Dec 11, 2013
Chile to expand hydroelectric generation, with IDB support
A $195 million loan will contribute to the 531 MW Alto Maipo project
The Inter-American Development Bank (IDB) signed a $195 million loan agreement with Alto Maipo Spa, owned by AES Gener (60 percent) and Antofagasta Minerals (40 percent), as part of a financing package of more than $1.2 billion for the Alto Maipo Hydroelectric Project.
The project consists of the construction of two run-of-the-river hydroelectric facilities designed to provide base load electricity to the Chilean grid. Ninety percent of the project’s infrastructure, including the power houses and 67 km of tunnels, will be located underground.
The facilities to be built include the Alfalfal II and Las Lajas hydroelectric facilities, located approximately 50 km southeast of Santiago, and 17 km of new 110/220 kV transmission lines. Once operational, the project will contribute an annual average of 2,300 GWh to the Chilean grid.
Chile’s electricity matrix at the end of 2012 relied to a large extent (63 percent) on thermoelectric power, much of it in the form of imported fossil fuels. Alto Maipo will thus contribute to displacing approximately one million tons of carbon emissions per year. The country’s energy demand has been increasing by 5 percent per year since 1985.
“This project makes a major contribution to Chile’s energy strategy over the coming years,” indicated Jean-Marc Aboussouan, chief of the Infrastructure Division of the Bank’s Structured and Corporate Finance Department. “We have been able to structure a loan commensurate with the needs of a project of this size, and our involvement in identifying measures to mitigate environmental and social impacts has been significant.”
The project is cofinanced by the International Finance Corporation, the U.S. Overseas Private Investment Corporation and six commercial banks. The total project cost will be roughly $2 billion, 60 percent in the form of debt and the remaining 40 percent in equity.
The facilities are expected to come on line in 2018