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Uruguay Spends $2.6 Billion to Become South America Wind Leader

Uruguay Spends $2.6 Billion to Become South America Wind Leader

Bloomberg

Uruguay expects to almost triple its use of wind power as investors plow $2.6 billion into installing more turbines.

The goal is to generate as much as 38 percent of its power from wind by the end of 2017, up from about 13 percent now, cementing Uruguay’s position as South America’s top wind-energy user, according to Gonzalo Casaravilla, chairman of the state-owned electric utility UTE.

That would put Uruguay in the same league as Denmark, the global wind energy trailblazer that got 43 percent of its power from wind last year. The country of 3.3 million is embracing wind because it offers low operating costs and as a hedge against drought, which reduces power from hydroelectric dams and in the past has forced it to fall back on fossil fuels.

“When someone calculates the percentage of wind power in our energy matrix, we’ll surely rank among the leaders in the world,” Casaravilla said in an interview May 15 in Montevideo. He expects the country to get about 30 percent of its power from wind by the end of next year.

“In percentage terms, Uruguay is a leader in wind generation in Latin America, and you can even compare it to some of the leaders worldwide,” said Lilian Alves, an analyst based in Sao Paulo for Bloomberg New Energy Finance.

Uruguay was the fastest-growing wind market in the world in 2014, according to the World Wind Energy Association. Installed capacity surged almost eight fold to 479 megawatts, according to the Energy Ministry.

Hydro Dependence

In a wet year like 2014, about 74 percent of Uruguay’s electricity came from hydropower. Now, with a drought affecting parts of the country, wind is coming to the rescue as hydropower’s share slips below 70 percent.

With oil at about $60 a barrel, Usinas & Transmisiones Electricas, as the utility is formally known, would have paid an additional $200 million for fuel this year without the recently added renewable energy projects, Energy Minister Carolina Cosse told reporters May 4.

Developers have invested $1.4 billion on wind power to date, and more projects are on the way. That will let Uruguay consistently generate at least 90 percent of its power from renewables by the end of 2016, Casaravilla said.

“It’s a unique example in the region of successful and fast energy-matrix diversification,” said Rafael Matas, an Inter-American Development Bank investment officer who was the team leader for a $216 million loan to finance wind farms in Uruguay. “It’s an example to follow.”

Wind Paradise

Uruguay is especially well-suited for wind with low ridges smoothing the flow of steady winds coming off the Atlantic Ocean. That helps turbines run at about 40 percent of capacity, said Fernando Schaich, a director at the Montevideo-based renewable-energy developer SEG Ingenieria.

“Uruguay is like a big wind farm because it’s flat,” and the highest point is 500 meters (1640 feet), he said in an interview. U.S. wind farms ran at 34 percent of capacity last year, according to the U.S. Energy Information Administration.

That helps wind farms in Uruguay produce electricity for about 65 cents to 70 cents a kilowatt-hour, half the cost of electricity generated by a natural gas-fired plant, Casaravilla said.

Wind capacity is set to reach about 800 megawatts this year with a $1.2 billion project pipeline lifting that figure to 1,400 megawatts by the end of 2017, Casaravilla said.

Biggest Plants

To put that in perspective, the largest U.S. wind farm, the Alta Wind Energy Center in Southern California, has more than 1,500 megawatts of capacity.

Casaravilla sees power exports growing in importance thanks to a rising supply of wind energy and the construction of a 540 megawatt gas plant.

Uruguay, Brazil and Argentina have exchanged electricity for years. In 2013, Uruguay didn’t import electricity from its neighbors for the first time in more than a decade, and also sold $21 million of electricity to Argentina.

UTE and Brazil’s Eletrobras are testing a 500-megawatt transmission line. During the early morning hours on a windy day Uruguay could have as much as several hundred megawatts of power available for export, Casaravilla said.

“We have an opportunity because the region is hungry for energy.”

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IDB Expands Climate and Clean Energy Facility for Adaptation

The IDB has doubled the size of its Climate and Clean Energy Facility for innovative climate change projects to $100 million, due to client demand and interest from international climate funds. Through the Facility, the IDB offers loans from $500,000 to $10 million to private companies for energy efficiency and self-supply renewable energy, as well as water and other adaptation investments. The Facility provides comprehensive support for clean energy and adaptation, by identifying potential projects through investment-grade feasibility studies and then providing the capital needed for their implementation.

