IDB Finances Solar Power in Chile, Geothermal in Mexico
4 June 2014: The Inter-American Development Bank (IDB) recently announced support for solar power in Chile and geothermal power in Mexico.
The Mexican project involves a loan and partnering with Mexican agencies and an international re-insurer to develop a risk mitigation programme for private geothermal energy projects in Mexico. The Chilean project concerns direct loans to a photovoltaic solar energy plant in northern Chile.
In the Mexican project, IDB will partner with Mexico's Energy Ministry (SENER), the Nacional Financiera (NAFINSA) development bank, and German re-insurer Munich RE to create a risk mitigation and financing programme to apply guarantee and insurance mechanisms to reduce risks in the exploration of geothermal energy in Mexico. Mexico has developed an installed geothermal energy production capacity of 850 megawatts (MW), making Mexico the world's fourth largest producer of geothermal energy. While all of its production to date has been under the auspices of the Federal Electricity Commission (CFE), a law moving through Congress would allow private investment in geothermal energy. Participants in the IDB-backed programme are focused on removing a key barrier to development and supporting the expected private investment. The partners aim to increase Mexico's geothermal energy production by 300 MW in six years, providing as much as 12% of Mexico's electricity needs while cutting Mexico's greenhouse gas (GHG) emissions by an estimated 1.1 million tons CO2e per year. IDB is providing US$85.8 million for the project, with SENER providing US$11.5 million.
The Chilean loan involves US$50.4 million from IDB's ordinary capital pool and US$16 million from the Clean Technology Fund (CTF), one of the Climate Investment Funds (CIF). The loan will help finance the construction, operation and maintenance of the 72.8 MW Crucero photovoltaic solar energy plant in the Antofagasta region. The project will not only reduce the dependence on imported fossil fuels for the northern Chile electricity grid, whose primary consumers are mining and industry, but also reduce CO2 emissions by 148,878 tons per year. [IDB Press Release on Chilean Solar Project] [IDB Press Release on Mexican Geothermal Project] [NAFINSA Release on Geothermal Program (in Spanish)]