Through technical and financial support, the Inter-American Development Bank (IDB) promotes the use of renewable energy in Latin America and the Caribbean.
Over the past decade, the IDB invested roughly $250 million in renewable energy projects in Latin America and the Caribbean, of which, around $180 million was granted to nine projects through operation and guarantee loans.
From the nine projects granted with loans, Reventazon Hydroelectric Powerplant in Costa Rica and La Jacinta Solar Power Project in Uruguay were the two projects with the largest support. Reventazon Project, commissioned in 2016, received a $98 million guarantee loan and has an installed capacity of 210 MW making it the biggest power station in Costa Rica. La Jacinta Solar Power, commissioned in 2015, received a $41 million operational loan and is the biggest solar farm in Uruguay with an installed capacity of 50 MW.
Péligre Hydroelectric Plant
Péligre Hydroelectric Plant Rehabilitation was another important project that received direct funding. The hydro plant, critical for the island’s electricity supply, was damaged during the 2010 Haiti earthquake. The $12.5 million loan not only funded the rehabilitation plan, but also looked to mitigate losses caused by poor transmission and distribution infrastructure. We expect power grid projects and transmission lines to be big opportunities for investors.
In the past decade, nine projects received loans, and the three projects account for around 60% of investment dollars. Technical cooperation and support have also helped countries execute on renewable projects in early stages. The IDB has, in partnership with various countries, developed long-term programs that we expect to boost renewable energy adoption in the future.
Technical Support a Key Driver of Renewable Adoption
In the last decade, IDB spent $67.3 million through technical support on 112 different projects. They were focused not only on renewable energy, but also on the electrification of rural areas and energy efficiency. From this budget, $37 million went to support governments to develop programs, prepare national policies, and implement regional strategies.
Two great examples of policies resulted from IBD technical support are the Sustainable Energy National Program (PRONASE) in Mexico and the Strategic Plan of Sustainable Energy and Biofuels (PEESB) in Peru. Both of them have been crucial in their countries and have served to promote use of renewable energies and biofuels. Technical support has also been provided for renewable sources such as solar and wind.
In the past 10 years, IDB gave almost $4 million in technical support to eight solar energy projects. Two of these (Kara Solar: Solar-Powered River Transportation in Ecuador and Solar Photovoltaic Pilot Project in Haiti) were particularly important since they helped vulnerable communities.
Kara Solar helped Achuar people, a local indigenous community, to move through the Amazon River by using solar energy, and the photovoltaic pilot project helped Haitians to auto-supply electricity needs by installing photovoltaic cells. The other six projects in this period were aimed to increase knowledge about solar energy potential. Please contact us to learn more about the impact investment funds we work with that look to support projects with a development component.
Wind and Geothermal are Large Beneficiaries
Wind and geothermal energy projects have also benefited. In the past ten years IDB spent $2 million on feasibility wind studies and government programs that support wind energy. One important feasibility study was carried out for the Isthmus of Tehuantepec, region in which most Mexico’s wind power is generated. In addition, eleven geothermal energy projects have received capital. Three projects consisted of potential assessments, five were for training programs, and three were for feasibility studies.
IDB’s financial support in Latin America and the Caribbean has been remarkable. Large financial funding was granted, helping developers to alleviate upfront cost burdens and financial risks. These loans not only benefit direct developers but also other stakeholders involved in renewable energy market. Technical support has been key since it has helped governments to develop important national policies supporting renewable energy.
Our Outlook
We expect significant opportunities for project investors since better regulatory framework and understanding about resources expands the penetration of renewable energy across the region. We also think that investment dollars flowing into infrastructure and impact investment funds can help to supplement the development bank funding. Please contact us for more information about investing in the renewable energy and power sector in the Caribbean.
