Honduras to improve renewable energy integration with IDB support

The Inter-American Development Bank (IDB) has approved an $18 million loan to help Honduras refit the Francisco Morazán hydroelectric dam and boost the adaptability and integration of renewable energies to the country’s power system.

The Francisco Morazán Hydroelectric Plant started operations in 1986 and currently has an installed capacity of 300 MW. In 2018, generation reached 1,625 GWh. It is now the main hydroelectric dam in Honduras, and the one with the largest contribution to the national grid—16% of generated energy.

But with aging equipment, the plant could suffer service interruptions due to failures and increasingly longer unscheduled stops. In addition, the growing presence of Variable Renewable Energies, which are playing an ever bigger role in Honduras’s generation matrix, is leading to an increasing wear and tear of certain elements of the dam, which provides support services that are crucial for a sustained and reliable power supply.

With this operation, Honduras is seeking to boost the hydroelectric plant’s reliability and operational efficiency in order to meet the system’s needs and make up for the fluctuations of the renewable energy variables in a cost-effective and efficient way.

This renovation project also contemplates replacing the monitoring and control mechanisms that are part of the command and supervision system, leading to increased digitalization of the plant’s management, operation and maintenance.

The IDB loan consists of a $1.1 million concessional tranche for a 40-year repayment term and a period of grace also of 40 years; a $500,000 credit from the Bank’s ordinary capital; and $16.4 million in concessional financing from the Clean Technology Trust Fund (CTF), with a 10-year period of grace. The operation, for a total $36.8 million, will also have $18.8 million in local counterpart funding. The executing agency will be the Empresa Nacional de Energía Eléctrica (ENEE) public utility.