The Facility is supported by $30 million from a combination of international climate funds –the Clean Technology Fund (CTF), the Nordic Development Fund (NDF), and the Scaling-Up Renewable Energy Program (SREP). These resources are utilized to extend concessional terms to the borrowers and mitigate risk by providing partial guarantees, which can increase credit ratings, extend tenors and lower collateral requirements.

In addition, the NDF, CTF, and SREP have contributed over $8 million to offer technical assistance grants for project identification, feasibility studies, engineering and capacity building. The funds can also be employed to reduce transaction costs that can make small loans unviable.

“This Facility is playing an important role in mainstreaming climate investments by developing innovative and scalable pilot projects. The IDB has a specialized team dedicated to financing energy efficiency and distributed generation under energy service companies, rooftop solar power purchase agreements and other emerging business models,” said Kelle Bevine, Strategy Management Unit Chief in the Bank’s Structured and Corporate Finance Department.

The Facility has financed two of the largest rooftop solar projects in Latin America in Honduras, and has several other innovative solar, biomass, and lighting projects in due diligence.

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GEF

IDB to support energy efficiency financing through the issuance of Green Bonds in Mexico

The Inter-American Development Bank (IDB) and the Clean Technology Fund (CTF) have closed the first phase of a $125 million financing for energy efficiency projects developed by Mexican energy service companies (ESCOs) through the issuance of green bonds in the local capital markets.

Estimates by Mexico´s National Program for Sustainable Energy Use (PRONASE), predict potential savings in final energy consumption resulting from the implementation of energy efficiency mechanisms ranging from 34,800 to 40,500 GWh by the year 2025. Despite the important role played by ESCOs in the energy efficiency market in Mexico, the funding sources they have been able to tap for such projects are usually limited, expensive, and have very short terms, which at times makes financing unfeasible.

In the first phase of this unique transaction, the IDB financing is structured as a warehouse line for up to $50 million in order to accumulate a portfolio of standardized energy efficiency receivables from two ESCOs–ECON Soluciones Energéticas Integrales, S.A.P.I de C.V. (ECON) and Veolus Energía y Gestión Técnica S.A. de C.V. (VEOLUS). Those investments will then be securitized in a second phase though the issuance of green bonds in the local debt capital markets. The transaction is also mobilizing $19 million in resources from the Clean Technology Fund (CTF), in the form of guarantees for the portfolio of projects.

“This innovative transaction underscores how the IDB can achieve a triple bottom line contributing not only to closing the long-term financing gap for ESCOs in developing energy efficiency projects in Mexico, but also promoting the efficient use of energy and reducing GHG emissions, and lastly, preparing the development of a new asset class in the debt capital markets, in Mexico, the region and the rest of the world,” said Gema Sacristán, Chief of the IDB’s Financial Markets Division.

This financing scheme provides long-term resources supporting the ESCOs’ commitment to develop small-scale (less than 5 MW) energy efficiency projects, allowing them to promote the highest standards and responsible energy consumption in the energy sector.

Samuel Reyes, CEO of ECON, said, “We are proud to partner with the IDB in this first-of-its-kind program and look forward to similar transactions in the future that will allow us to achieve our financial and environmental mission.”

Francisco Torres, CEO of VEOLUS, said, “We are pleased with this transaction as it supports our business strategy to promote energy efficiency projects.”

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Energy Efficiency

To Connect or Not to Connect? Shifting Energy Industry Forges Unlikely Partnerships

To Connect or Not to Connect? Shifting Energy Industry Forges Unlikely Partnerships

By Hans Schulz, IDB VP for Private Sector, a.i.

On the big island in Hawaii, the sun shines 168 days of the year. In Honolulu, it jumps to 271 days of sunshine. That’s the perfect market to launch a new partnership between solar panel supplier SolarCity and electric carmaker Tesla Motors.

The pair announced plans earlier this month to sell off-grid solar packages using Tesla’s new Powerwall battery. This would give Hawaiians the choice to disconnect from the grid completely and rely instead on the growing number of rooftop solar panels dotting the Pacific islands.

