IDB Approves US$50 Million Energy Efficiency Finance Facility

The Inter-American Development Bank (IDB) approved US$50 million for the launch of the Energy Efficiency Finance Facility, which aims to finance companies investing in energy efficiency and self-supply renewable energy projects in Latin America and the Caribbean (LAC), by helping them to overcome financial barriers with small-scale loans to curb emissions.

According to IDB, the loans will range in size from US$500,000 to US$5,000,000. The Nordic Development Fund (NDF) will provide US$8.6 million to mitigate risk through providing partial guarantees to the IDB-financed loans, and an additional US$1.3 million for technical assistance for project identification and feasibility and engineering studies.

The Facility will: address funding needs in energy efficiency and small-scale renewable energy generation, where borrowers often encounter high risk premiums, high collateral requirements and inadequate tenors; and focus on projects with potential for high financial returns, including technologies, such as smart-grid, advanced lighting, and solar or biomass power.

IDB expects the Facility will significantly reduce transaction costs and facilitate access to finance, and reach US$100 million in climate-friendly investment, with complementary funding from other IDB-administered funds, which are also aimed at incentivizing climate-friendly investment. [IDB Press Release] [Facility Project Abstract]