbonisation.
This is all while ensuring this infrastructure isadapted to changes in climate. The dependence ofso many sectors and societies on stable electricity
provision makes grid resilience essential.

+ –Investment need

6. Electricity storage facilities, and:Annual spending of USD 820 billion on electricalgrids will be needed by 2030 to reach net zeroby 2050.

7. Dedicated supporting infrastructure to
all the above.

However, global investment has been falling forthe past several years, down from USD 306 billionin 2016 to USD 248 billion in 2020.

For grid infrastructure, this means any assets andactivities are potentially eligible use-of-proceeds,
if they meet the necessary requirements.

A dynamic approach to criteria development

Eligible Use of Proceeds

This is the first version of the Grids and Storage
Criteria. However, all Climate Bonds criteria aim
to improve in line with industry best practiceand evolving scientific understanding. They willthus be reviewed after 3 years. These Criteria may
be subject to change sooner if future industry
standards are underpinned by differing criteria.
This will depend on the Technical Working Groupdeciding that such criteria are robust and workableenough to be adopted. Examples might look
like the tightening of thresholds, or new ways ofdetermining what an eligible grid system looks like.

Eligible use-of-proceeds relating to grid andstorage infrastructure can include capital andoperating expenditure relating to:

1. Transmission and distribution lines
2. Interconnectors
3. Transformers
4. Advanced metering infrastructure
5. Grid flexibility measures

Will your project meet the Grids and Storage Criteria? It’s as easy as 1
STEP1

Comply with Overarching ClimateBonds Standard (V3)

Any bond issuance seeking Climate Bonds Certification must meetthe requirements of the Climate Bonds Standard. This underlines all
Climate Bonds Sector Criteria, including the Grids and Storage Criteria.
The Climate Bonds Standard contains disclosure, management andreporting requirements.

STEP

2

Comply with mitigation
component

The mitigation component applies to all grid and storage assets andactivities. However, the requirements differ depending on the asset
or activity being practiced. This is explained in the diagram overleaf.
Certain assets and activities are automatically eligible in any system.
The rest are eligible if the system in which they’re located is on apathway to decarbonisation.

Electrical Grids and Storage Criteria Climate Bonds Standard 2021

STEP

32 3

Comply with Adaptation &Resilience Component

Complete checklist to:
1. Identify clear boundaries and critical interdependencies between
the infrastructure and the system it operates within
2. Undertake a risk assessment to identify the key physical climate
hazards to which the infrastructure will be exposed and vulnerable toover its operating life
3. Sufficiently mitigate risks identified that the infrastructure is resilient
to climate change conditions over its operational life
4. Assess the resilience benefits of the infrastructure and ensure it
does no harm to the resilience of the defined system it operates within
5. Ongoing monitoring and evaluation
TWG Organisations• Element Energy• EIB• EBRD• University College London• Rochester Institute of Technology• Globalfields• European Commission• Inter-american Development BankPAGE 1Assets and activities which
automatically meet the mitigation
component

Summary of the criteria
1. Do the proceeds relate to infrastructure dedicated to creating adirect connection, or expanding an existing direct connection betweena power production plant that meets the requirements of the relevant
Climate Bonds Standard Sector Criteria, and a substation, network or
storage facility?

Yes

No
2. Do the proceeds relate to infrastructure dedicated to creating a directconnection, or expanding an existing direct connection between apower production plant that is less CO2 intensive than 100 gCO2e/kWh,measured on a LCE basis, and a substation, network or storage facility?

Yes

Yes

NoNo

4. Is the system on a sufficient pathway to decarbonisation?
This means either:
The average System grid emissions factor in which the infrastructure islocated below the threshold value of 100 gCO2e/kWh measured on a PCF
basis, over a rolling five-year average period?
Or:
More than 67% of newly connected generation capacity in the System inwhich the infrastructure is located is below the generation threshold valueof 100 gCO2e/kWh measured on a PCF basis, over a rolling five-year period?

5. Has the issuer fulfilled the requirements as part of theAdaptation & Resilience Checklist? This includes:• Equipment and infrastructure where
the main objective is an increase of thegeneration or use of renewable electricity
generation• Equipment to increase the controllability
and observability of the electricity
system and enable the development andintegration of renewable energy sources.
This includes:

No
3. Are the Use of Proceeds being used to finance any of the automaticallyeligible assets and activities listed in section 3.2 on page 13?

• Installation of T&D transformers that
correspond to or comply with the Tier 2(2021) EU Regulation requirements ontransformer eco-design.

Yes• Sensors and measurement tools(including meteorological sensors forforecasting renewable production)• Communication and control (including
advanced software and control rooms,
automation of substations or feeders,and voltage control capabilities toadapt to more decentralised renewableinfeed)• Equipment to carry information to users
for remotely acting on consumption• Interconnectors between transmission
systems are eligible, provided that
one of the systems on a sufficient
decarbonisation trajectory• Equipment to allow for exchange of
renewable electricity between users• Identifying clear boundaries and critical interdependencies between theinfrastructure and the system it operates within• Undertaking a risk assessment to identify the key physical climate hazards
to which the infrastructure will be exposed and vulnerable to over its
operating life
• Risks identified are sufficiently mitigated that the infrastructure is resilient
to climate change conditions over its operational life
• The resilience benefits of the infrastructure are assessed and do no harmto the resilience of the defined system they operate within• Ongoing monitoring and evaluation

See Appendix 1 for the full Adaptation & Resilience Checklist
NoYes
Not Certifiable

Certifiable

Further information sources
Want to Certify, or just know more? Take alook at these documents:
1. Grids and Storage Criteria Document:
Summary of the Criteria for issuers andverifiers
2. Grids and Storage Criteria Background
Document: Technical Background andsummary of Criteria development process
3. Climate Bonds Standard V3.0: CBI’s
Certification process, Pre- and Postissuance requirements and a suite of sector
eligibility and guidance documents

For more information:Go to www.climatebonds.net
Email chris.moore@climatebonds.net

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation orinvestment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites. The Climate Bonds
Initiative is not endorsing, recommending or advising on the merits or otherwise of any investment or investment product and no information within this communication should be taken as such, nor should any information inthis communication be relied upon in making any investment decision. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation
makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.
© Climate Bonds Initiative 2021

Electrical Grids and Storage Criteria Climate Bonds Standard 2021

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