IFC could play a part in financing geothermal projects in Chile
IFC could play a role in financing geothermal projects in Chile, based on a recent deal of the bank in the wind sector in the country.
In a news piece of last week, it is mentioned that IFC invested about US$31 million and syndicated an additional US$31 million for a wind project in Chile. While being wind project, it shows a direction the bank goes with regards to helping Chile develop its renewable energy sources, among them important geothermal resources in the country. So there could be a role of IFC investing in geothermal projects in the country, while involving banks of the home countries of some of the developers.
The project mentioned in the article, “situated 300 kilometers north of Santiago in Canela County, the 46-megawatt Totoral Wind Farm consists of 23 two-megawatt Vestas wind turbines. The project is expected to generate an average of 110 gigawatt hours a year of electricity for the Chilean central grid, relieving the country’s significant supply constraints, reducing environmental pollution, and improving the quality of life.
This is Chile’s first project-financed wind farm. IFC invested about $30.8 million for its own account and syndicated an additional $30.8 million, funded by DnB NOR, the leading Norwegian financial services firm. The project developer is Norvind S.A., a special-purpose vehicle set up by the project sponsors, Statkraft Norfund Power Invest A.S., the Norwegian power developer, and its Chilean partner, Centinela. Centinela, a local firm owned by the Pavez family, is an investment company with interests in a wide range of industries.
One of the largest operating wind farms in Chile, the Totoral Wind Farm is the first renewable energy project to be financed under Chile’s new “Non-Conventional Renewable Energy Law” that was enacted in March 2008. IFC’s financing monetizes the expected carbon revenues under the Kyoto Protocol’s Clean Development Mechanism.
“IFC is proud to participate in the inauguration of the Totoral Wind Farm, a significant renewable energy project for Chile,” said Bernie Sheahan, IFC Director for Infrastructure. “We look forward to continuing our support for such sustainable energy projects in the country, including solar and wind power, geothermal, and small hydropower.”
IFC is supporting Chile’s objectives of rapidly increasing and diversifying its energy supply. In the past five years, IFC has invested more than $290 million in five projects with a focus on supporting the expansion of the country’s traditional energy sources and less traditional energy sources such as wind.
IFC is the only international financial institution focused exclusively on the private sector, the engine of sustainable development in emerging markets. Along with IBRD, it is currently seeking a capital increase to strengthen its ability to create opportunity for the poor in developing countries—including by investing in renewable energy projects such as the Totoral Wind Farm.”