And it’s not just in sunny Hawaii.

Honduras is beginning to harness solar energy. Take the example of Corinsa, a large beverage company based in the city of San Pedro de Sula. Last year, the Inter-American Development Bank provided investment-grade energy appraisals and concessional financing with the Nordic Development Fund for Corinsa to invest in what is now the largest solar rooftop system in Latin America.

The growing demand for self-supply renewable energy is prompting some to disconnect from the grid, while others are forging new connections.

This is the case of D.C.-based startup Opower. Founded by two Harvard alumni in 2007, the software company is using behavioral economics to break down key barriers to energy efficiency, for instance lack of consumer awareness and inertia (namely, the tendency to do nothing). Progressive regulation allows utility companies to purchase the Opower software and billing solutions, which can be a powerful and low cost tool to achieve energy efficiency gains.

The impact here is important. According to Opower, the startup saved close to three terawatt hours in 2014. To give some perspective, the Hoover Dam produces 3.9 terawatt hours each year and it’s one of the largest hydroelectric sources in the U.S.

Partnerships between startups like Opower and large utility companies are key to tackling the changing business model for energy. Rather than resist distributed generation (power generated on-site), progressive utility companies are embracing the shifting landscape by partnering with other industry players. For instance, PG&E in California and SolarCity pledged $60 million in tax equity financing for SolarCity to install more than 1,000 solar systems for homes and businesses in the United States.

In Latin America alone, we could save over 78 million mega-watt hours by reducing the transmission and distribution losses to the level common in OECD countries, which would avoid millions of tons in greenhouse gas emissions released to the atmosphere. That’s the equivalent of the electricity produced by 20,000 wind turbines, more than double the total number installed in Latin America.

The same potential is true for green buildings.

Zero emissions buildings using distributed generation to provide our energy needs, is critical to avoiding the most severe impacts of climate change. In fact, the buildings sector represents 32 percent of global emissions. To transform buildings we need many innovative companies –including startups– working on new and existing building energy efficiency. New buildings may last 50-100 years or more, and it’s essential that we build in energy efficiency and sustainability to the design.

This is where the low hanging fruit are lowest.

But there are many barriers and early engagement is critical. Changing business as usual requires early engagement with developers and complex green engineering skills.

The IDB has engineering firms on retainer throughout Latin America that can provide our clients with green building design expertise on short notice. For example, we supported the First LEED Certified University Campus in Peru, University of San Ignacio de Loyola, to build a green campus with advanced air conditioning and materials, green roofs and energy efficient lighting. This was possible through a lower cost loan from the Canadian Climate Fund, a fund we manage to incentivize companies to make climate-friendly investments.

As the rate of construction of new buildings is low in many industrialized countries, new business models to deliver deep retrofits of the existing building stock are crucial. The IDB is working with ESCOs, or energy service companies in Latin America, many of which are start-ups, to offer outside finance to implement energy efficiency and rooftop solar PV and guarantee savings to building owners. We have several innovative programs to provide this high risk finance and if successful we plan to issue bonds to further expand markets and lower the cost of capital for these companies.

Connecting startups and large companies are also essential in the green building space.

Take the case of Saint-Gobain, a multinational company in construction and building materials ranked among Thomson Reuters’ 100 Most Innovative Companies. Its innovation arm develops partnerships between Saint-Gobain and startups worldwide. One startup, Brochier Technologies, was first identified by Saint-Gobain’s innovation team in 2008, and now the two companies have released an innovative lighting fabric combining fiberglass technology and interweaving optical fibers that are connected to a LED source.

Yet more connections are needed among startups, large companies and investors.

As the energy industry landscape continues to shift, we must rethink old partnerships and forge new ones. Certainly initiatives like the 1776 Challenge Festival provide a forum for unlikely pairs to leapfrog from ideation to implementation.

Let’s see what connections spark this week.

This is a featured article on the 1776 Thought Leadership Platform.  The IDB is a sponsor of this year’s 1776 Challenge Festival hosted in Washington, D.C. May 9-16.  1776 is a global incubator and seed fund helping startups transform industries that impact millions of lives every day—education, energy & sustainability, health, transportation and cities.

