The Inter-American Development Bank (IDB) continues to support the expansion of renewable energy in Uruguay through two financial packages, totaling $216 million, which were approved for the private sector to finance part of the construction of the Colonia Arias and Valentines wind farms and their related works. Each of the parks will have the capacity to generate 70 MW.
The financing approved by the IDB for the Colonia Arias wind farm, located in the department of Flores, includes a loan of up to $72 million from its ordinary capital and up to $36 million from the China Cofinancing Fund for Latin America and the Caribbean, created by the Chinese government to co-finance projects in the region with the IDB.
The financing approved for the Valentines wind farm, located on the border between the departments of Florida and Treinta y Tres, also includes a loan of up to $72 million from the Bank's ordinary capital and up to $36 million from the China Cofinancing Fund.
“These two projects are in line with Uruguay's efforts to significantly increase the proportion of renewable energy within its overall energy matrix, and at the same time they use the innovative element of offering Uruguayan investors a mechanism for participating through the Initial Public Offering,” said Jean-Marc Aboussouan, chief of the Bank’s Infrastructure Division.
Both projects will be carried out under the auspices of the Administración de Usinas y Transmisiones Eléctricas (UTE) and will sell to UTE all the power generated, under a long-term contract.
The loan for the construction of the Colonia Arias wind farm will be issued to a trust, the Fideicomiso Financiero Arias, and the loan for the Valentines wind farm will be issued to Areaflin S.A., both created specifically for these projects.
The raising of capital through an Initial Public Offering will introduce a new way of financing renewable energy projects in the country and is expected to increase the participation of Uruguayan investors in national renewable energy projects.
The two projects are expected to create a positive impact by generating a total of 614.5 GWh of renewable energy per year, contributing to the diversification of the energy matrix through a reduction of its dependence on fossil fuels, and reducing emissions by approximately 366,555 tons CO2 equivalent per year by replacing fossil fuels with renewable energy.
In addition, the energy needs of an estimated 200,000 or more individuals may be met with a renewable energy source that is lower in cost than those of other generation options available in the country.