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Add to Preferred SourcesAt COP25, the Green Climate Fund (GCF) and MUFG Bank, Ltd. took the first step towards allocating GCF resources to the Espejo de Tarapacá renewable energy project in Chile by signing a Funded Activity Agreement (FAA).
The project is expected to decarbonise up to 5 percent of the country’s energy mix, helping Chile achieve its long-term climate objectives, including Nationally Determined Contribution (NDC) targets. The initiative will also support climate change adaptation by diversifying local economies and providing stable water supplies from its associated desalination plant. GCF will invest up to USD 60 million in the project’s equity, and its anchor investment will help to attract additional private sector debt and equity investors to finance the remaining USD 1 billion.
As the first such initiative in Latin America, signed with the largest bank in Japan and one of the largest banks in the world, the project will combine solar energy with a pumped-storage hydroelectric system to offer a continuous and stable supply of low-carbon electricity, reducing Chile’s dependence on fossil-fuels.
“This project exemplifies GCF’s financial innovation and willingness to accept higher risks to scale up climate action,” said Yannick Glemarec, Executive Director of GCF. “By investing equity in the early development stage, the Fund de-risks the project and catalyses much larger private sector investment,” he added.
The unique combination of solar and hydro storage systems will help solve renewable power intermittency, thus transforming the entire energy market in Chile.
Original source: GCF
Published on 11 December 2019