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Getting more out of the same amount of land: cattle and forestry as a sustainable investment

By Katalin Solymosi

Published in Global AgInvesting Editorial 

As the global agricultural community gathers this week in New York for the Global AgInvesting conference to explore investment opportunities, strategies for reducing risks through diversified agricultural portfolios is high on the agenda. As the sector is facing the challenge of resource scarcity, climate change and a growing global population with diets increasingly based on animal products, combined production systems are an effective sustainable investment.

According to the FAO, combined systems include both traditional and modern land-use systems where trees are managed together with crops and/or animal production in agricultural settings. So called silvo-pastoral systems – which combine trees and pastures – deliver multiple outputs on the same area and are therefore a smart investment strategy to spread agricultural production risk across commodities while achieving environmental benefits. Take pulp and paper production in the Southern Cone for instance. In this industry, partnering with cattle ranchers on farm plots neighboring industrial timber plantations has become a best practice.

In Uruguay for example, cattle ranching is a traditional and culturally dominant industry, and other land use based sectors like forestry are competing for land with local long timers. Leasing pasture land from landowners that neighbor their own timber plantations in exchange for allowing farmers access to company lands is one way for IDB client Montes del Plata to expand their wood plantation area. The company broadens its access to raw material that it would otherwise have to purchase on the spot market. Cattle continue to graze to a limited extent on the same plots as soon as the newly planted trees are large enough, therefore providing an important fire regulation service to the company. The mechanical, labor-intensive process is replaced by the “free” ecosystem service of cows keeping grass in fire breaks short. A recent study conducted by the IDB has brought to light that this model also benefits beef production itself.  Shade provided by plantation trees enables cows to fatten up to 17% faster under certain conditions, be healthier and less affected by heat stress.

Apart from the business opportunities for rural cattle ranchers, this model provides further economic, social and environmental benefits to local communities. Land owners entering the program receive technical assistance and planning for establishing timber plantations on parts of their plots and get to share part of the revenues once the wood is harvested. Farmers receive additional income, knowledge transfer and specific training such as on how to obtain Forest Stewardship Council certification, which is the industry standard on sustainable wood production.

From an environmental perspective, well managed multiple land uses on the same area are preferable to extensive land uses that results in continuous degradation such as soil erosion and nutrient depletion. Green investment funds from Moringa to the Global Sustainable Agroforestry Fund are recognizing these opportunities in combined systems and expecting IRRs of 10%.

This is good news for agricultural investors seeking to reduce risk by diversifying income streams that contribute to a triple bottom line.

The Inter-American Development Bank is a sponsor and exhibitor at Global AgInvesting 2015 at the Waldorf Astoria in New York City, April 27-30. For more information, please visit www.iadb.org/agribusiness.

Katalin Solymosi has a PhD in sustainable land use and works in IDB’s Structured and Corporate Finance Department, where she manages concessional finance and technical cooperation products for clients investing in their supply chains.

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bb awards 2015

2015 beyondBanking Award Winners

Financial intermediaries from Latin America and the Caribbean are recognized for their contributions to making the region’s financial sector more sustainable

BUSAN, Korea – The Inter-American Development Bank (IDB) announced today the winners of the fifth annual beyondBanking awards, which recognize best projects and initiatives in the region contributing to the creation of a more sustainable financial sector. The awards were given in a ceremony at the Bank’s Annual Meeting in Busan, Korea. This year’s winners were financial intermediaries from Bolivia, Brazil, Chile, Colombia, Ecuador and Paraguay.

Created in 2010, the awards seek to identify, share and inspire good practices in Latin America and the Caribbean’s financial sector. The award categories reflect distinct types of sustainable development in the region, from financial inclusion strategies to the application of new technologies, as well as sustainability reporting and projects that reduce the effects of climate change, among others.

