The Inter-American Investment Corporation (IIC), acting on behalf of the Inter-American Development Bank (IDB) Group, has joined efforts with Providencia Solar S.A. de C.V. to finance the construction of the first-ever commercial-scale solar photovoltaic (PV) energy project in El Salvador.
The project will diversify the country’s energy matrix, contributing 100 MWp of renewable energy capacity. Providencia Solar will displace an average of 163,800 MWh of thermal power generation per year while avoiding the annual emission of an average of 114,500 tons of CO2e. The project will also boost the social and economic development of nearby communities, as the sponsor will allocate 3 percent of revenues generated to finance high priority social investments.
The US$151 million project includes an A-loan of US$57.7 million and a co-loan of US$30 million from the Canadian Climate Fund for the Private Sector in the Americas, managed by the IIC. In addition, Proparco, a subsidiary of the French Development Agency, will provide a co-loan of US$30 million.
The loan offers an 18.5-year tenor and will support the construction, operation and maintenance of the solar PV power plant and its associated facilities. In addition to providing long-term financing, the IDB Group led a consultative process to strengthen the power purchase agreement (PPA) in El Salvador to make the contractual structure bankable and improve the viability of the most recent renewable power tender by the government.
About the IIC
The Inter-American Investment Corporation (IIC), a member of the Inter-American Development Bank (IDB) Group, is a multilateral development bank committed to supporting the private sector in Latin America and the Caribbean. The IIC finances sustainable enterprises and projects to achieve financial results that maximize social and environmental development for the region. With a current portfolio of $7 billion under management and 330 clients in 20 countries, the IIC works across sectors to provide innovative financial solutions and advisory services that meet the evolving demands of its clients.
About Providencia Solar, S.A. de C.V.
Providencia Solar, S.A. de C.V. is a company incorporated in El Salvador with the sole purpose of developing the Project. The Borrower is fully owned by Neoen, S.A.S.,a French independent renewable energy producer that was established in 2008 as part of the Louis Dreyfus Group, a global commodity firm. Neoen has significant experience in developing and managing solar and wind projects in Europe and Australia, having developed more than 438 MW of solar and 100 MW of wind farms since its creation. The Project will be the first for Neoen in Central America and the Caribbean and the company expects to expand to the Region. Neoen’s business model consists of developing, building and holding solar projects on its balance sheet.
- José Luis Lobera