Luxembourg-based Securum Equity Partners said it planned to start building a 2 billion euro ($2.6 billion) solar park in Serbia, which could be Europe's largest when it opens.
The head of the company's Serbia unit, Ivan Matejak, said on Monday the project would include installation of photovoltaic units with a combined capacity of 1 gigawatt in an area of some 3,000 hectares (6,600 acres) in the south of the country.
The company expects to obtain all necessary permits by 2013, when it would start the project, and aim to connect it to the grid in 2015, Matejak told Reuters in a telephone interview.
"The park would be located in a geographical area that offers a conversion rate of solar radiation into electrical energy which is among the highest in Europe," he said.
"Furthermore, Serbia has an infrastructure for the transmission and distribution of electricity which is suitable for export and is already well connected to major electricity grids in the Western Balkans and Western Europe".
Matejak added the company had already signed a framework deal with Serbian authorities and would set up an open-end fund by the end of December to channel the investment.
"The investment plan proposes a minimum annual return for investors of 15 percent guaranteed over a 20-year period," he said, adding that electricity generated from the park would be exclusively for export.
Serbia produces 70 percent of its electricity in coal-fired plants and the rest from hydro-power.
It urgently needs to upgrade its energy infrastructure, which was damaged and mismanaged during the Balkan wars of the 1990s, to meet growing demand, reduce future reliance on imports and put it in line with the European Union environmental standards.
International investors are increasingly targeting energy projects in the Balkans, boosting their presence and showing a willingness to take bigger risks on a potentially lucrative market with links to the EU. ($1 = 0.7665 euros)