The winners by category were the following:

  • accessBanking Award: promotion of financial inclusion strategies

Banca Joven – Banco Nacional de Bolivia (Bolivia)

  • clearBanking Award: strengthening corporate governance, transparency and the use of sustainability reports

Relato integrado – Banco Itaú (Brazil)

  • connectBanking Award: dissemination of new information and communication technologies

Credimóvil – Banco Familiar (Paraguay)

  • equalBanking Award: support for diversity and gender equality

Un compromiso de VIDA para CREER – Banco D-MIRO (Ecuador)

  • learnBanking Award: development of financial education as a tool for responsible financial decision-making

Programa de educación financiera Sanodelucas – Banco Santander (Chile)

  • planetBanking Award: searching for answers to the effects of climate change

BanCO2 – Bancolombia (Colombia)

  • Socially responsible/Impact investment Award: the most socially responsible or impact investment

Vox Capital Investing Fund – Vox Capital (Brazil)

  • People’s choice Award: project with the most popular support

BanCO2 – Bancolombia (Colombia)

“This year we are celebrating the fifth anniversary of the beyondBanking awards. When we started these awards, our goal was to identify the best sustainability practices in the financial industry in the region and to showcase them as part of a new financial model that combines economic, social and environmental returns,” said Gema Sacristan, Chief of the Financial Markets Division of the IDB. “This year’s awards included a record number of applicants and high-quality projects.”

The awardees were chosen from over 150 proposals for the seven categories. A Committee of Experts selected the best 21 proposals, three per category. Finally, the winner was selected by the public through an online vote.

About beyondBanking

The beyondBanking program is managed by the Financial Markets Division of the Structured and Corporate Finance Department and promotes social, environmental and corporate governance practices among financial intermediaries in Latin America and the Caribbean. It was created in order to contribute to the Bank of the Future – a financial business model that combines financial profitability with social and environmental returns; values principles of transparency, responsibility and integrity; seeks to promote financial inclusion through new channels; and respects the environment and community in which it operates.

Aquapolo (2)

IDB Announces Winners of Infrastructure 360º Awards

Awards developed with the Harvard Zofnass Program for Sustainable Infrastructure

BUSAN, Korea – Projects in Brazil, Chile, and Mexico have won the Infrastructure 360º Awards, which showcase leadership in climate and environment, social impact, governance and innovation.

Inter-American Development Bank (IDB) President Luis Alberto Moreno delivered the awards to three companies as part of the second annual ceremony of the Infrastructure 360º Awards, staged as part of the Annual Meeting of the Board of Governors of the IDB.

The EURUS Wind Farm project in Mexico was selected as the winner of the People and Leadership category. The Cerro Dominador Solar Concentration Plant in Chile won in the Climate and Environment category, and the Aquapolo Industrial Water Production Project in Brazil was named the winner of the overall Infrastructure 360º category, demonstrating the most comprehensive implementation of a sustainability strategy.

The IDB Private Sector Infrastructure Sustainability Awards, or the Infrastructure 360° Awards, seek to identify, assess, and reward sustainable infrastructure investments made by the private sector and public-private partnerships in the IDB´s 26 borrowing member countries in Latin America and the Caribbean.

Developed jointly with the Harvard Zofnass Program for Sustainable Infrastructure, the Awards help underscore how sustainability can be integrated during the planning, design, construction, and operation of infrastructure projects. Eligible projects must have been under construction or in operation within the past three years, and have a total investment of $30 million or more.

“We must invest in sustainable infrastructure to meet the challenges of climate change and ensure socially inclusive growth in the region,” said Hans Schulz, IDB Vice Presidentfor Private Sector and Non-Sovereign Guaranteed Operations. “The Infrastructure 360º Awards recognize cutting-edge private sector sustainability efforts in this direction.”

Former U.S. Vice President Al Gore congratulated the awardees in a recorded message, noting, “Innovations in design and technology are revolutionizing the way engineers and architects think about infrastructure, allowing us to build a sustainable future that is a better future in every way.”

The awards initiative was launched in Panama in March 2013, and had its inaugural ceremony in March 2014 in Brazil.

In 2015, over 40 projects applied from ten countries in the telecommunications, energy, transport, water treatment and solid waste/sanitation sectors. Each project was submitted online through a self-evaluation tool developed by the Harvard Zofnass program.

The IDB announced the 12 finalists for the awards in September 2014. Each finalist submitted additional documents and materials that were reviewed by the Harvard Zofnass team, which then prepared a detailed assessment of each project for review by the nine-member panel of international experts that chose the winners.

