Ecuador to Increase Resiliency of Energy Sector with IDB Guarantee

Ecuador is encouraging private investments to diversify its energy mix and enhance energy security with a $77 million sovereign guarantee from the Inter-American Development Bank (IDB).  

The guarantee—the first operation under a $140 million conditional credit line for investment projects—is designed to reduce country risk and attract private investment in non-conventional renewable energy sources such as solar and wind. These efforts will help Ecuador lessen its dependence on large scale hydroelectric power, which is increasingly vulnerable to climate-related disruptions like droughts and floods. 

Up to 12 investment projects are expected to benefit from this initial guarantee, collectively adding more than 820 megawatts of newly installed capacity. These initiatives will mobilize approximately $1 billion in private sector funding. These projects were selected through a public tender process conducted by Ecuador's Ministry of Energy and Mines and will contribute to meet priority investments established in the country's Electricity Master Plan. 

In addition, the IDB is providing a $3 million reimbursable technical cooperation to strengthen the institutional capacity of key energy regulatory bodies, especially the Electricity Regulatory and Control Agency (ARCONEL). This funding will enhance their ability to license, oversee, and monitor social and environmental aspects of private energy generation projects, ensuring effective implementation and long-term sustainability. 

The IDB guarantees are for a maximum period of 25 years and are denominated in U.S. dollars. The accompanying loan features a 25-year amortization period, a 5.5-year grace period, and an interest rate based on the Secured Overnight Financing Rate (SOFR).