Ecuador plans to diversify its energy mix and boost energy security with a $77 million sovereign guarantee from the Inter-American Development Bank (IDB). The guarantee is the first operation under a $140 million conditional credit line for investment projects and aims to reduce country risk while attracting private investment in solar and wind power.
Ecuador wants to cut its dependence on big hydroelectric plants, which droughts and floods have been hitting harder. The country needs more types of energy sources to keep the lights on as weather gets more unpredictable.
The guarantee will back up to 12 investment projects that add more than 820 megawatts of new power capacity and bring in about $1 billion in private money. Ecuador’s Ministry of Energy and Mines picked these projects through a public bidding process, and they’ll help the country meet goals set out in its Electricity Master Plan.
The IDB is also providing $3 million in technical cooperation to strengthen key energy regulatory bodies, particularly the Electricity Regulatory and Control Agency (ARCONEL). This funding will help them license, oversee, and monitor social and environmental aspects of private energy generation projects. The IDB guarantees last up to 25 years and are denominated in US dollars, with the accompanying loan featuring a 25-year amortization period, 5.5-year grace period, and interest rate based on the Secured Overnight Financing Rate.