Gen Con participants get Job Exp at Marriott 078-2

Three Pillars for Jamaica to Achieve Sustainable Growth

There are many encouraging signs emerging from Jamaica these days.  Three of the major rating agencies provide a positive outlook for the economy, consumer confidence reached a two-year peak in 2014, and lower oil prices are helping to cut energy costs and improve the fiscal accounts. What this means is increased investment opportunities in a country that is proudly emerging from a period of economic hardship.

As the country moves forward, both the public and private sectors will have key roles in defining a new growth path for Jamaica, which in my mind will depend greatly on three pillars: connectivity, expanding business opportunities, and sustainability. Let me explain why.

  • Connectivity: In today’s globally connected markets, it is not enough to offer great services or sell high value products. The key to success, beyond geographic position, is to develop efficient logistics networks, leveraged through deep partnerships.  Connectivity is measured by an economy’s linkages to global markets for goods and services, capital, technology and ideas.  Jamaica must prepare for the 21st century by investing in hard and soft infrastructure that boosts its connections with external markets.
  • Expanded business opportunities: Expanding business opportunities means creating the conditions for a dynamic business environment, one that can count on access to finance as well as programs that help firms upgrade their skills and increase their competitiveness. Reducing government excessive bureaucracy is central to create these conditions, but is not sufficient.  Investment in dynamic SMEs is needed for long-term growth and firm upgrading.
  • Sustainability: It is paramount for future growth to be built on sustainable environmental and social practices – both in business and government.  Investments in renewable energy and energy efficiency are needed to reduce the impact of volatile fossil fuel prices, while lowering Jamaica’s carbon footprint. More broadly, sustainability encompasses social elements such as: gender equality, youth employment, and improved access to basic services for underserved populations.

The IDB is a long-standing partner for Jamaica, committed to work with the government and private sector to capitalize on these opportunities. We are investing to increase Jamaica’s connectivity in multiple ways: from exploring long-term financing to upgrade Kingston’s container port to take advantage of the expansion of the Panama Canal and Jamaica’s potential as a regional hub; to using the internet to connect businesses from Jamaica and across the region through our ConnectAmericas platform – the first online community of companies dedicated to international trade and investment.

To boost the expansion of business opportunities, we are supporting the Junior Stock Exchange by helping to expand the range of debt and equity finance for high impact entrepreneurs and develop a credible exit for venture capital investors. We offer a range of credit programs to finance microentreprenuers, small-scale firms and larger corporates as all need a piece of the action.

As to sustainability, we are investing in sustainable tourism and industry, for example the Marriot Courtyard in Kingston, where we financed the construction of the first LEED certified building in Jamaica that incorporates green technologies improving the hotel’s carbon footprint, while reducing its operational expenses (Video). The IDB also partnered with Marriott and the Jamaican construction firm building the hotel to provide construction jobs for youth from disadvantaged communities, a win-win for the hotel and Jamaican youth.

From my viewpoint, Jamaica is on the move. The many conversations I had during the Jamaica Investment Forum earlier this month revealed a tangible awareness that sustainable and inclusive business is not only necessary but marks the path toward a smarter growth path. From the IDB’s perspective, Jamaica’s economy is ripe for increased private sector investment and sustainable growth.

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IDB supports Grupo Corinsa in Honduras with energy efficiency investment

Feb 12, 2015

IDB supports Grupo Corinsa in Honduras with energy efficiency investment

Financing will support the largest rooftop PV system in Latin America

A $5 million loan from the Inter-American Development Bank (IDB) will enable Corporación Industrial del Norte, SA (Corinsa), to install photovoltaic solar panels on the roofs of its bottling plant buildings in San Pedro Sula, Honduras.  The panels will produce 3 MW of zero-emission electricity as part of a project with an overall cost of $10 million.

“This example has tremendous scale-up potential in the private sector, as companies seek to become more competitive and at the same time reduce their carbon footprint,” said Kelle Bevine, Chief of the Strategy Management Unit in the IDB’s Structured and Corporate Finance Department.

The project will reduce greenhouse gas emissions by replacing grid electricity with emission-free solar power. In addition, energy efficiency improvements will reduce demand on the electrical grid. The project is expected to generate approximately 53,000 tons of CO2 reductions.  Upon project completion, the photovoltaic panels will cover 34,000 square meters of roof and supply about 20 percent of the plant’s electricity needs, making it the largest rooftop industrial scale photovoltaic system in Latin America.

“The investment in solar PV will not only generate considerable savings and a good return on investment, it will also help the company manage future energy cost fluctuations and reduce our carbon footprint.” said Roberto Larach, General Director of the Corinsa Group.

As demand for energy in the region is expected to increase by over 50 percent in the next decade, it’s critical that individual companies make investments in saving energy and produce their own clean energy on-site in order to reduce costs, increase reliability, and decrease fossil fuel consumption.

The IDB loan to the Corinsa Group is part of a $50 million Energy Efficiency Finance Facility (EEFF). The EEFF was established by the IDB with support from the Nordic Development Fund (NDF) and is structured to both identify opportunities for companies to invest in clean energy projects, and finance their implementation. NDF helps reduce barriers to finance through an innovative guarantee program to support IDB financial offerings.

“Our partnership with the IDB helps us leverage our resources effectively and uncover highly developmental business opportunities that really make a difference in Latin America and the Caribbean,” said Leena Klossner, Deputy Director of NDF.

The IDB plans to provide similar loans for innovative energy efficiency projects throughout Latin America and the Caribbean.

Full press release

Corinsa

A Green Revolution under the Central American Sun

Jan 26, 2015 

A Green Revolution under the Central American Sun

by Hans Schulz, Vice President for the Private Sector, IDB

The same sun that bathes Central America’s beaches is an increasingly valuable asset for many companies in the region. That is the case with the Honduran bottling plant Embotelladora de Sula, which will soon have one of the largest rooftop photovoltaic projects in Latin America.

This new solar plant in sunny San Pedro Sula—three hours from Tegucigalpa—is one of the first large-scale photovoltaic projects in the country. It shows the potential for renewable energy—not just to reduce companies’ carbon footprint but also to increase competitiveness.

Energy prices tend to be higher in Central America than in other places, given the region’s dependence on imported fossil fuels, which account for 45 percent of energy use. For countries that depend disproportionately on oil for electricity generation, price volatility complicates planning for the medium or long term.

Of course, one company by itself is not going to solve national energy problems, much less resolve the regional challenges brought by climate change Thanks to private and public sector efforts, photovoltaic capacity in Central America is expected to jump ten-fold over the next year.

The IDB seeks to play a leadership role in this upward trend. Working with the Nordic Development Fund, we have set up a$50 million fund to support companies’ energy efficiency and reduce their dependence on oil through renewable energy. Depending on the size of the project, the fund can provide direct loans ranging from $500,000 to $5 million to finance up to half the cost of an energy project. Along with financial support, the program provides technical assistance to assess needs and analyze the costs and benefits of different technologies.

Over the past year, the IDB supported energy audits and feasibility studies for dozens of Central American companies to determine what solutions work best. For an agricultural company in Costa Rica that generates a high volume of organic waste, it was determined that turning this readily available material into biofuel would be the best option. For other companies, we demonstrate how reducing energy costs through installing new equipment or upgrading production systems can make sense.

Embotelladora de Sula will rely on the sun, as well as certain efficiency measures, for energy savings. During the next few days, the IDB will extend a loan for the project to Grupo Corinsa, which owns the plant.

This modern facility—which bottles soft drinks, juices, and purified water, 24 hours a day, 7 days a week—began a solar pilot project more than a year ago and is about to expand it significantly. Although solar energy cannot be the only solution for a company that operates 24/7, it can have a big economic impact. In this case, once all the solar panels are installed they will cover 34,000 square meters (more than 35,000 square feet) and generate 3 megawatts of electricity, enough to supply 20 percent of the plant’s total electricity needs.

Technological advances like this make renewable energy more attractive. The initial investment can often be recovered in four or five years, while the benefits last for the long term. 

We have seen enormous interest in green technologies throughout Central America, which is expected to install around 550 MW of solar per year through 2018.

In 3Q2014, Honduras added a total of 72MW alone. The IDB is at the cutting edge of this burgeoning market with additional projects in San Pedro Sula and elsewhere. For companies willing to invest in the environment—and at the same time improve bottom lines—this IDB fund provides a unique opportunity.

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